Unlocking Success: Understanding Zomato's Business Model and Revenue Strategies

Zomato is an Indian restaurant search, discovery, and online food delivery service. The food tech unicorn was founded by Deepinder Goyal and Pankaj Chaddah in 2008. Zomato is well known throughout the country and has also managed to venture into many international markets over the years. It currently operates in 10,000 cities in 24 countries, including the USA, India, Australia, Brazil, New Zealand, Singapore, the United States and in the Middle East Qatar.

Today, Zomato focuses on online food ordering, restaurant reservations, loyalty programs, consultant services, and a lot more. Zomato is also a food search engine that works the same as Google's search engine but explores a wide range of food and restaurants. The company has grown from a home project to one of the world's largest food aggregators. Zomato not only connects people to food in every context but also works closely with restaurants to enable a sustainable ecosystem.

With its unique and sustainable business and revenue model, as well as a well-defined organizational structure of Zomato, the company has managed to remain a top player in the market. Zomato has become successful because of factors such as affordability, easy accessibility, and assortment, which have built trust among people from the years of service. Zomato continues to work on finding innovative ways to serve its customers.

Zomato - History
Zomato - Business Model
Zomato - Revenue Model
Zomato - Value Proposition

Zomato - History

Zomato, which was earlier known as Foodiebay, was established in July 2008 by two IIT graduates, Deepinder Goyal and Pankaj Chaddah. The idea first struck Deepinder when his colleagues consistently had a demand for paper menu leaflets from different restaurants to order food. That is when he thought of converting the restaurants' paper menus to a digital app, which is far more accessible and easier to use.

In a matter of 9 months, the company grew to become the largest restaurant directory in Delhi and later expanded to other cities due to its success. By 2012, Zomato had started expanding internationally to countries like the UK, South Africa, Qatar, Sri Lanka, South Africa, New Zealand, Brazil, etc. During this course, the company had to change its name since its last four letters of ‘Foodiebay’ coincided with ‘eBay’; the company name was changed to Zomato in 2010 to avoid any legal issues.

In 2015, the company forayed into the food delivery business and went on to launch Gold in India, which was a subscription product under which subscribers would get access to complimentary food and drinks. Zomato also launched Hyperpure, which directly works with Farmers to improve the quality of food produce and supply fresh produce to restaurants. The company now views its business as a combination of three key large pillars: Delivery, Dining Out, and Sustainability.

Shareholding & Worth of Zomato Founders

Zomato is an Indian food delivery startup restaurant aggregator. Zomato primarily provides concrete information, menus, and user reviews of the restaurants. Along with this, Zomato also has food delivery options from partnered restaurants of the selected cities. The founders of Zomato are Deepinder…

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Zomato - Business Model

During the initial phase of the company, Zomato used to scan the menu of the restaurants and keep it on the site, and the menu was received by people. It still follows the same formula but has also added other services to its operation. The business model of Zomato is quite different from that of other food delivery such as Swiggy and Foodpanda. The key partners of Zomato are Uber and London & Partners, which could launch Zomato in the UK within the expected timeline.

While the company's key resource is its large database of restaurants across 10,000 cities in 24 different countries, the business model is based on providing local restaurant search services, collecting data on food menu contacts, and providing relevant information to their customers. The main channels for Zomato are mobile applications and its website. The target audience of the company is the users who try to find local restaurants of various cuisines and restaurants who want their name to reach a large number of people.

Zomato also caters to customers who prefer home delivery; it helps out database and market research of companies. At the same time, the online service is built with a mandatory rating mechanism. Zomato's business model has revolutionized the food industry by incorporating various restaurants and making it convenient for people to find restaurants, provide feedback, and food business industries by incorporating various listings and availability according to their choice of cuisine.

Zomato - Expansion & Impact

• Zomato employs over 5,000 individuals, spanning diverse roles and compensation levels.
• The monthly user base is 80 million users.
• Zomato continually expands its platform, adding a new restaurant every 30 seconds.
• Presence established in 24 countries.
• Available in multiple languages, including Turkish, Portuguese, Indonesian, English, Hindi, and some regional Indian languages.

Zomato - Revenue Model

Zomato, in itself, does not offer the products to customers, but the revenue model of Zomato is massive. Zomato is not just a food business; it is also in the advertising business. Zomato's business has two parts: one is the delivery business, and two is the advertising business. Today, Zomato has multiple revenue streams besides online ordering, which most consumers would be familiar with.

Restaurant Listings and Advertising

Zomato first started as a restaurant search and rating service. This brought in the advertising revenues from restaurants who joined the platform. They further extended this feature to food delivery and restaurant reservations; for this, Zomato charges commissions from restaurants that want to be placed on the feed. Advertising is Zomato's major source of revenue. The restaurants can promote their banner on the site in order to get better visibility and appeal to a large section of the audience via Zomato.

