Zomato, Swiggy orders now cost more when it rains—Here's why
What's the story
Zomato and Swiggy stocks rose up to 3.3% after the two food delivery giants removed the rain surcharge waiver from their subscription programs.
This means even Zomato Gold and Swiggy One subscribers will now have to pay an additional 'rain fee' during inclement weather.
The surcharge, which ranges between ₹15-35, is aimed at aiding delivery partners during bad weather.
Zomato shares gained 2% to hit a day's high of ₹247.2, while Swiggy shares jumped as much as 3.3% to ₹326.8.
Profitability focus
This move is part of broader profitability enhancement efforts
The decision to end the rain surcharge waiver is in line with Zomato and Swiggy's larger plan to increase profitability, particularly as losses in their quick commerce verticals keep widening.
Despite the losses, food delivery continues to be the main revenue driver for both companies.
In the March quarter, Zomato's food delivery vertical posted an adjusted EBITDA of ₹428 crore, a 55% YoY growth.
Swiggy's food delivery EBITDA was ₹212 crore, registering a fivefold jump year-on-year.
Operational challenges
Zomato's CEO addresses challenges and market stability
Eternal, Zomato's parent company, posted a 78% annual net profit decline in the March quarter at ₹39 crore owing to losses from its quick commerce arm Blinkit.
Zomato CEO Deepinder Goyal acknowledged food delivery's slow growth, citing weak discretionary spending and the growing impact of quick commerce on operations and demand.
He also revealed food delivery order volumes were impacted after Zomato delisted around 19,000 restaurants during the March quarter over hygiene standards violations or duplicate menu listings.
Service closures
Zomato shuts down unprofitable services
In keeping with its emphasis on food delivery for consolidated profits, Zomato also shut down its 15-minute food delivery service Quick and its homely meals offering Everyday.
Goyal told shareholders that the company saw no visible "path to profitability" for these services "without compromising customer experience."
The move further highlights Zomato's dedication to improving profitability as losses in other sectors continue to rise.