Small fee, big impact: Why Zomato and Swiggy are raising platform charges

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TL;DR

Zomato and Swiggy are raising platform fees, and even small increases could significantly boost profits. Analysts say this is one of the most effective ways to improve margins as the companies shift from growth to sustainable profitability.

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Food delivery platforms Zomato and Swiggy are increasing platform fees — a move that analysts say could materially improve their earnings outlook. According to a report, even modest hikes in these charges can drive meaningful gains in profitability, at a time when both companies are under pressure to demonstrate sustainable business models.

The timing reflects a broader shift in the food delivery sector. After years of prioritizing growth and discounts, platforms are now focusing on unit economics and margin expansion. Platform fees — typically small, fixed charges per order — offer a relatively low-friction way to increase revenue without directly altering menu prices or delivery charges.

A premier global equity research and brokerage firm estimates that a ₹2–₹3 increase in platform fees could boost EBITDA margins by 100–150 basis points. This is significant in a business where margins have historically been thin. “Incremental platform fee hikes are among the most efficient levers available to improve profitability,” the report notes, highlighting their outsized impact compared to other revenue streams.

The move also reflects changing consumer behavior. As food delivery becomes habitual, users appear less sensitive to small fee increases, especially when bundled with convenience and speed. This gives platforms pricing power that was previously difficult to exercise in a highly competitive market.

However, the strategy is not without risk. Repeated hikes could trigger consumer pushback or drive users toward alternatives, including direct restaurant ordering. Still, analysts believe the current pricing adjustments remain within acceptable thresholds.

For investors, the implications are clear: platform fee optimization could accelerate the path to sustained profitability. For consumers, it signals a gradual normalization of pricing in India’s food delivery market — where convenience is no longer subsidized as heavily as before.