Foodtech

Swiggy Revises Service Fee Structure for Non-Metro Restaurants: Report

• ByStartupStory     |    August 17, 2024

Swiggy, one of India’s leading food delivery platforms, is reportedly revising its service fee structure for restaurants outside metro cities, according to a report by The Economic Times. Previously, restaurants in Tier II cities and beyond were charged a service fee—or commission—based on the net order value. In contrast, restaurants in larger cities were charged based on the gross order value. Gross order value includes GST and packaging charges along with the net order value.

The shift to charging service fees based on gross order value means that restaurants will now pay Swiggy a slightly higher amount per transaction. The change is set to take effect from August 14, 2024.

“Effective 14 August (Wednesday), we shall be charging service fees on the gross value of each order as defined under our merchant terms. This change is being implemented across the platform for all our partners to ensure uniformity in our commission structure. This change will marginally increase the service fee payable to us,” Swiggy said in a letter to its restaurant partners accessed by the publication.

The new service fee structure is expected to impact around 1,000 restaurants, which represents just 0.2% of the 3.5 lakh restaurants listed on Swiggy’s platform. Swiggy clarified that this communication was intended for a small subset of partners and is part of routine discussions based on commercial arrangements tailored to the needs of individual restaurants.

“The recent communication from Swiggy was intended for a small subset of partners, basis discussions, and is fairly routine as different partners have commercial arrangements based on their needs. We have multiple channels available for partners to discuss all issues with us,” Swiggy stated.

Swiggy also reassured its restaurant partners that there are no broad changes to its commission structure. “There are no broad changes to Swiggy’s commission structure for restaurant partners. Partners will continue to operate under the existing terms of their agreements,” the company added.

Swiggy, led by CEO Sriharsha Majety, competes fiercely with Zomato in both the food delivery and quick commerce sectors. The company recently converted to a publicly listed entity in preparation for its initial public offering (IPO). In June, US-based asset management firm Baron Capital marked up the valuation of its stake in Swiggy to $109.16 million from an initial investment of $76.77 million. Swiggy’s current valuation stands at $15.1 billion, a significant increase from its previous valuation of $12.1 billion.

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