What if you had unexpected guests at your house, and you had nothing to serve them?
Isn't it amazing that one of India's most successful startups provides solutions to your problems related to dining?
Yes, you heard it right!
Zomato is the most successful startup, which offers online food delivery services. It has a valuation of over $8 billion. It is an Indian multinational restaurant group and food company, headquartered in Gurugram.
In addition to its operations throughout India, it has also expanded internationally. Currently, it is operating in 10,000 cities in 25 countries including the USA, India, Australia, Singapore, Brazil, and New Zealand.
Among its services, Zomato offers information about restaurants, menus, reviews, and food delivery from its partners to consumers.
In 2008, Zomato was founded by IIT Delhi graduates Deepinder Goyal and Pankaj Chaddah.
Do you wonder how these two IIT graduates managed to start the biggest food delivery startup in the world?
Are you curious about Zomato business model, Revenue Model and How it earns money?
I can hear a "YES"!
So, Without further ado, let's get started!
Growth Story of Zomato
Zomato was founded in 2008 by Deepinder Goyal and Pankaj Chaddah in Delhi, India. It delivers food and allows users to discover nearby restaurants.
As of FY22, Zomato had generated $525M in revenue & went public with an IPO worth $1.1B.
Zomato has become the first Indian unicorn to list on the stock market. Almost 38 times the amount of subscriptions is received by the food-tech unicorn's mega public offering.
The company initially focused on providing information about restaurants and menus in various cities across India, and it quickly gained a large user base. It has since grown to become a global player, with a presence in more than 24 countries.
Here are some numbers and statistics that illustrate the company's success:
In 2010, Zomato launched its first mobile app, which allowed users to search for restaurants and access menus and user reviews on their smartphones. The company also started expanding internationally, first to the United Arab Emirates and then to other countries in the Middle East, Southeast Asia, and Europe.
In 2015, Zomato acquired Urban spoon, a popular restaurant discovery platform based in the United States, which helped the company expand its reach to the US market.
In 2017, Zomato launched its food delivery service, which allowed users to order food from restaurants and have it delivered to their homes. This was a significant milestone for the company as it helped it tap into the growing food delivery market.
Over the years, Zomato has continued to expand its services and presence in various countries around the world. It has also diversified its revenue streams by launching new products:
- Zomato Gold is a subscription-based service that offers discounts and perks at participating restaurants.
- Zomato Pro is a subscription-based service for restaurant professionals.
Today, Zomato is one of the leading food delivery and restaurant discovery platforms in the world, with a presence in over 10,000 cities across 24 countries. It has also raised over $1 billion in funding from investors, including Alibaba and Ant Financial.
In the financial year 2020, Zomato's revenue reached INR 2,485 crore (approximately $340 million), a significant increase from INR 1,457 crore (approximately $200 million) in the previous year.
As of 2021, Zomato has over 53 million monthly active users, making it one of the most popular food delivery apps in the world.
Zomato has a strong presence in the Indian market, where it has a 70% share of the food delivery market.
In 2020, Zomato acquired the UAE-based food delivery platform Talabat, further expanding its international reach.
Zomato has also diversified its business by launching Zomato Gold, a subscription service that offers exclusive discounts and perks at participating restaurants. As of 2021, the company has over 1.5 million Gold members.
Overall, Zomato's success can be attributed to its strong brand presence, large user bases, and innovative business strategies, such as its expansion into international markets and the launch of new products and services.
According to data from Statista, as of 2021, Zomato had more than 400 million monthly active users and was valued at over $5 billion. In terms of revenue, the company reported earning $394 million in the fiscal year 2020, with a net loss of $293 million.
Zomato has also been successful in raising significant funding from investors. In 2021, the company raised $250 million in a funding round led by Kora Management and Ant Financial, bringing its total funding to over $2 billion.
Zomato Business Model: How Does Zomato Work?
Zomato is a technology company that operates a restaurant search and discovery service. Through advertising and subscription fees, Zomato earns revenue from commissions on orders placed through its platform.
