Zomato Pauses AI-Based Instant Refunds For Complaints After Partner Feedback

Zomato has temporarily paused its new AI-based refund-sharing system following criticism from restaurant partners. The feature, which automatically split the cost of customer refunds equally between Zomato and the restaurant, was introduced to speed up complaint resolutions. But many restaurant owners pushed back, arguing that they had no say in refund decisions under the new setup. The company has now said it will revise the policy based on partner feedback.

The refund policy, which rolled out in phases over recent weeks, aimed to build trust with customers by ensuring fast complaint resolution. Zomato believed this would help improve customer satisfaction and reduce churn. In an email to partners, spotted by Inc42, the company stated that unaddressed complaints lead to customer loss, which harms both Zomato and restaurants.

However, restaurant partners felt blindsided. Previously, Zomato would consult restaurants before issuing refunds. But under the new AI system, restaurants had no choice – they were automatically charged 50 per cent of any refund amount, regardless of who was at fault.

One cloud kitchen operator told Inc42, “If food arrives cold because of traffic or a delayed delivery partner, why should the restaurant pay? That’s not our fault.” Another restaurateur argued the policy was less about fairness and more about Zomato cutting its own costs.

After strong feedback from partners, Zomato hit pause on the program. In a follow-up email, the company said it would relaunch the policy after incorporating suggestions from restaurant owners.

This comes at a time when Zomato's parent company, Eternal, is facing multiple challenges. In Q4 FY25, Eternal’s profits dropped by 77.8 per cent year-on-year. The company has also shut down its ‘Everyday’ and ‘Quick’ delivery services and delisted nearly 19,000 restaurants from the platform.

Meanwhile, Zomato and its rival Swiggy are under scrutiny by the Competition Commission of India for alleged anti-competitive practices. The National Restaurant Association of India (NRAI) has also considered legal action against the platforms for their business models.

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