zomato business plan ppt

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

PV Vyshnavi , Apoorva Bajj

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.

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.

How is Zomato Profitable when Swiggy and Dunzo are Burning Money

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.

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.

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.

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.

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Zomato Business Model | How does Zomato make money?

Company: Zomato Founder & CEO:  Steve Easterbrook Year founded: 2008 Headquarter:  Gurgaon, Haryana, India. Number of Employees (2019):  5000+ Type: Private Monthly Active Users (2019) : 70Million+ Valuation (Oct 2020): $2 Billion Annual Revenue (FY2020): $394 Million Loss |Net income (FY12020): -$293 Million

Products & Services:  Restaurant Directory | Online food guide | Food delivery Competitors: Yelp | Zagat | Open Table | Grub Hub | Swiggy | Uber eats | Qraved | Chope | Redfoodie | DoorDash | EatStreet | Restorando | MenuEgypt | Forkly | Delivery Hero

Table of Contents

Introduction to Zomato

Zomato has proven to be a phenomenal foodie platform, providing a convenient way to review restaurants, feedbacks, listings in (now) over 24 different countries. The platform is even capable of giving insightful analytics for the restaurant to help route their business to exponential growth.

Zomato is a restaurant-café search and discovery service platform, idealized in 2008 by Deepinder Goyal and Pankaj Chaddah . The brand was originally known as Foodiebay till November 2010.

The platform is ideal for both food lovers and restaurant owners. Users can also view pictures and menus for restaurants that do not have a website of their own.

Any restaurant owner who wishes to list a menu can, regardless if the restaurant has an online presence or not. The platform allows restaurant owners to increase their restaurant business visibility through listing advertisements and special promotional menus through the Zomato platform.

The Zomato platform is designed with smart search engine filters, meaning that it will search for only relevant restaurants as per to the searched relevant keyword.

Zomato acts as the key-bridge to providing relevant information on potential restaurants for users that searches with keywords or keyphrases relevant to the restaurant.

Zomato has grown rapidly from a small food review website to a multinational giant serving over 70 million people every month, both in the food and entertainment business. It is now gearing up for a public listing in the first half of 2021 and focused on raising over $146.5 million in a Series J financing round. In October 2020, it raised close to $52 million from Kora Investments and $5.1 million from Pacific Horizon Investment Trust, which had previously invested $5 million in March 2020. Zomato has already raised over $270 million in 2020 alone from major investors like Tiger Global, Temasek, and Ant Financial. [ 1 ]

The following is a compilation of Zomato Business Model Canvas .

Business Model Canvas: Zomato

1. customer segments.

Zomato has three customer segments:

Users – Zomato platform is explicitly designed for users to find and locate restaurants in a range of various cuisines. Zomato is perfectly geared for customers who prefer home delivery .

Local Businesses – The platform further stands significant for restaurants who want to promote the business or restaurant name to help reach the target audience . Zomato was built on market and trend research. Marriot International is one of the latest global hotel chains to join Zomato’s long list of customers. Zomato will work alongside Marriott on Wheels to enhance its corporate outdoor catering services and home delivery services in partnership with close to 30 hotels across all major cities in India. [ 2 ]

Reviewers (content contributors) – these are active reviewers, who add reviews and photos of local restaurants or businesses on Zomato platform. 

2. Value Propositions

Zomato is an exceptional platform for diners to review a wide range of different restaurants in their serving area. At the same time, it allows restaurant owners to differentiate themselves in the market place, even if they are the owners of more than one restaurant.

 Zomato further serves as a bridge between restaurant owners and hungry customers.

Zomato provides a comprehensive pricing model for the food delivery services , providing insightful details to the overall cost, duration, etc. of the delivery order.