It also offers various subscription plans to customers, such as the Zomato Gold Membership program, which offers discounts and other perks at participating restaurants. Here's how it works:
- Customers can browse through the Zomato app or website to find restaurants in their area. They can filter results by specific cuisines, locations, price ranges, and ratings.
- Once they've found a restaurant they'd like to order from, customers can view the menu and place an order for delivery or pickup.
- Zomato partners with local restaurants to offer delivery services, and it also has its own fleet of delivery partners. When an order is placed, the restaurant prepares the food and hands it off to a delivery partner, who then brings it to the customer's location.
- Customers can pay for their order through the Zomato app or website using a credit card or other online payment methods.
Overall, Zomato's business model is based on connecting customers with local restaurants and facilitating the ordering and delivery process.
It aims to make it easy for people to discover and order food from their favorite restaurants and to help restaurants reach a wider audience and generate more business.
Here is an infographic explaining the business model of Zomato:
The Zomato business model canvas is a visual tool that helps businesses understand and analyze their business model. It consists of nine key elements, which are:
Value Proposition: This refers to the unique value that Zomato offers to its customers, such as a wide selection of restaurants and an easy-to-use platform for ordering food online.
Customer Segments: Zomato's customer segments include individuals who use the platform to order food for delivery or pickup, and restaurants that use the platform to reach new customers and manage orders.
Channels: Zomato uses a variety of channels to reach and serve its customers, including its website and mobile app, social media platforms, and partnerships with delivery services.
Customer Relationships: Zomato aims to build long-term relationships with its customers by offering a convenient and seamless experience, as well as personalized recommendations and loyalty programs.
Revenue Streams: Zomato generates revenue through a combination of commission fees from restaurants, advertising, and subscription fees for its premium services.
Key Resources: Zomato's key resources include its technology platform, data analytics capabilities, and partnerships with restaurants and delivery companies.
Key Partners: Zomato partners with restaurants, delivery companies, and payment providers to offer a comprehensive food delivery service.
Key Activities: Zomato's key activities include marketing and promotion, technology development, and order fulfillment.
Key Partnerships: Zomato's key partnerships include those with restaurants, delivery companies, and payment providers.
Zomato Revenue Model: How does Zomato Makes Money?
The modern world is obsessed with good food, ease, and activities that are time-saving.
In addition, Zomato is providing its customers with an enjoyable experience. Therefore, their revenue graph always shows upward trends.
Various activities are carried out on this platform in order to generate revenue. These include:
Advertising: Zomato allows restaurants to advertise on its platform and reach potential customers through sponsored listings and banner ads.
Food delivery: Zomato allows users to order food from local restaurants and has it delivered to their homes or offices. The company charges a commission on each order to the restaurant and also adds a delivery fee to the customer's order.
Commission fees: Zomato charges restaurants a commission fee for each order placed through the platform. Depending on the restaurant's popularity, Zomato charges a commission.
For each order placed, Zomato charges a commission of 20-25%. The commission rate varies from 5-7% depending on the location.
Subscription fees: Zomato offers a subscription service called Zomato Gold, which allows users to access exclusive discounts and offers at participating restaurants.
Event ticket sales: Zomato also sells tickets to food-related events, such as food festivals and cooking classes.
Zomaland recently organized it's event on 17th December in Delhi.
The two-day event featured over 200 food and beverage brands, as well as live music and entertainment. Zomaland is being billed as Delhi's biggest food festival, and it is certain to be a hit with foodies from all over the city.
It takes place in 7 cities which are Pune, Mumbai, Ahmedabad, New Delhi, Bengaluru, Hyderabad, and Kolkata.
In-app purchases: Zomato offers users the option to purchase additional features, such as the ability to make reservations or order food directly from the app.
Partnerships and sponsorships: Zomato has partnerships with various companies and organizations, and may generate revenue through sponsorships or other types of promotional arrangements.
Overall, Zomato's revenue is generated through a combination of advertising, commission fees, subscriptions, event ticket sales, in-app purchases, and partnerships.
The company's unique selling proposition (USP) is its comprehensive database of restaurants, which allows users to easily discover and compare different dining options in their area. Zomato also has a strong focus on user experience and customer service, which has helped it build a loyal customer base.
