Zomato’s restaurant partners in Mumbai are complaining about reduced delivery radius, attributed to the shortage of delivery executives in the city. This coincides with the food delivery unicorn’s decision to increase the commission on the average order value.
Late on Friday, April 28, Pankaj Kumar*, a restaurant owner in Mumbai, tweeted that Zomato reduced his restaurant’s delivery radius to four kilometres after the former refused to comply with the food delivery unicorn’s demand to increase commission on the average order value. He further mentioned that the number of direct orders he has received over the last three days has shot up and customers have started reaching out to him directly on the restaurant’s website, powered by online ordering and digital payment app Uengage.
“Zomato has been trying to reach out to us for the last one and a half months to increase the commissions on average order value. When I refused, they gave an indication that our visibility could be impacted,” Kumar told YourStory.
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Bansi Kotecha, Co-founder of Mumbai-based cloud kitchen startup Kytchens, too complained that he has been facing a similar issue for over a week. “Delivery executives are not available and most of the time my restaurant is either shown as temporarily or permanently closed,” Kotecha says.
Kotecha, who manages seven cloud kitchens under his brand, also mentioned that the delivery radius on Zomato has been reduced from 5-7 km to 3-4 km. When he reached out to Zomato, the latter acknowledged the issue and agreed to raise it with higher officials in the company.
However, Kumar has a different story to share.
He had been sharing the discounts offered to Zomato users with the company. He revealed that 80% of the discounts were borne by him, while 20% was taken care of by Zomato. During the recent commission negotiations, when Kumar refused to increase commissions for Zomato, he told the foodtech company he would compensate by bearing 100% of the discount amount.
Three days ago, Kumar started getting calls from his regular customers complaining about not being able to place orders from his restaurant. After constant complaints, he reached out to Zomato to discuss the issue.
“They informed me that they have reduced the service radius to 4 km. When I asked for official communication (via email), they stopped responding to my WhatsApp texts. I am yet to receive any official email confirming the same,” Kumar told YourStory.
Earlier in March, YourStory reported that besides increasing commissions on food-delivery orders, Zomato was pushing restaurants to spend more on advertising on the platform. But does that really help?
Kumar, who earlier spent on Zomato to generate more ‘menu opens’ (a feature where Zomato promotes certain restaurants to ensure more users click and browse through their menu), did not find it fruitful.
For instance, if Kumar recorded 10,000 organic menu openings in a month and spent money for 2,000 menu openings the next month, the total openings would end up being the same. “Whenever I bought menu openings, my organic numbers would decrease,” he revealed.
Food delivery companies have been struggling to navigate the slowdown in business of late. Recently, Economic Times reported that Swiggy has started charging platform fees for its food delivery service. In an attempt to focus on profitability, Zomato has been reaching out to its partner restaurants to increase the commission on the average order value. This increase varies from restaurant to restaurant.
Shaurya Malwa, Co-founder of Vietnamese bistro Nho Saigon and mead taproom The Canary, did not face issues with delivery since his restaurants are more focused on dining in, but complained about Zomato’s increasing commission rates. “The negotiation (with Zomato) starts at 20%, gradually decreasing to 18, 12, 10%,” he said.
Kotecha has been asked to increase the commission by 25%, and he is still renegotiating the terms of the contract and commissions. Kumar, on the other hand, has been asked for a 2% increase in commission.
YourStory reached out to some more restaurant owners in Mumbai and most of them complained of the reduced delivery radius. But is Zomato actually punishing restaurants with reduced serviceability for not increasing commissions or is it just a coincidence?
“I am not very sure if the two are correlated. Every summer there is a dip in the supply of delivery executives (owing to the heat). That could be one of the reasons for the decreased delivery radius,” Kotecha says.
Another restaurant owner mentioned that last week’s shortage could be attributed to an increase in food orders due to Eid celebrations and staff going on leaves. They also mentioned having faced a similar issue on Swiggy as well. Kumar also noted that the orders per day for his restaurant have shot up in the last couple of days.
YourStory reached out to Zomato but did not get a comment.
*Name changed to protect the source’s identity.
