Zomato is a well-known Indian brand that started an online search and delivery service in the food apps segment. The food-tech company ventured into several international markets across the UK, Brazil, New Zealand, Australia, Singapore, UAE, and more. Zomato's services are available in 24 countries across 10,000 cities, and as of 2019, the company has established many subsidiaries. Today, Zomato is one of the world's largest food delivery apps and connects restaurants to customers and sustainable mobile ecosystems. The app has been experiencing massive success with a unique business revenue model. Let’s check out the secret behind Zomato’s success.
Did You Know? One of the primary growth drivers of Zomato is its affordability, ease of use, and innovative ways to serve customers.
How did Zomato Start?
Zomato began as a food delivery service in 2008 and was founded by Pankaj Chaddah and Deepinder Goyal. The story started when Deepinder's colleagues wanted paper flyer menus of different restaurants to order food around the city. It was a great idea to create a digital app connecting restaurants to customers online and delivering meals to their doorstep. Fast forward to 2010, the company got funded by Angel Investments and went international in 2012 thanks to a UAE Launch.
The company Zomato formed several partnerships over the years and recently acquired UberEats to introduce contactless home deliveries during the COVID-19 pandemic. Pankaj is an IIT graduate who partnered with Deepinder to grow the company and came together when they launched Zomato. Chaddah has a Bachelor's degree in technology and worked for Bain and Company before he joined Zomato full-time as the co-founder.
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Zomato - Value Proposition
Zomato processes refunds, gives exclusive discount vouchers to such cases and addresses grievances immediately. Support is available 24X7, and the team overall is very responsive. The company offers different payment modes, such as digital wallets, debit/credit cards, net banking, etc. Currently, the app is onboarding pay-later merchants like GetSimpl and LazyPay, which means customers can eat now and pay later.
During the lockdown, the Zomato delivery team took strict measures to ensure customers stayed safe when placing online orders. The team delivered meals in states that were under lockdown when there were food shortages faced, including doing grocery deliveries and shopping for medicine.
The company introduced a priority delivery feature during the crisis and what's impressive is how quickly it adapted to different circumstances during the pandemic. Currently, the Zomato business model is giving strong competition to Swiggy and delivers food to millions all over India. The app is free to download and available on Android and iOS.
How Does Zomato Make Money?
Zomato's business model is essentially an app that lets customers find restaurants locally, including discovering partner restaurant menus, reviews left by other customers, remote food delivery services, and more. The Zomato business model service targets neighbourhood restaurants, outlets within the vicinity, and far away locations in the city.
The main ways in which the founders of Zomato make money through their business model include:
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Advertising
Zomato partners with restaurants to promote their products, services, and subscription plans online. It charges them commissions for placing ads directly on their feed. Restaurants also pay Zomato to host special events and promote their brands, thus giving them better visibility. This generates a lot of revenue from advertising since brands continue to rely on the platform's services when growing.
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Food Delivery
They charge commission fees to restaurants that use its food delivery network for all their deliveries. The fee is distributed between the business and suppliers. The commission charged can vary depending on whether Zomato uses its fleet of drivers to do those deliveries or if the restaurant chooses to use its delivery systems.
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Zomato Kitchens
The app offers exclusive kitchen infrastructure services to restaurant operators and supports entrepreneurs by financing them. It's one of the best ways they make high returns on their investments and promote their services.
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White label access
They provide consultancy services to cloud kitchens, startups, and smaller restaurants. It works with selected operators to identify expansion opportunities at minimum investment costs, with great user options. This allows the company to generate profits while helping its restaurant partners acquire the necessary licenses and start up.
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Zomato Gold and Subscription Services
Zomato Gold opened its exclusive loyalty programs and customer services through its Gold and premium-tier subscriptions. Restaurants get access to exclusive features on the app, such as live tracking, branded packaging, etc. Customers prefer to pay extra for these subscriptions since they get priority deliveries, access to special menus, discounts, and other benefits. The company makes a steady revenue stream from these plans and makes good money this way.
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Cost
The costs associated with using Zomato may include fees for using the platform to order food delivery or make restaurant reservations, as well as commissions or fees charged to restaurants for listing their information on the platform.
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What is the Cost of Zomato Business?
The cost of using Zomato for business depends on the specific services and features that a company wants to use. Zomato offers a variety of advertising and marketing options for restaurants, including sponsored listings, banner ads, and sponsored search results. Additionally, Zomato has a premium subscription service for restaurants called Zomato Gold, which can cost anywhere from a few hundred to several thousand dollars per year depending on the package. It is best to contact Zomato directly to get a more accurate estimate of the cost for your specific business needs.
How much profit does Zomato earns?
As a private company, Zomato's financial information is not publicly available. However, the company has reported that it has been incurring losses for quite some time and it's revenue is not enough to cover the operational costs. The company has been investing in expanding its operations and increasing its market share, which has led to increased expenses.
However, the company has been focusing on expanding its services and increasing its market share, which has led to increased expenses. It's worth to mention that Zomato has been focusing on expanding its services to other areas like delivery and subscription-based services which could be impacting its financials.
What is the market capital of Zomato?
As of 2021, Zomato's market capitalization is not publicly available, as it is a private company. However, in September 2020, the company had raised ₹25 Crore in a funding round and was valued at ₹300 Crore.
Also Read: What Are Best Food Franchise Options Available in India Under 2 Lakhs?
What is Zomato's Future?
The food and beverage industry reported that Zomato had introduced certain regional cuisines and tied up with many restaurant outlets across the nation during the COVID-19 pandemic, despite the economy facing a slump. Certain affluent residential areas were responsible for its quick recovery when operations halted.
Customers started to prefer home-delivered meals and not go outside to dine in restaurants. For now, the company focuses on providing the best quality customer service and ensuring that users enjoy great meals.
Conclusion
Every food and beverage industry entrepreneur has heard of Zomato. The company's success story is remarkable but didn't happen overnight. What's unique about the Zomato business model is how simple it was when it started to where it is today. As we speak, the company is adding new services to its food delivery plans, and entrepreneurs are catching on to its trends. Zomato's unique value proposition enables restaurateurs to differentiate from each other and deliver value to guests. Users can shortlist restaurants based on cuisines and find restaurants according to customized preferences.
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