ZOMATO
ZOMATO : AN INDIAN STARTUP GROWING STRONGER AND
SUCCESSFUL
INTRODUCTION
Zomato is an Indian multinational
restaurant aggregator and food
delivery company founded by Pankaj
Chaddah and Deepinder Goyal in
2008. Zomato provides information,
menus and user-reviews of restaurants as
well as food delivery options from partner
restaurants in select cities.
Type of Company : Public, Unlisted
Industry : Online food ordering
Founded : July 2008; 12 years ago
Founder : Deepinder Goyal and Pankaj Chaddah
Headquarters : Gurgaon, Haryana, India
Area served : Worldwide
Key people : Deepinder Goyal (Founder&CEO), Pankaj Chaddah(Co-Founder),
Gaurav Gupta (COO)
Services : Food delivery
Revenue : Increase ₹2,486 crore (US$350 million) (2020)
Net income : Negative increase ₹−2,451 crore (US$−340 million) (2020)
Owner Info : Edge(18.6%), Uber(9.1%), Alipay Singapore(8.3%), Antfin
Singapore(8.2%)
Number of
employees : 5,000+
Website : https://www.zomato.com/bhopal
How was Zomato started?
The story of Zomato started in the office of Bain & Company in Delhi. Deepinder and Pankaj
worked at this company when they thought of this idea. They saw people standing in a queue
at lunchtime and give the order for their food when their turn came. From there they got an
idea of “Foodiebay” which became a prologue to Zomato.
At first, they started scanning all the menu items of the restaurant and listed them on their
intranet website Foodiebay.com. Later on, after seeing a huge surge in their traffic, they
decided to launch their website open to the public.
They began listing restaurants from Deli NCR on their portal and quickly expanded to other
cities like Kolkata and Mumbai. In November 2010 they changed the name Foodiebay to
Zomato.
Their idea germinated in the form of Foodiebay.com they put up scanned copies of the food
court menu onto their company’s private network. Everyone at the company soon started using
this service and there was a sudden surge in the website traffic.
By now this wasn’t just confined to the walls of their office. Everyone else around their vicinity
also started using these scanned copies. The first professional restaurant menu that Deepinder
and Pankaj uploaded onto their site was that of Hauz Khas in Delhi. After this, they started
expanding this idea into other metropolitan cities of the country including Kolkata, Mumbai,
and Bangalore.
And once a word was around, thousands of people started using their website to get to know
about the best restaurants around. It was this interest from people around that encourage both
Pankaj and Deepinder to think of going PAN India with this idea. This is when the idea of
renaming the site came into their minds. They wanted something with more of a punch and
something easier to remember and hence came the word ZOMATO in November 2010.
The founders then wanted to make life a little easier for their users and hence came the idea of
building a mobile application. With this growth in their business and their ideas arose a need
for funding.
The story behind the name Zomato
One of the reasons why they decided to change the name in late 2010 from Foodiebay
to Zomato was that they wanted a powerful brand name. After endless debate over several cups
of coffee, they came up with the name Zomato. Decided to keep the idea of food at the center
and choose a name that is short, easy to remember and makes people think of food. Zomato’s
got a zing to it and is originally a play on the word ‘tomato’. They also wanted to avoid any
confusion with “ebay”, they wanted to be sure that they weren’t taking any chances when
creating a brand they’d want to take international. Focusing on brand recall and communicating
what they stood for is of primary importance to any consumer internet company and to think
they have got most of it right.
Zomato - Startup Launch
When the founders launched this website, it wasn’t called Zomato back then, it was called
Foodiebay. And it initially started out in Delhi, then the services were extended to cities like
Mumbai and Kolkata. With the tremendous user base and growth rates that Foodiebay brought
in to the founders, they decided to modify it and take it international. And that’s when this
venture started being called Zomato, as we know of it today. It was in 2010 when Foodiebay
was officially rechristened as Zomato.
Zomato - Name, Tagline, and Logo
The founders changed Foodiebay to 'Zomato' to make it more prominent, simple to
memorize and primarily to eliminate the confusion with the website eBay. Zomato's tagline is
"Never have a bad meal".
Zomato - Business Model and Revenue Model
The main source of revenue for Zomato now is the advertisements channel that the portal offers
to display. This accounts for most of its revenue followed by the commissions that it charges
to the restaurants. It works on a commission business model.
