Zomato 'unable' to reduce its delivery commission during coronavirus pandemic

The delivery aggregator is refusing to bow to pressure to lower its fees
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Zomato, Delivery, Aggregators

Zomato has become the latest food delivery aggregator to refuse to lower its commission during the coronavirus pandemic, despite increasing pressure from restaurateurs.

Following in the footsteps of Talabat, also owned by Delivery Hero, it released a statement saying it is "unable" to reduce its fees to restaurant partners and outlined the reasons why it couldn't, including paying staff salaries, last mile delivery costs, and marketing.

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You can see the full statement below.

The COVID-19 pandemic has had a widespread effect on various industries, including the food and beverage industry. Among these adverse effects, most restaurants have seen their cash flow and revenue impacted with reduced dining as well as an impact on the ordering due to safety-related user concerns. 

As a partner and participant in this ecosystem, the effects on Zomato have been no different. As one of the world’s largest restaurant discovery and food delivery platforms, we are also in a very financially challenging situation. While we continue to work our hardest to continue delivering food to people as safely and efficiently as possible, and to carry on helping our restaurant partners reach their customers, like most businesses, we are also trying to ensure that our own business survives the pandemic. 

In this situation, we are focusing all our energy, and our limited financial bandwidth to roll out best-in-class user facing safety related features like contactless delivery, sanitization stations, temperature check stations in partnership with restaurants, and PPE for our delivery partners. We continue to stay in close communication with the government, and up-to-date on the latest research/technology to ensure that we are the industry which follows the highest levels of hygiene standards available for our customers. 

We have also taken a number of steps to support our restaurant partners in these challenging times. One of these key steps is a relief fund for restaurant industry workers where 100% of Zomato Gold revenue for the month of April is going towards helping restaurant workers. Another measure taken has been to offer interest-free loans for small- and medium-sized restaurant partners and delivery partners. We have also increased delivery radius to 9 kms for all restaurant partners on our logistics, this helps bring in new customers and revenue to restaurant partners.

While we have heard a call for Zomato, and other food delivery platforms, to take an additional step by removing or reducing our commission fees further, we are unable to do so (even on a temporary basis) without compromising our own survival. Like every other business, we have to cover the costs that it takes to be developed, maintained, and operated. We have worked tirelessly to bring down our infrastructure costs. Our employees, our biggest asset, have also helped by taking voluntary salary cuts in these difficult times.

Of the revenue that comes from each order, the bulk of it goes towards supporting the last mile delivery costs. The rest - which includes the commission fee that is paid to Zomato - is spent on
operational and marketing costs. This includes paying for staff salaries - riders and nonrider employees alike - maintenance costs (including fuel, vehicle, device, internet connectivity costs), payment gateway fees, marketing campaigns, and administrative costs such as rent, sales, legal, finance, logistics, and customer care support. 

Zomato is also actively continuing to work on new measures, such as a visibility programme over the Ramadan period for SMEs, and the ongoing Meals of Hope programme, which has now been expanded to provide meals for a wider range of those in need. 

Like most other businesses in the industry, we are committed to doing everything we can to ensure that we can continue to keep our customers, our delivery riders, and the rest of our staff safe and healthy, to keep our business running, and to continue playing an essential role in the wider ecosystem.

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