Additionally, Zomato provides membership and loyalty program to build loyal customer base. For example, Zomato Gold membership and Piggy Bank loyalty program ensure that customers get additional value for their money. In 2020, Zomato moved all Gold members to the newly unveiled Zomato Pro. Users on Zomato Pro get a variety of features and upgrades like instant food delivery services and a money-back guarantee from newly registered hotels, bars, and lounges. [ 3 ]

Super excited to introduce Zomato Piggybank – https://t.co/I4xs5NHHwd pic.twitter.com/h1Hrxhqy6t — Deepinder Goyal (@deepigoyal) July 10, 2018

3. Key Partners

• Zomato has built an alliance with Uber Taxi for users to book a ride to the restaurant that they plan to dine at.
• The clever innovation eliminates users from dealing with two different apps. Especially when customers are trying to review, pick, and find the best place to dine, all in a smooth, simple way.

London & Partners

Zomato has built an alliance with London & Partners to help expand their virtual foodie presence in the European regions. London & Partners were responsible for aiding Zomato with:

• Finding an office location in London.
• Assistance with the staff hiring process
• Insightful advice on salaries
• Management recruitment
• Work placements
• Market research
• Advising on accountants and legal procedures, policy, and compliance.

Other business partners – These are electronic payment companies like Visa, PayPal .

Seasonal partners – Zomato partners with companies from time to time, particularly during the holidays. For instance, Zomato partnered with the Singapore Tourism Board to stage an elaborate digital event called Zomaland in June 2020. The virtual event enables the tourism organization to engage Indian consumers successfully while maintaining social distance. [ 4 ]

4. Key Activities

The business model is incomplete without analyzing the key activities of a company. Although Zomato’s primary purpose was to make restaurant hunting exceptionally easy and convenient, it also has various key activities which are listed as follows.

• Manage Network effects : As aforementioned, Zomato provides local restaurant search service to the users, currently operating in 24 countries. It provides details and reviews of restaurants. The information includes data about the food items, contact info, and address of the restaurants.
• Manage and Utilize Advertising : Zomato has an enormous user database which it uses for advertisement. The company makes the most of its solid presence and brand popularity by posting advertisements for various restaurants, generating a considerable amount of revenue.
• Drive Customer Experience Initiatives : Zomato initiates a lot of activities to improve its customer’s experience and keep updating its features as per the trends. In April 2020, it expanded its online food aggregator platform to include contactless dinin g features that allow diners to scan a QR code on the table to check the menu, then place orders and make payments using the app. The feature reduces interaction and contact between staff and diners when they visit restaurants. [ 5 ]
• Enhancing Brand Image : Zomato maintains its brand image by providing a sense of community for foodies and facilitating people the exact information about “What to Eat and Where to Eat.”
• Expand and Diversify their service offer:
• Online food delivery and subscription : Zomato was not a delivery service at the beginning, but eventually it launched it’s delivery and subscription feature as well. However, the section does not generate much revenue for the company as it faces fierce competition from Swiggy .
• Consultancy to Restaurant Owners : Zomato has a massive database of users, revealing many significant facts about their behaviors, likes, and dislikes. Zomato offers data consultancy services to many eateries and new restaurants in town.  
• Zomato Whitelabel: Zomato also provides service for restaurants to develop their own app through a platform known as plug and play.

5. Key Resources

Zomato has a massive database on restaurants, café, and similar business places across cities in 24 countries. Zomato aims to build new alliances and capture the global market.

High-Quality Database – Massive Database of restaurants and businesses

Employees – that are working diligently to extend its outreach, apart from the current 24 countries.

Zomato Platform

A community of content contributors or reviewers

Zomato brand reputation

Funding Partners – Zomato were able to raise millions through funding channels. Top investors include Ant Financial, Sequoia Capital, Temasek Holdings, Info Edge, and Vy Capital. In the recent past, other investors have joined Zomato, including Asia Growth Fund, Steadview Capital, Luxor Capital Partners, Lugard Road Capital, and ASP India LP. The investors are part of a  $525 million financing round, which is estimated to reach around $600 million. Currently, India’s company regulator values Zomato at $3.4 billion. Zomato is also set to raise more capital once it debuts for the 2021 IPO. It seeks to issue 34,873 class J7 CCPS shares to the investors at Rs 300,235 per share to raise Rs 1,047 crore ($141 million). [ 6 ]