Zomato - Hyperpure
Hyperpure by Zomato is changing the way restaurants work. It is Zomato’s B2B foodtech
vertical. Hyperpure allows restaurants to buy everything online from vegetables, fruits,
poultry, groceries, meats, seafood to dairy and beverages. It claims to be working directly with
farmers, mills, producers, and processors to source these products thus ensuring quality and
consistency.
It is an initiative by Zomato to provide fresh, hygienic, high quality ingredients and supplies.
Zomato at a glance
Currently, there are over 100 million Zomato users worldwide and people use the application
to get in touch with other foodies around the globe so that they can get the best of food in
whatever place possible. This being an added advantage, big restaurants from around the globe
post their advertisements on the Zomato app and this is basically how Zomato makes its money.
As of 2018, Zomato clocks 3 million orders on a monthly basis with 1.4 million restaurants
listed on its platform. It is available in 10,000 cities and 23 countries worldwide.
Another form of income for them is the sale of tickets for food festivals that they partner with
or sponsor. Not to forget the hardships that Deepinder Goyal and Pankaj have had to face in
their quest to the top of the mountain. Since the whole plan from the start of this business was
to be able to reach out to each street in every city to provide the best services to its users, there
have been multiple ups and downs. Zomato’s services in the cities of Kochi, Coimbatore,
Lucknow and Indore are currently suspended because their markets weren’t ready for this level
of business
These small downfalls have however never disheartened either Deepinder or Pankaj. Zomato
proudly boasts over 1.5 million restaurants on its database and they don’t seem like they want
to stop at this and one day hope to be at power with global players present across the world.
Zomato is also India’s first-ever global application.
Both Deepinder and Pankaj are leaving no stone unturned and this is the main reason as to why
Zomato continues to climb up the ladder of success.
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The biggest challenge faced while setting Zomato up and while taking it
overseas.
One of the biggest challenges faced by any fast-growing company is finding the right talent to
fuel growth. Today they have a team of about 650 people globally and are looking at tripling
that number in the near future. They keep innovating in the ways they hire and try to ensure
that people fit in well in terms of skill, culture and attitude. However, the challenge continues
to be finding the right people for the right job. Another major challenge has been to make sure
that they have covered each and every street in the cities they’re launching in. The information
needs to be relevant and comprehensive for users to keep coming back to use our product. Data
collection teams in each city hit the streets on a daily basis and collect data first hand. One
thing learned while going international is that there is no alternative to doing own market
research or data collection. They send out teams to scout a market before decide to launch there
and have their own teams working on gathering data to ensure accuracy and exhaustiveness. In
fact, it was encouraging for the team to see Pankaj, Zomato’s Co-Founder and COO, sweating
it out on the streets collecting data in the Dubai summer to launch Zomato UAE two weeks
after Ramadan.
Fundings raised by Zomato
This idea of Deepinder’s and Pankaj’s impressed Sanjeev Bikhchandani, the founder of
Naukri.com. In December of 2010, Sanjeev Bikhchandani provided Zomato with a funding of
1 million USD through his company Info Edge India and from here on, there was no looking
back.
The next round of funding that they got was again from Info Edge India and this time it was
3.5 million USD and again in the year 2013, Zomato received a staggering 10 million USD
from Info Edge India which made Info Edge India a holder of nearly 50% of the shares in the
start-up. Other investors for Zomato include Sequoia Capital, VY Capital, and Temasek. The
funds just kept coming in after this. By the end of 2018, it is estimated that Zomato would’ve
received a funding of more than 300 million USD. This funding then gave Zomato the idea of
expanding into more cities across India apart from Delhi, Bangalore, Kolkata, and Mumbai.
So, they moved into Hyderabad, Ahmedabad, Pune, Chennai, etc. In September 2012, Zomato
launched its services in Dubai, Sri Lanka, United Kingdom, South Africa, Turkey, and New
Zealand.
Investments by Zomato
Between 2010 and 2013, Zomato raised approximately US$16.7 million from Info Edge India,
giving Info Edge India a 57.9% stake in Zomato. In November 2013, it raised an
additional US$37 million from Sequoia Capital and Info Edge India.
In November 2014, Zomato completed another round of funding of US$60 million at a post-
money valuation of ~US$660 million. This round of funding was being led jointly by Info Edge
India and Vy Capital, with participation from Sequoia Capital.
While in April 2015, Info Edge India, Vy Capital and Sequoia Capital led another round of
funding for US$50 million. This was followed by another US$60 million funding led
by Temasek, a Singapore government-owned investment company, along with Vy Capital in
September.
