A person at Zomato said the company is no longer using this rule about having the same prices everywhere. It had been in Zomato’s contracts for years and allowed them to fine restaurants if their in-house or self-delivery prices were lower than on the app. The fine could have been three times the difference in price, per order. Zomato could even use secret shoppers and make unannounced visits to restaurants to find places charging less. Though the company never actually enforced this rule, it’s now been removed and Zomato hasn’t said why.
What changed in Zomato’s contracts
The National Restaurant Association of India was against this rule, saying it stopped restaurants from setting their own prices. Sagar J. Daryani, the president of the Association, said that restaurants should be able to decide the price of their own products and that they are pleased to have a guarantee that Zomato won’t enforce the pricing rule anymore.
Five lawyers, plus a former antitrust official from India, who looked at the clause said it could harm competition and likely would have been investigated by regulators. Removing it lowers the chance of this happening.
Here are the key elements of the dropped clause:
– Fines for price gaps against Zomato-listed rates
– Penalty up to three times the difference
– Mystery shopping to check compliance
– Clause reportedly never enforced
Why the clause drew opposition and risk
In 2024, an antitrust investigation in India found Zomato and its competitor Swiggy had broken competition laws by giving some restaurants better deals. Both companies say they did nothing wrong. This increased attention from regulators is the context for Zomato removing the clause.
According to the original source of this information, Zomato’s app has 24 million customers and 300,000 restaurants listed. Because the app is so widely used, any change in policy is important for restaurants all over India.
Since demand for food delivery has greatly increased, Zomato’s stock price has more than doubled since 2021. The company is worth almost $26 billion, which shows that investors are confident the food delivery business will continue to grow.
Scale of Zomato and market context
India’s food service industry is worth $94 billion, with Domino’s, KFC and millions of local restaurants all competing. Mordor Intelligence estimates the market will reach $153 billion by 2031. How much things cost and the rules of the platforms are still very important in this competitive environment.
Removing this clause should improve the relationship between Zomato and the restaurants that use the app, and will address the concerns raised by those in the industry and by legal experts. It also makes a part of the contract that was causing a lot of disagreement simpler, even though it wasn’t actually being used.
The Zomato source didn’t say why the company changed the policy. People involved will be watching to see how this change affects how restaurants set prices both on and off the app, and if Zomato makes any other changes to its contracts.
What to watch next
This decision shows a change in how Zomato is doing things as the industry gets more competitive and receives more oversight from regulators. Restaurants now have more freedom, and customers will be watching to see how menu prices change on all platforms.