Cloud and Zomato Kitchens – It provides kitchen infrastructure services by partnering with entrepreneurs to set up and operate Zomato Kitchens in selected restaurants under different labels. Entrepreneurs first have to find restaurants in the right location that they wish to fund, and then Zomato invests INR 35 Lakh or more. Zomato has already set up over 180 affiliate kitchens with its partners and eliminated exclusivity for cloud kitchens, which allows its restaurants to list on rival platforms such as Swiggy . [ 7 ]

6. Channels

Zomato offers its platform accessible through multiple access points:

Application (smartphone or tablet)

Zomato Official Website

Food Porn (Zomato has also created a site specifically for the food porn industry, providing an exclusive photo of exotic foods from around the world)

7. Customer Relations

Convenient Self Servicing : Zomato provides its customers independence to make the right choice, providing all the options and information which leads to comfortable self-servicing.

Up to Date Ratings and Reviews : Users enjoy Zomato’s transparency in their ratings and reviews, providing authentic information to users about the quality and service of restaurants. It started testing a new feature in October 2020 that allows consumers to post their reviews of restaurants , photos of their favorite foods, and a short story on the app for their friends and food bloggers to see directly from the app’s feed. [ 8 ]

Customer Engagement Activities : Zomato initiates customer engaging activities like offering coupons and tickets.

Active Communication Channel and Customer Support : Zomato has a reliable customer support service platform and maintains effective communication with its customers.

8. Zomato’s Cost

The total cost of Zomato’s FY18 was $80 M, which has increased to $500 M in FY 19 . An immense shift indicating how much the business has expanded.

The annual cost of $ 500M is utilized in the following operations.

• Platform development

Zomato invests graciously on improving its online presence, brand value by enhancing its online portal, customer service, and enhanced marketing operations.

• Branding and advertisement cost

Zomato launches a lot of various marketing campaign top maintain its popularity, which of course requires a great deal of investments. In 2019, it introduced the Zomato Premier League with a diversified kitty of TV ads and offers like predicting the winners in particular matches to get further discounts. ZPL’s gamification and offers appealed to the foodies watching cricket and attracted over 4 million participants within the first three weeks of the IPL in 2019. [ 9 ]

• Credit card processing fees

Zomato pays for its credit card transactions operations as well.

• Legal and accounting fees

Zomato pays other legal fines and payments for acquiring different licensees and taxes.

• Office maintenance cost 

Zomato operates from 24 countries including Portugal, India, United Arab Emirates, Qatar, Turkey, Indonesia. The company bears office maintenance cost for all of its offices.

• Employee’s salary

Zomato has over 5000 employees overall with different pay scales. 

9. Zomato’s Revenue

Zomato’s revenue similarly increased in FY19 compared to FY18.  In FY19 , Zomato’s revenue is $206 M – a total of three times more than the FY18 (which was $68 M )

How does Zomato make money?

Now let’s see how Zomato makes money based on a few high-level categories:

The delivery service, dine out membership, advertisements, promotional deals, exclusive offers that Zomato offers are the primary revenue generators for Zomato.

• The commission from delivery transactions constitutes about 75 % of the total revenue for FY 19.
• Zomato delivery services earned $38M in FY18, while in FY19, the revenue from the services increased, generating almost $155M , indicating 4 times more growth than the last year.

Dining Out  

• Zomato has partnered with restaurants to provide complimentary food and drinks to its subscribed members. The membership is called as Zomato’s Gold membership program . The annual membership fee is Rs   1,199 , and the program has over 1 million active subscribers. All subscribers under the Gold program were upgraded on August 1, 2020, to its new subscription package called Zomato Pro that offers to dine out privileges and discounts on the best restaurants. As of July 2020, 50% more partner restaurants had already signed up on Zomato Pro than on Zomato Gold. [ 10 ]
• The dining out section also saw an increment in sales with $30 M in FY18, while $49M in FY19.

