Zomato Hits Pause on 50:50 Refund Policy with Restaurants

Zomato, a prominent player in the foodtech industry, has suspended a policy that asked restaurant partners to split 50% of refund costs, just weeks after it was introduced. The new policy has been gradually implemented by Zomato over the last few months.

Zomato stated in the emails it issued to its restaurant partners that both the firm and the restaurants would contribute 50% to the client refunds. In the email, Zomato said that unresolved issues cause a slow but continuous drop in client retention, which negatively impacts the restaurant's and Zomato's capacity to generate demand.

Resolving a complaint is much less expensive than losing a customer. It also emphasised that the new refund policy is about more than just cost sharing; it's about fostering trust, guaranteeing equity, and creating a more robust and sustainable food distribution system.

Policy will be Relaunched After Necessary Alterations

A few weeks after the new policy went into effect, the corporation stopped it. Zomato recently emailed some of its restaurant partners to let them know that the programme will be relaunched after taking into account the input they received.

In an email, Zomato announced that it had put the programme on hold for the time being and would restart it after taking partner input into consideration. A media outlet was informed by a number of restaurant owners that Zomato is attempting to "cut its costs" with the new policy.

A restaurant owner pointed out a policy flaw in a media report by asking why the business should foot the bill if the food is cold when the delivery partner gets there due to traffic or the delivery executive taking a longer route.

Another restaurateur stated that although it was previously optional, Zomato appears to be forcing eateries to pay for refunds in order to reduce its costs. The proprietor clarified that following Zomato's refund initiative, the restaurant partners were previously given the choice to accept or deny a claim.

If the restaurant denied the allegation, Zomato was responsible for the full amount. However, the restaurant partners would have no say once the new policy was implemented.

It is important to remember that Zomato often starts reimbursements for "high-value, power" customers—those who place large orders and rarely complain about them.

Massive Decline in Zomato’s Business

The development coincides with a slowing in the expansion of Eternal's meal delivery service. Due to slow growth in food delivery and rising rapid commerce prices, Eternal's consolidated profit after tax (PAT) fell 77.8% to INR 39 Cr in Q4 FY25 from INR 175 Cr in the same period last year.

In the March quarter, Zomato's adjusted EBITDA was INR 428 Cr, up 2% sequentially and 56% year-over-year (YoY). To INR 2,409 Cr, adjusted revenue increased 17% year over year and decreased 0.2% quarter over quarter (QoQ).

 In addition, Zomato announced that it would discontinue its Quick and Everyday services and delisted 19,000 eateries in Q4. In a letter to the company's shareholders, Eternal CEO Deepinder Goyal acknowledged that the growth in meal delivery is still below projections.

Additionally, Zomato and restaurants are already at odds over the new regulation. The National Restaurant Association of India (NRAI), a restaurant association, stated earlier this year that it was considering bringing legal action against Swiggy and Zomato for their respective quick meal delivery apps, Snacc and Bistro.