Zomato also has a cloud kitchen business, which involves setting up and operating virtual restaurants that only offer delivery.
They have a strong presence in India and several other countries and continues to expand its operations globally.
Zomato Marketing Strategy
Having started as a small food review website, specifically for foodies, Zomato has become a multinational giant serving over 65 million people each month with its marketing strategy.
In FY22, Zomato generated $525M in revenue & went public with an IPO worth $1.1B.
In order to drive sales, Zomato relies on a mixed marketing strategy. Using innovative ideas, offering affordable products and services, and acquiring other businesses, has achieved the goal.
The food-tasting app Zomato was quick to venture overseas shortly after launching. As of 2012, Zomato was established in the UK, Dubai, the Philippines, Qatar, and a number of other countries.
Zomato's subtle but effective marketing strategy contributed to the shift toward online food delivery.
Through social media, email marketing, and text messaging, its content appeals to the audience's interests and needs without being overbearing.
Let's learn about the popular Zomato marketing strategies :
1. Content marketing:
Zomato creates unique, trending, and engaging content, and they distribute it well.
Content distribution is as important as creating personalized and interesting content, and brands rarely overlook this.
In addition to creating fresh content, Zomato also repurposes it across different distribution channels and tweaks it to ensure it is suitable for each.
During Covid, Zomato expanded to offer groceries as well as Zomato Market. In addition, the content strategy in covid times has increased trust, reliability, and brand recognition.
2. Social Media Strategy:
Meme marketing is successfully employed by Zomato. Zomato has millions of followers on Facebook, YouTube, Twitter, and Instagram, which drives traffic.
It's most of the audience falls in the age category of 18–35 years, therefore their social media strategies are engaging, funny, and witty.
3. A unique approach on Twitter:
Zomato’s Twitter profile is full of hilarious content, which is mainly focused on brand offerings. They have maintained a relationship-based food delivery system with their customers. The Twitter post shows that the company understands the food cravings of its customers well.
4. SEO Strategy:
SEO is the most essential marketing channel of Zomato. The goal of SEO is to create content that is focused on users but optimized for search engines at the same time.
Over 61% of users visited the Zomato website via Google search.
According to the keywords it targets, it creates URLs that rank on search engines. It also targets very specific keywords called “near me” type keywords.
It's very tough to identify the SEO strategy of Zomato as they have blocked all SEO tools.
Also, Zomato gets backlinks from approx. 12 lakh unique and high-authority domains.
5. Email Marketing:
Their email marketing strategy is interactive and engaging.
In addition to meme-marketing, Zomato connects customers with real-life examples and movies as well.
6. Visual Advertising:
Zomato uses simple sentences, bright colors and appealing visuals. They are powerful in content. For visual advertising, they use billboards, and video adverts.
7. Paid Advertising Campaigns:
Paid marketing contributes to keep good engagement on mobile app and website. In addition to its organic results, the brand runs Google Ads to target specific customers, which helps it target a wide range of keywords, which would otherwise be impossible.
8. Fun-filled engagement: Every strategy and content of Zomato is engaging and funny. Notifications, billboards, and social media posts are always connecting and use Hindi along with the English language.
A few days back, Zomato and Blinkit put up two billboards in collaboration in proximity which has captured the hearts of people.
According to different weather conditions, and timings, they send push notifications.
9. Keyword Targeted: More than 900k keywords are optimized for SEO purposes in Zomato's marketing plan.
They have included minute details about every restaurant in their huge directory of restaurants. A detailed description of the dish, its price, availability, and best-selling time is provided. A great deal of effort has gone into targeting keywords.
10. Pages on the website: There are over 54 million pages on the Zomato website since it allows restaurants to create and manage their own data. Furthermore, the high number of pages increases the SEO of the site.
Zomato Funding and Valuation
The market capitalization of Zomato as of January 2023 is $5.82 billion. In terms of market cap, Zomato ranks, 2075th in the world.
In total, Zomato has raised $2.6B in 22 rounds. Their latest funding was raised on Dec 1, 2022, from a Secondary round.