Ticket Sales

• Zomato also sells tickets for several of events and shows. Zomato earns a commission through these types of sales and deals. Zomaland is one of the most successful live events organized by Zomato, which attracted over 100,000 visitors when it debuted in 2018 across Delhi, Bengaluru, and Mumbai. In 2019, it expanded to over 10 cities and enticed major partners like the Singapore Tourism Board. In 2018 and 2019, Zomato increased its revenue by charging attendees entry fees but was forced to live stream virtual Zomaland@home carnival in June 2020 on its app and the Zomaland pages on Facebook, Instagram, TikTok, and Helo to avoid gatherings and interactions. [ 11 ]

Consultation Services

• Zomato also offers consultation services and data analytics services for clients, prospects.

Sustainability:

• In the past few years, Zomato has shifted its focus on being a transactional company instead of relying a hundred percent on its advertising revenue. The company is trying to balance its both features the delivery and the dine out which has generated a revenue of $2M in the sustainability department. In the early years, more than half of its revenues came from ad sales that grew from $38 million in 2017 to $46 million in 2018, representing 62% of its total revenues in FY18. Even though Zomato continues to charge commissions for listing and promoting restaurants on its app’s feed, it stopped considering ad sales as a standalone revenue stream. In 2020, Zomato considered reducing its commission charges by 5% after it received a request from the hotel association. [ 12 ]

Final Thought

Zomato happens to be one of the most successful platforms that was originally launched in India. Today it’s serving platforms and operations have extended to over 21+ countries and are determined to continue to grow its customer base.

Zomato is working on many new business endeavors. However, this doesn’t limit Zomato from further implementation and improvement to their existing platforms and software applications. 

 References & more information

• Bhallah, T. (2020, Nov 6). Zomato to raise $146 mn as it preps for IPO in 2021 . Live Mint
• PTI (2020, June 12). Marriott enters into a pact with Zomato to expand the home delivery service . Deccan Herald
• Flick (2020, July 5). Zomato Pro: New Features like ‘Money-Back Guarantee’ & More . Flick-on-Click
• Editor (2020, June 4). Singapore Tourism Board Partners with Zomato to bring a virtual weekend festival experience . Indian Newz
• Tandon, S. (2020, April 18). Zomato plans contactless dining post-covid-19 . Live Mint
• Rai, S. (2020, September 11). With food delivery bouncing back, Zomato plans IPO next year . The Print
• Shrivastava, A. (2020, Feb 05). Zomato lets go of exclusivity for cloud kitchens . Economic Times
• Harsh, U. (2020, Oct 20). Zomato pilots feature to post stories and reviews through the feed . Entrackr
• Pragati, B. (2020, April 20). A guide to the winning Zomato marketing strategy . Talk Walker
• Nandi, T. (2020, June 30). Zomato Gold is now Zomato Pro: Here are the extra benefits for customers . Live Mint
• Dash, S. (2020, June 2). Zomato’s popular carnival Zomaland goes online as large gatherings remain banned due to Covid19 . Business Insider
• FE Bureau (2020, October 14). Hotel association writes to Swiggy, Zomato, to cut commission charges on takeaway services . Financial Express

 Tell us what you think? Did you find this article interesting? Share your thoughts and experiences in the comments section below.

A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

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Decoding the Business Model of Zomato: A 360-Degree Analysis

The food delivery industry has experienced a substantial transformation in the current fast-paced global landscape. Zomato, a leading entity in this industry, has significantly transformed how we place food orders and reimagined the entire dining experience. This article aims to thoroughly analyse the business model of Zomato, covering various aspects from multiple perspectives. By comprehensively analysing its diverse elements, we can better comprehend Zomato’s operational strategies and sustained success within the fiercely competitive food delivery industry.

