Zomato Long-Distance Fee: NRAI To Act On Restaurants’ Complaints

After a flood of complaints from restaurants about Zomato’s newly introduced long-distance service fee, the National Restaurant Association of India (NRAI) has decided to discuss the issue with the foodtech giant this month.

The restaurant industry body held initial discussions with Zomato parent Eternal’s CEO Deepinder Goyal on the issue and plans to hold a meeting with him this month to seek a resolution, a source at NRAI told Inc42.

“Zomato’s representatives were in a very aggressive way arm-twisting restauranters, which Deepinder has assured will not happen,” the source added.

In May this year, Zomato said it would levy a service charge of INR 15 on restaurants for deliveries at a distance between 4 to 6 km for orders above INR 150, and INR 25 to INR 35 for deliveries beyond 6 km, regardless of order value.

Restaurants have been up in arms against this move. While Zomato claims it caps the commission it charges from restaurants at 30% of the order value, restaurants allege that this cap is being breached after the levy of the new long-distance fee.

“In an email, Zomato said that it would charge INR 25 to INR 35 for long distance. Now, the commission for someone who is already paying 25% on an order of INR 250 and an additional INR 25 comes to 35%. Then they (Zomato) are saying it will be capped at 30%. So, it’s a very complicated, very confusing structure,” the source added. 

A quick service restaurant (QSR) owner said that the long-distance fee seems to be Zomato’s way of breaching the 30% commission cap.

“When Zomato wanted to grow the platform, they decided to increase the delivery radius, not us. So, it’s up to them now to figure out the solution. They can go ahead and charge the customer for this if they want,” the NRAI source added. 

Besides the long-distance fee, restaurants are also miffed with Zomato for trying to change the terms of its agreements with the former. Since May, Zomato has been reaching out to restaurants to sign a new agreement under its parent’s name Eternal.

However, restaurants alleged that Zomato has quietly inserted a new clause in the agreement under which it can penalise the former if they don’t maintain price parity across foodtech platforms.

A restaurant partner listed on Zomato said that most restaurants are refraining from signing the new agreement. “There seems to be nothing happening even if the NRAI is involved. Zomato is cornering everyone,” the restaurant partner said, adding that the NRAI should push for a lock-in clause for the commission charged as Zomato “keeps introducing new charges every month or two”.

A questionnaire sent to Zomato on the long-distance fee and other allegations by restaurants didn’t elicit any response till the time of publishing this story.

Eternal Looks To Shore Up Its Revenue 

The long-distance fee has emerged as the latest flashpoint between restaurants and Zomato. Restaurants have often been at loggerheads with foodtech platforms Zomato and its rival Swiggy over the commissions charged by them, marketing and advertising costs, and more.

Notably, the NRAI has been involved in a legal battle against the two foodtech giants since 2021 for their alleged anti-competitive practices. The restaurant body has also been at odds with Eternal and Swiggy over the food offerings of their quick commerce verticals Bistro and SNACC, respectively

As a result, restaurants have long been scouting for viable alternatives to the two platforms. While ONDC initially appeared promising, leadership churn and a decline in retail food orders have weakened its standing as a credible alternative. In a renewed effort, the NRAI has now joined hands with Rapido for food deliveries. 

For Eternal, the move to bring in more revenue from food deliveries comes as it looks to grow its top line amid the slowdown in the segment. Zomato’s revenue grew only 17.5% YoY to INR 2,409 Cr in Q4 FY25, compared to 122% YoY growth in Eternal’s quick commerce vertical Blinkit to INR 1,709 Cr during the quarter.

As per reports, Zomato is also experimenting with new monetisation models for restaurants, including new monthly plans for higher visibility.