Zomato Ends Rain Fee Waiver for Gold Subscribers Amid Financial Strain

Zomato has discreetly declared that its Gold subscription users will now be required to pay a "rain fee". The restaurant aggregator has changed its subscription plan so that even its premium customers will now be charged more for deliveries conducted in adverse conditions.

 The majority of rapid commerce and foodtech platforms charge extra for deliveries. For its Gold customers, Zomato eliminated the INR 10-35 rain fee that it previously charged.

As of May 16, this perk will no longer be available. Additionally, each order on the meal delivery platform incurs a platform fee of INR 10. Zomato stated in an app notice that the fees will enable it to better reimburse its delivery partners in the event of rain.

Zomato Witnessing Steep Decline in its Business

Zomato's parent company, Eternal, announced a sharp 78% year-over-year (YoY) decline in net profit for the March quarter, coming in at INR 39 crore, as the firm's bottom line continued to be negatively impacted by losses from its rapid commerce division, Blinkit.

The expansion of Blinkit, which is now tied with food delivery in terms of gross order value (GOV), was the main driver of the Gurugram-based company's operating revenue, which increased 64% year over year to INR 5,833 crore.

The expansion of Blinkit was accompanied by a 75% sequential increase in operational losses to INR 178 crore. The company's established business of food delivery kept expanding gradually.

Strong discretionary spending and the growing impact of fast commerce on operations and demand were cited by CEO Deepinder Goyal as the reasons for the slow pace. According to Goyal, market share, however, stayed steady with the expectation of future increases.

Zomato Delisted 19000 Restaurants

According to Goyal, Zomato delisted almost 19,000 businesses in the March quarter, which had an effect on the volume of food delivery orders. Because they violated hygienic regulations, imitated well-known brands, or ran several identical menu listings to increase listing impressions, these restaurants were removed from Zomato.

The firm also shut down its homely meal service, Everyday, and its 15-minute food delivery service, Quick, as a sign of its growing reliance on food delivery for overall earnings.

The company does not see a clear "path to profitability" for these services "without compromising customer experience", according to CEO Deepinder Goyal's letter to shareholders.

After Zomato and Swiggy eliminated the rain surcharge waiver from their membership programmes, their stocks increased by 3.3% on 15 May. In Friday's trading, Swiggy's shares increased 3.3% to INR 326.8, while Zomato's shares increased 2% to reach a day's high of INR 247.2 on the BSE.

The action is consistent with the businesses' larger attempts to increase profitability, especially in light of the growing losses in its rapid commerce verticals.