1. Online Platform for Restaurants and Customers: The Core of Zomato’s Business Model

The core of Zomato’s business model is centred on offering a robust online platform that serves as an intermediary between restaurants and customers, facilitating seamless connections and transactions. Zomato is a digital marketplace enabling restaurants to present their menus, high-quality images, comprehensive descriptions, and customer reviews. The interface of this platform is designed to be user-friendly and provide a seamless connection with customers. It offers a wide range of dining choices to enhance their experience. The business model of Zomato is based on establishing relationships with restaurants to generate commissions. These commissions are calculated as a percentage of the total bill, incentivising restaurants to list their services on the platform.

2. Revenue Generation through Commissions: Zomato’s Primary Income Source

The primary source of revenue for Zomato is its commission-based business model. The commission is applied when customers place orders through Zomato. This mutually advantageous arrangement incentivises restaurants to collaborate with Zomato, allowing them to tap into a broader customer demographic and experience a boost in sales. The business model of Zomato is based on a commission-based revenue model, which has demonstrated significant success.

3. Food Delivery Services: Expanding the Revenue Horizon

The expansion of Zomato into the food delivery sector is a crucial element of its overall business strategy. Customers can now conveniently place food orders from their preferred restaurants through the Zomato platform. In addition to the earnings from commissions, Zomato levies a delivery fee for its services. Implementing Zomato Pro enhances the value proposition by providing exclusive discounts to subscribers, resulting in a mutually beneficial arrangement for both Zomato and its users.

4. Advertising and Promotions: Driving Visibility and Additional Income

Advertising and promotional services play a crucial role in increasing the visibility of Zomato and driving its revenue growth. Restaurants can choose sponsored listings, banners, and featured content to differentiate themselves in a highly competitive marketplace. Zomato generates additional revenue by providing promotional tools, increasing restaurants’ visibility to a broader customer base. This aspect of the business model of Zomato exemplifies its function as a proficient marketing platform.

5. Data Monetization: Leveraging Information for Profit

The extensive data repository of Zomato, which encompasses customer preferences, ordering habits, and restaurant performance metrics, possesses significant value. The company utilises data analytics to provide actionable insights to its restaurant partners. Zomato uses this data to support restaurants in optimising their menus, pricing, and marketing strategies, ultimately improving their overall performance. Data monetisation is a strategic component of the business model of Zomato, serving as a significant source of revenue and driving the success of its partner restaurants.

6. Diversification into Grocery Delivery: Expanding the Revenue Portfolio

Zomato expanded its range of services in response to evolving consumer preferences by venturing into the grocery delivery sector. By utilising its pre-existing logistics network and technology infrastructure, Zomato now offers customers the convenient ability to place grocery orders from nearby stores. Implementing strategic diversification not only allows Zomato to enter the expanding online grocery market but also introduces an additional source of revenue. This enhances the resilience and adaptability of the business model of Zomato.

7. Cloud Kitchen Initiatives: A Strategic Culinary Move

The business model of Zomato encompasses the operation of cloud kitchens, commonly known as dark kitchens or virtual kitchens. These specialised kitchens are dedicated solely to online food delivery and do not offer any dine-in options. Zomato strategically invests in and manages its cloud kitchens through collaborative partnerships with renowned restaurant brands. This initiative guarantees a dependable food supply and enables Zomato to explore various culinary concepts, strengthening its competitive advantage in the food delivery industry.

8. Expansion into Event and Dining Reservations

Zomato’s growth strategy encompasses expanding into event reservations and enhancing dining experiences. Customers can conveniently reserve tables at their preferred restaurants using the Zomato application, a comprehensive platform catering to all their dining requirements. Zomato implements a fee structure for restaurants utilising its reservation service, enhancing its revenue model.

9. International Expansion and Global Partnerships

The business model of Zomato extends beyond a singular market. The company has successfully expanded its operations on a global scale by establishing strategic partnerships with various international restaurants and chains. This expansion enables Zomato to access a broader range of customers and generate supplementary revenue by offering global cuisine options to its users.