Zomato is registered under the ticker BOM:ZOMATO. Their stock opened with ₹116.00 in its Jul 23, 2021 IPO.
Tiger Global, Kora, and Fidelity led a $250 million funding round for Zomato.
After raising $660 million in December, the food delivery app's primary financing was valued at $3.9 billion post-money. Zomato’s shareholders contributed-
- Kora - $115 million
- Fidelity - $55 million
- Tiger Global - $50 million
- Bow Wave - $20 million
- Dragoneer Investment - $10 million
An IPO worth $1.1B was completed by Zomato in FY22, generating $525M in revenue.
In the last week, Zomato's stock price has been fluctuating between 55-60.
Zomato is funded by 29 investors. It has a history of 14 investments, with Camas Investments and Franklin Templeton Investments being their most recent. The most recent investment of Zomato was on Apr 17, 2022, when UrbanPiper raised $24M.
Zomato has a wide range of investments, with their most recent being in the food tech industry.
Zomato's investment in UrbanPiper helps the company to keep up with the latest technology and trends in the food industry. This will allow Zomato to continue to provide the best possible service to its customers.
As of 2019, Zomato had extended its services to 24 countries. Zomato has acquired 15 companies, the most recent being blinkit, a restaurant table-booking service, on March 16, 2022, for $725 million. A few of its acquisitions are:
- Uber Eats - India
- Sparse Labs
- NexTable, Inc.
- MapleGraph Solutions Private Limited
Few investors have sold stakes in Zomato in recent years or exited the company.
- Tiger Global- 5.11% to 2.77%
- Sequoia Capital India- 6.41% to 4.4%
- Uber, Moore, Delivery Hero, D91
These acquisitions and investments have helped Zomato to solidify its position as one of the leading food delivery and restaurant discovery platforms in India and other markets around the world.
Conclusion: The Way Ahead
Zomato is the world’s largest restaurant discovery service. They help consumers make informed food choices by providing rich information on over 900,000 restaurants in over 24 countries.
Zomato is obviously doing something right as they continue to see great success with its latest business strategy. With 1.5 million orders per day, it's evident that they're on the right track.
The reason for this obvious success is clear – Zomato understands how important it is to stay in touch with customer needs and trends.
With all these well-planned and strategic approaches, there is no doubt of the future multifold expansion of the company. Practically, Zomato is sitting on a data goldmine, they can even launch their own food chain to make billions of dollars of profits.
And this can turn Zomato into a super profitable business in no time.
Frequently asked questions (FAQs)
1. Who Owns Zomato?
Zomato is an Indian online food delivery and restaurant discovery service founded in 2008 by Deepinder Goyal and Pankaj Chaddah. As of 2021, Goyal is the CEO of the company.
2. When Zomato started?
Zomato is a restaurant search and discovery service that was founded in 2008 by Deepinder Goyal and Pankaj Chaddah in Delhi, India.
The company initially focused on providing information about restaurants in the Delhi-National Capital Region, and has since expanded to operate in over 10,000 cities in India and over 50 countries around the world.
Zomato offers a range of services, including restaurant listings, reviews, ratings, and food delivery.
3. How does Zomato makes money?
Zomato Revenue Model consists of:
Commission fees: Zomato charges restaurants a commission fee for each order placed through its platform. This is the primary source of revenue for the company.
Advertising: Zomato also earns revenue by selling advertising space on its platform to businesses. These ads may be displayed to users as they browse through restaurant listings or as sponsored content in search results.
Subscription fees: Zomato offers a subscription service called Zomato Gold, which gives users access to exclusive discounts and offers at participating restaurants. The company charges a fee for this service.
Online ordering: In some markets, Zomato allows users to place orders for food delivery directly through its platform. The company charges a fee for this service, which is paid by the user.
Other services: In addition to its core food delivery and restaurant discovery business, Zomato also offers a range of other services, such as event ticketing and food delivery insurance, which generate additional revenue for the company.
4. Which business model does Zomato follow?
The Zomato business model is based on offering local restaurant search and delivery services as well as collecting data on food menus, contacts, and providing relevant information to customers.