Food delivery company Zomato is piloting a feature to charge extra fees for quicker delivery at select locations in cities like Bengaluru and Mumbai, Moneycontrol has learnt.
At the time of writing this article, the feature was available across multiple restaurants and cuisines in these cities. However, it was not visible in other cities such as Delhi-NCR and Kolkata, indicating that the feature is on a limited rollout.
For instance, a user in Bengaluru was given the option to pay an additional Rs 29 to avail of an order in 16-21 minutes, while the expected time of arrival otherwise was shown as 21 minutes.
The fee is being levied on Zomato Gold subscribers as well, Moneycontrol noticed. We have sent queries to the company on this development and will update once we hear back.
This comes days after Zomato increased its platform fees by 25 percent to Rs 5 per order and paused its inter-city food delivery service called Intercity legends.
While Zomato is expected to announce its March quarter results in the next few weeks, its stock price has been surging on the back of rising profitability in its core business and the fast growth of its quick commerce arm, Blinkit.
In the December quarter, Zomato's food delivery business reported a 30 percent on-year increase in adjusted revenue, reaching Rs 2,025 crore on a consolidated basis. Blinkit doubled its revenue to Rs 644 crore during the period.
Zomato reported a consolidated net profit of Rs 138 crore against a net loss of Rs 347 crore in the year-ago period. Revenue surged to Rs 3,288 crore from Rs 1,948 crore in the previous year.
The company's stock is trading at over 100 times forward earnings, well above multiples for global peers including Uber, Deliveroo and Meituan.
Goldman Sachs Group Inc. expects profit forecasts to increase for Zomato’s “quick commerce” business Blinkit, analyst Manish Adukia wrote in a recent note. While “earlier investor conversations suggested skepticism around profitability of this business model,” concerns should ease as more results are reported, he said.
The rich valuations for Zomato looked justified given “significantly higher” projected revenue and profits for the company, according to ICICI Securities Ltd. analyst Abhisek Banerjee. The broker adds that the stock has basically moved in line with Doordash Inc. over the past six months amid improving sentiment on tech stocks around the world.
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