This analysis comprehensively examines Zomato’s business model, delving into its fundamental elements, revenue streams, and strategic diversifications with meticulous attention to detail. The business model of Zomato is a highly efficient system that facilitates connections between restaurants and customers, all while optimising multiple revenue streams. Zomato has successfully implemented various strategies to monetise its platform, including commission-based earnings, food delivery services, advertising, data-driven insights, diversification into grocery delivery, event reservations, expansion into international markets, and establishing global partnerships.

Zomato has demonstrated remarkable adaptability and a proactive approach to diversification, which have played a pivotal role in its sustained growth amidst the ever-evolving food delivery industry. The company’s expansion into various sectors and global markets demonstrates its dedication to maintaining a leading position in the industry. In summary, Zomato’s versatile business model drives its expansion and empowers numerous restaurants and food businesses to flourish in the era of digitalisation. The adaptability, innovation, and robust business model of Zomato position the company to maintain its leading role in the food delivery industry for the foreseeable future.

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Zomato business model

Zomato was launched in 2010, from the rebranding of Foodiebay, a food directory website. Like any other startup in india, food tech unicorn Zomato too had its ups and downs. In 2015 , during the massive layoffs and losses, there were big question marks on the company’s survival in the market. But, Zomato defied the odds and came out even stronger to dominate the food delivery industry in India. 

Pankaj Chaddah and Deepinder Goyal , are the brains behind Zomato . They were alumni of IIT Delhi and co-workers at Bains & Co in New Delhi. In their office, they recognized how people had to wait for a long time to have a glimpse of the menu card. And, this led to the birth of Foodiebay. 

In Foodiebay, the menu soft copies were uploaded so that people can check out the menu on their smartphone and order quickly with no wait. The concept became an instant hit, their website traffic numbers increased significantly so they decided to expand their services to Kolkata and Mumbai. The number of people using the Foodiebay soared with each passing fiscal year. Later, the founders of Foodiebay wanted to make the venture even bigger, thus leading to Zomato, a simpler name to remember. They didn’t want people to confuse Foodiebay and eBay. In 2010, Zmato was officially unveiled. 

As the users of the Zomato website grew, Founders with the aim to enhance ease-of-use decided to launch a dedicated Zomato food ordering App.

However, this innovation needed a lot of funding to kick start. So they started doing series of funding :-

• In 2010, Info edge invested US$ 1 million into the Zomato
• Then the next year, they gave whopping funds of US$3.5 million and US $10 million the following year
• In 2014, Sequoia Capital joined in and poured 50 million+ for the next three years
• Later investment firms like Temasek Holdings, Vy Capital, Baillie Gifford, and multiple other firms joined in.

So far in the last three funding rounds Zomato has been able to raise 100 million + funding each time and was valued at $5.4 billion .

The formula of success of Zomato according to their founders is hiring the right people with passion and dedication to take the company forward. In fact, they believe this is the biggest hurdle, and now they are proud of their team. 

During the earlier days of Zomato, the founders did not focus much on earning revenue, and only when the website gained huge popularity, they recognized the prospects of earning. When they had 62.5 million sign-ups, restaurants started contacting them to place their advertisement through which Zomato made a good revenue. Restaurants were eager to integrate Zomato’s online food ordering sytem into their ecosystem and multiply their sales. Later, Zomato enhanced the customer experience via cashless transactions. 

Today, Zomato is operational in 24 countries, across 10,000 cities. The revenue of the company is ₹2,486 crore as of 2020. 

Zomato’s IPO success is promising for other startups in India. The company’s stock market debit day ended at 66% at a value of $13.3B. The concept of Zomato is similar to US-based DASH that lets companies book restaurant tables and order food from restaurants. 

“The response from institutional investors has been strong. This suggests that the overall float available for trading might be limited leading to a higher GMP. We had to issue a *Subscribe with Caution* rating for it’s IPO, keeping in mind the long investment horizon required for high-growth companies that are currently loss-making,” said Rajnath Yadav, Research Analyst at Choice Broking.