In October 2018, Zomato raised $210 million from Alibaba's payment affiliate Ant Financial.
Ant Financial received an ownership stake of over 10% of the company as part of the round,
which valued Zomato at around $2 billion. Zomato had also raised an additional $150 million
also from Ant Financial earlier in 2018.
In September 2020, Zomato raised $62 million from Temasek, after previously committed
capitol from Ant Financial never came through.
In October 2020, as part of a Series J round of funding, Zomato raised $52 million from Kora,
a US-based Investment firm.
In February 2021, Zomato raised US$250 million from five investors, including Tiger Global
Management, at a valuation of US$5.4 billion.
Expansion of Zomato in India – 2021
With the launch in 17 new cities, Zomato has expanded its online ordering and food delivery
services to 213 cities in India, the online restaurant guide and food ordering firm said Monday.
The newly launched cities include Bulandshahr, Shahjahanpur, Solan, Palwal, Rewari,
Machilipatnam, Nandyal, Bhimavaram, Ongole, Srikakulam, Kadapa, Kottayam, Kollam,
Khanna, Gurdaspur, Ambur and Deoghar.
"Emerging cities are a major growth avenue for us and we expect them to constitute more than
50 per cent of our total order volume by the end of the year," Zomato Founder and CEO
Deepinder Goyal said.
As the company grows, it is also trying to create value for everyone in the ecosystem, he added.
"With 1.8 lakh delivery partners, we are creating jobs and skill-building opportunities for many
in India. We are developing Zomato Kitchen hubs in smaller cities in India to drive growth for
our restaurant partners," Goyal said.
How Does Zomato Work?
The main work of Zomato is to suggest local and nearby restaurants to users and receive orders
from them. Users can place orders from their favorite restaurant based on ratings and reviews
shared by previous customers.Perhaps this is why more and more startup owners are interested
in developing an app similar to Zomato. It offers comfort to the users and helps business owners
reach their local food business to new heights.Zomato’s working flow is simple,
Step 1: From the desiccated app solution or website, users can explore various restaurants and
order meals.
Step 2: Particular restaurant owners receive an order request and start preparing a meal.
Step 3: Once the food is ready to dispatch, it will be handed over to delivery providers.
Step 4: Delivery providers deliver the meal to the customer’s preferred location.
Step 5: From the given payment options, customers can make payments and share reviews
based on their experience.
OBJECTIVES OF ANALYSIS
Zomato started as a Foodiebay.com startup, a service provider app which was supposed to be
a restaurant directory which started in Delhi. Slowly Zomato expanded to other countries as
well as cities in India. Launching a food delivery app in a country where people were not very
used to takeouts, back then the culture of eating out was not popular in India. But an app which
gave the service of ordering food and delivering it to our door step became popular and became
a success.
The main objective behind this analysis is finding out how Zomato managed to survive in
the Indian market and how founders made it a huge success? What were their strategies?
How the company handled the pandemic covid-19? And comparing Zomato with one of
the top food delivery company Swiggy.
SUCCESS DOESN’T COMES WITH STEP 1.
PROBLEMS AND TOUGH TIMES ZOMATO FACED.
The most significant hurdle they faced was to find a way to cover all the areas in all the pivotal
cities so the people who hinge on them do not fail to miss the finest restaurants. This
complication was present in the initial stages and endures to be a hurdle.
The graph of Zomato, that looks excellent this far, did not stay the same post 2014. The year
2015 brought with it hardships of all kinds and it was then that the company had to make some
harsh decisions. After acquiring Urban spoon and rebranding it as its own, the venture failed
miserably, so much, that the company was forced to lay off 300 employees to curb its losses,
10% of which were from the US.
By 2016, things went out of hand to an extent that Zomato had to roll back its operations in
various countries like the US, UK, Brazil, Chile, Sri Lanka, Canada, Italy, Slovakia, and
Ireland. And when it finally resumed its operations in the said countries, Zomato had to work
with remote services.
There’s more lined up in their story. Zomato faced a major setback in the year 2017 when its
existence was put at stake with a cyber-attack. A hacker had breached into the records of 17
million users from the database of the company. Soon after, Zomato understood that the data
could only be accessed by the hacker and the breach was resolved after communicating with
the hacker. As it later turned out, the hacker was only trying to prove a point that there existed
security loopholes in the system.
