Zomato revises delivery partner remuneration to accommodate fuel price hike

File photo of a Zomato delivery executive

Online food ordering platform Zomato on Thursday said it restructured its delivery partner remuneration to factor in the fuel price hike, a move that will increase their earnings by 7-8 per cent.

The company said the dramatic increase in fuel prices has led to a direct impact on the net earnings of Zomato delivery partners.

This also impacts the earnings of the partner in case of a long-distance order, given that the delivery partner is required to return back to the base-working localities to get another order assigned.

In a series of tweets, Zomato founder and Chief Executive Officer Deepinder Goyal said the company has increased the pay structure for its delivery partners by 7-8 per cent.

He added that the company is "not yet passing on this cost to our customers".

Over this past month, Zomato has taken multiple steps to ensure that this increase in the running costs for delivery partners does not impact their net take-home earnings, a statement said.

The company explained that its delivery partner travels between 100-120 km in a day, consuming 60-80 litres of fuel in a typical month. The recent increase in prices amounts to an additional monthly spend of Rs 600-800 (about 3 per cent of monthly income) from their take-home income.

Zomato has now introduced a revised pay structure for its delivery partners which will include an additional component of distance pay. This component will be applicable over and above the existing remuneration, and will automatically be pegged to adapt to any changes in fuel prices in the future.

Besides, Zomato has also introduced long-distance return pay where for every long-distance order completed, its delivery partner would either receive another order within 15 minutes that would bring them back closer to their base areas of working or they will receive an additional payout for travelling the extra distance.

"We understand how fuel price hikes can impact their earnings and have decided to factor in such developments in their pay structure. Both of these inclusions combined will increase their earnings by 7-8 per cent," Zomato COO- Food Delivery Mohit Sardana said.

He added that the Zomato has already implemented the new structure in about 40 cities and will be rolling it out in other cities in the coming week.

Zomato - which has recently raised USD 250 million (over Rs 1,800 crore) in funding from Tiger Global, Kora and others - has 1.5 lakh delivery partners in its fleet, and has been strengthening it further to meet the growing demand for food delivery in India.

The online food delivery segment has seen significant growth in the last few years with Zomato and Swiggy competing head-on to grab market share.

Zomato -- which competes aggressively with Prosus-backed Swiggy in the Indian market -- has previously stated that it plans to go for an initial public offering (IPO) in the first half of 2021.

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