Food Delivery

Through the food delivery business, Zomato charges a commission to the restaurants based on orders. The company earns through restaurants that pay a commission for each delivery, which is then split among the delivery partners and the company. Zomato imposes a commission ranging from 20% to 25% on each order made at a specific restaurant, with potential variations in commission rates from 5% to 7% in certain regions. However, online food delivery only contributes a low percentage of income compared to other revenue streams because of the huge competition and the need to provide deep discounts.

Subscription Programs

The next major source of revenue for Zomato is a subscription fee. Restaurants pay a certain fee monthly; in return, Zomato offers them the analytical tools. Zomato has a huge number of databases that know what a customer wants to eat, where he/she wants to eat, and what the consumers are searching for, and it is given to restaurants, which helps them know about all this information through the cookies. It has a tool called Zomato Order which is given to restaurants, which tells them about consumers' interests. The restaurants then use this tool to flash their discount offers on food.

Zomato Success Story - How was Zomato Started | Tagline | Founders

There were days when we used to call different restaurants to place orders and again call up for corrections and directions and reservations. Then came in applications like Zomato who reversed the whole scenario and made it extremely simple for the consumers. Deepinder Goyal and Pankaj Chaddah found…

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Live Events

Zomato has forayed into the events space by partnering with restaurants and creating limited events. By which they made a sale through the price of the tickets. Zomato recently introduced Zomaland and entered the live event market in 2019. Zomato charges users an entry fee to attend Zomaland, where, besides food, they can witness live musical performances and other acts. Zomato also organized an entertainment carnival in 2018 in Delhi, Pune and Bengaluru, where more than 100 thousand people showed up.

White Label Access

The next source of revenue is app development. Zomato launched a service called Zomato Whitelabel, under which they give offers to restaurants to develop customized food delivery apps. It also works with cloud kitchens and restaurants for consultancy services. Zomato works with selected restaurant operators to help in identifying locations for expansions at a minimal fixed cost but with increased options for the user. It provides the requisite licenses and operational enablement for such restaurant partners.

Zomato Kitchens

Zomato also provides kitchen infrastructure services to select restaurant operators; it works with entrepreneurs to set up and operate Zomato kitchens under various other labels. This helps entrepreneurs fund restaurants in the right location with an investment of INR 35 lakhs. It also claims to offer returns in the range of INR 2 lakh to INR 4 lakh per month to investors and has so far completed more than 180 affiliated kitchens.

Zomato Gold

Zomato Gold is a premium subscription service offered by Zomato, providing members with exclusive dining benefits. Subscribers enjoy complimentary dishes or drinks at partner restaurants, making dining out a more rewarding experience. The service aims to enhance the dining lifestyle by offering special privileges and discounts at a wide range of top-rated eateries. Zomato Gold caters to food enthusiasts seeking unique culinary experiences while enjoying cost-effective perks. It has become a popular choice for those who appreciate both quality dining and savings.

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Zomato - Value Proposition

Zomato Revenue Breakdown

The total revenue generated by Zomato in FY 22 was INR 4192 crore whereas its turnover in FY 2023 was INR 7079 crore.

The business model of Zomato offers a variety of value to its customers, while Zomato's revenue model focus has been on creating something new and extra that the customers cannot get anywhere else. Zomato is a one-stop shop for dinners and offers a way for restaurants to differentiate themselves. Restaurants have an option to create differentiation by keeping the listing updated, responding to criticism positively, and also by being accountable for their action.

Zomato's business plan believes in creating value for its customers to sustain its business operations. The company endeavors to bridge the gap between customers and restaurants by providing efficient technology applications, which, as outlined in the business plan, has played a crucial role in reducing delivery times and enhancing overall service quality.

FAQs

What is Zomato?

Zomato is an online platform that offers food delivery and helps users discover restaurants with various dining options available.

What is the business model of Zomato?

Zomato operates on a commission-based model, charging restaurants a percentage fee for orders through its platform. Revenue is generated via subscription services, including Zomato Gold, which grants exclusive dining benefits.

What is the revenue of Zomato?

Zomato's revenue is ₹7079 Crores (2023).

How to contact Zomato for business?

You can contact Zomato through email to start a business with them.

What is Zomato for business apps?

The Zomato for Business app is for business owners. It is an interface with powerful features to get the most out of your Zomato listing.

Zomato operates in how many countries?

Zomato operates in 10,000 cities in 24 countries, including the USA, India, Australia, Brazil, New Zealand, Singapore, the United States, and in the Middle East Qatar.