Commercial LPG Crisis Takes Toll On Restaurants As Zomato Partner Base Falls

Commercial LPG shortages during the June quarter pushed several restaurants offline, contributing to Zomato's first-ever sequential decline in active restaurant partners.

Despite the decline in active restaurant partners, Zomato's food delivery business continued to expand during the quarter.

Source : PTI

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Key points generated by AI, verified by newsroom

• India's commercial LPG shortage caused Zomato's first restaurant partner decline.
• West Asia conflict disrupted the country's critical commercial LPG supply.
• Smaller eateries faced high costs, limited cooking gas supplies, forcing temporary closures.

India’s prolonged commercial LPG supply disruption has started to show its impact on the country’s food delivery ecosystem, with Zomato reporting the first sequential decline in its active restaurant partner base since it began disclosing the metric.

According to Eternal’s Q1 FY27 disclosures, the food delivery platform had an average of around 328,000 monthly active restaurant partners during the June quarter, compared with 344,000 in the preceding March quarter. This marked the first decline in the company’s disclosed history after the figure had risen consistently from 313,000 a year earlier.

Speaking to analysts, Eternal Chief Executive Officer Albinder Singh Dhindsa said the fall was linked to restaurants temporarily going offline during the quarter because of the commercial LPG shortage, rather than the company reducing the number of partners on its platform, reported The Financial Express.

LPG Shortage Disrupted Restaurant Operations

The disruption followed a sharp squeeze in commercial LPG supplies that began towards the end of March. The situation emerged after the closure of the Strait of Hormuz during the conflict in West Asia affected India's LPG imports.

At the same time, the government directed oil marketing companies to prioritise domestic LPG supplies for households, resulting in reduced availability of commercial cylinders used by restaurants. Supply restrictions continued through much of the June quarter before being eased gradually, with sector-specific restrictions reportedly lifted only towards the end of June.

As a result, many restaurants had to operate with limited cooking gas supplies for several weeks while also coping with higher fuel costs.

Commercial LPG prices also increased during the period. The cost of a 19-kg commercial cylinder, widely used by restaurants, rose significantly during the first half of 2026, with the steepest increase recorded in May, even after the most severe supply disruption had begun to ease.

Although prices were reduced in July for the first time this year, the decline offered only partial relief, with commercial LPG cylinders continuing to remain costlier than they were at the beginning of the year.

Smaller Eateries Faced The Biggest Challenge

Industry bodies had earlier stated that nearly one-fifth of restaurants were forced to scale back operations at the peak of the LPG shortage. They said the pressure was particularly severe for small and medium-sized eateries, which typically operate with limited financial flexibility and smaller gas reserves.

For many independent restaurants, the combination of reduced business activity during the shortage and persistently elevated fuel costs created significant operational challenges. Larger restaurant chains, by comparison, were considered better equipped to manage the disruption as they generally maintained larger gas inventories and, in some cases, shifted part of their cooking operations to electric alternatives.

Demand Remained Strong Despite Supply Constraints

Despite the decline in active restaurant partners, Zomato's food delivery business continued to expand during the quarter.

Eternal reported that the platform's net order value rose 20.1 per cent year-on-year to Rs 10,769 crore in the June quarter. Monthly transacting customers also increased to 27.2 million.

The simultaneous rise in customer demand and decline in restaurant participation indicates that the pressure during the quarter was concentrated on the supply side rather than reflecting weaker consumer demand. According to the company's management, the reduction in restaurant partners was primarily driven by outlets going offline during the commercial LPG disruption rather than any strategic rationalisation of the platform.