Consequently, in the year 2019, a campaign called #logout surfaced where restaurants listed
on the platform called the company out for eating their profit margins via its features like
Infinity Dining and Zomato Gold, which provided heavy discounts to customers.
Covid-19 Impact
Online restaurant guide and food ordering platform Zomato, last year in may laid off around
13% of its workforce on account of the impact of covid-19 pandemic. The company had around
4,000 employees in different roles. Founder and CEO Deepinder Goyal said multiple aspects
of the company’s business have changed dramatically over the last couple of months and many
of these changes are expected to be permanent.
“While we continue to build a more focussed Zomato, we do not foresee having enough work
for all our employees. We owe all our colleagues a challenging work environment, but we
won’t be able to offer that to around 13 per cent of our workforce going forward,” he added.
Zomato faced several hurdles across cities while trying to deliver food. Online food delivery
orders dropped up to 70% during 1st wave of covid, as customers step back to place orders and
top restaurants were shut amid a lockdown.
Zomato being a food delivery company faced problems post lockdown too as customers were
afraid to order food because it could have been a potential carrier of virus. Even after
restaurants opened orders were less in number. Now that restaurants and Zomato is using
protective measures still if Zomato doesn’t innovates and markets properly it will face
downturn because of tough rivals like Swiggy which is getting popular.
ANALYSIS
Pankaj Chaddah and Deepinder Goyal are the master brains behind this great food delivery
application 'Zomato'. Zomato has been and is the most widely used ordering application that
attracted many customers with its innovatory strategies.
In the early 2000s, we weren’t accustomed to using our phones for purposes other than calling
and text messaging. In fact, most of us were oblivious to the opportunities that this magic box
could present! The end of the first decade of the century brought with it a revolution like no
other. And it was during those crucial years of transformation when the foundation of Zomato
was laid in India.
Zomato in India Market
Initially ‘Foodiebay’ only offered menu of the restaurants and review the properties online but
later Chaddah and Goyal introduced food ordering. After that it started becoming popular.
People working private jobs, bachelors, students, teenagers were the first target of the
company as there were many reasons people could use food delivery. Working people had to
wait in lines at restaurants during lunch which wasted time, people wanted to explore dishes
and cuisines fancy restaurants offered and Zomato gave them this service. Enjoying food
without actually visiting the restaurants. People no longer had to wait in lines or visit the place.
Zomato made food one tap away which was new to Indian market and attracted my people.
The Success Story of Zomato
Food is the prime mover for anyone across the globe. Of course, there are many people who
yearn for food and to taste a variety of cuisines that are available. The furtherance in the
technology has paved a way for the creation of many innovations and it is no less to mention
that food delivery app development is one among them.
In this extravagantly ornate system, it has become hard for every person to disburse time on
everything. Besides, cooking food after a busy day entails a lot of time and that is what that
has gained huge rage about these food delivering applications, where food will be delivered
directly at your doorsteps.
For all these ingenious thoughts, there are those unusual people who have a perfect
understanding of all the trends and so are these people Pankaj Chaddah and Deepinder Goyal.
They are the master brains behind this great food delivery application 'Zomato'. Zomato has
been and is the most widely used ordering application that attracted many customers with its
innovatory strategies.
The formula of Zomato’s Success
The founders of Zomato, Deepinder Goyal and Pankaj Chaddah consider that hiring the correct
persons is the primary reason for their company's startling growth and moreover, it was also
the greatest hurdle encountered by them while building Zomato. Now, they have a squad who
are vital in bricking their dream project.
Zomato’s business model in detail
• Restaurant Listings / Advertising
In its first avatar, Zomato was just a listing platform and a restaurant directory. This
brought in advertising revenues from restaurants who joined the platform. Extending
this further after the launch of food delivery and restaurant reservations, Zomato now
charges commissions from restaurants to be placed prominently on the feed.
Restaurants can pay to have their events or offers promoted as well as their overall
banner, which brings improved visibility and conversions from Zomato users.
• Food Delivery
To begin with, through its food delivery business, Zomato charges a commission to the
restaurants on the basis of orders. While users pay a delivery fee, Zomato earns through
restaurants who pay a commission for each delivery, which is then split among the
delivery partner and the company. Commissions from restaurants vary based on
whether Zomato is fulfilling the delivery or whether the restaurant uses its own riders.
This is said to contribute in a small way to the company’s total income due to huge
competition and need for deep discounts etc.
