Zomato Introduces 'Long Distance Service Fee' on Deliveries Beyond 4 km, Faces Pushback from Restaurants

New Delhi, May 22, 2025 — Food delivery platform Zomato has rolled out a new "long distance service fee" on orders that exceed a 4-kilometre delivery range, a move that has stirred unease among its restaurant partners.

Under the new pricing model, Zomato is charging customers Rs 15 for deliveries between 4–6 km for orders above Rs 150. For distances beyond 6 km, the fee increases to between Rs 25 and Rs 35, depending on the city — irrespective of the order value. The company has informed restaurant partners that the total service fee, including this new charge, will remain capped at 30%, not including additional charges.

Industry Pushback and Contract Revisions

Restaurant owners are voicing concern that the new service charge may effectively increase their commissions to as high as 45% in some cases. Several partners are considering formal protests, particularly in response to Zomato’s revised agreements that accompany the fee update.

According to sources, the updated contracts not only reflect the renaming of Zomato’s parent company to “Eternal,” but also introduce stringent clauses. These include penalties for failing to maintain price parity with other platforms and potential suspension for promoting direct ordering options outside the Zomato app.

“This change isn’t just about fees — it’s about control. They’re tying us down with restrictive clauses under the pretext of a name change,” said one restaurateur who received the new agreement.

Context Behind the Policy Shift

Zomato executives have defended the fee, linking it to the recently introduced distance-based restaurant ratings system. “Data shows that customer satisfaction drops with longer delivery distances. These changes are aimed at improving overall user experience,” said a company representative on condition of anonymity.

Notably, Zomato had previously expanded its delivery range from 4–5 km to up to 15 km during the COVID-19 pandemic, as many eateries shuttered. The current rollback, accompanied by distance-based fees and ratings, marks a strategic pivot.

Industry Reaction and Slowing Growth

The National Restaurant Association of India (NRAI) confirmed it has reached out to Zomato seeking clarification. “We’ve raised preliminary concerns and a more detailed discussion is scheduled later this week,” said an NRAI spokesperson.

The fee change comes amid slowing growth in the food delivery sector. Both Zomato and its main rival Swiggy recorded sub-20% year-on-year growth in the last two quarters. Zomato’s food delivery vertical remains its largest revenue generator, posting a Gross Order Value (GOV) of Rs 9,778 crore in the March quarter — a 16% rise year-on-year, but a 1% drop sequentially.

Adding to the pressure, Zomato recently shut down its 10-minute delivery services, indicating a consolidation of its business focus.

As tensions rise, all eyes are now on the upcoming discussions between NRAI and Zomato, which could shape the future dynamics between food delivery platforms and restaurant partners in India.