What Does Zomato Bring to the Table?

Since the launch of Zomato, it has created a buzz in tier-1, tier-2, and tier-3 cities throughout India. Zomato operates on the QAAA model, which stands for Quality, Accessibility, Affordability, and Assortment to both their partners and customers. Let’s understand what makes Zomato so distinctive from its market rivals.

Improving Food Quality: Yes, Zomato has invested big time in improving the food quality by funding restaurants through their Hyper Pure campaign. This funding helps restaurants to maintain the highest standards with the use of high-grade ingredients, fresh veggies, and a hygienic kitchen.  Zomato gives food hygiene ratings to each restaurant thus allowing customers to order accordingly.

Increased Accessibility for Customers: With each quarter, Zomato is expanding to new cities across India, covering the suburbs along with the metro cities. Nowadays, they offer additional features such as corporate catering and table reservations. And, their feeding India initiative is a campaign that works towards creating a better India when no one sleeps on an empty stomach. 

Maintaining Affordability: Affordability has been the major aspect that Zomato has never overlooked. They offer amazing deals and discounts on food ordering. Their gold package subscription was an instant hit, allowing customers to save a considerable amount on regular food orders. They have always strived in the direction of ensuring affordability without compromising much on their profits.

Aid in the Assortment: Zomato presents its customers with the opportunity to taste dishes of diverse cuisines with no geographical borders. They provide the most detailed information on their App so that their customers can make well-informed decisions. 

How Zomato Earns Money?

Ever since Zomato’s inception it has been churning out good revenues but was never able to make hefty profit. Hence the reason why people think Zomato doesn’t earn much and they expect it to be the same in the future.

But only few are able to realize what Zomato brings to the table and apart from it’s cheap food delivery services , it has diversified it’s revenue into multiple streams and today we’re gonna talk about that:-

Restaurant Advertising

Restaurants are the backbone of Zomato. As of now, there are about 131,233 active restaurants added each month on Zomato and every restaurant on Zomato prefers to be on the top of searches whenever a customer searches for a relevenat dish in their locations. So, the food delivery App Zomato offers restaurant advertisements.

It typically charges 40 to 50 Rs per click on their platform. Also there is a zero restaurant listing fee on Zomato. Hence for F&B business owners all they can do is sign for free and to boost their order numbers, they pay upfront for the advertisments.

Food Delivery

Approx 75% of Zomato’s revenue in the fiscal year 2019 was through food delivery commissions. Zomato has currently developed it’s own ecosystem for online food ordering where restaurants have to use Zomato’s own associate riders to delivery their orders and there is no way around. In the end, restaurants are charged for delivery commissions, which you can completely avoid if you use NinjaOS as your online ordering system.

Anyways, Zomato’s revenue was $155M in 2020 which was approx four times what they made last time. 

Subscription Programmes

The Gold subscription that aims at providing premium services to their customers is amongst the biggest revenue streams of Zomato. If a customer has a gold subscription, they get complimentary beverages and food. 

In the year 2020, the revenue from the gold subscription model was about $49 million, and $30 million. The unlimited pack gold subscription charge in India is Rs 1800 for 365 days.  

Live Events

Another way Zomato makes good earnings is by hosting live events with the objective to promote their partner restaurant. These restaurants get great exposure & visibility via Zomato events, and they have to pay a hefty price for it. 

The Zoomland event of Zomato is quite popular, it charges its users a nominal fee to enjoy food and live musical performances. 

Zomato’s White Label Access

Recently, Zomato has an unrivalled Whitelabel Platform that is a suite of technologies that allow restaurants to operate their business over the Internet. The key feature of this platform is allowing restaurants to have their custom-branded native Apps to better engage with their customers. 

The Whitelabel platform works on the subscription model of $200 per month. 

Zomato Kitchens

Zomato also belives in cloud kitchen’s concept where they provide infrastructural services to certain restaurant partners. They fund food entrepreneurs to set up a restaurant in the right location with an investment of Rs 35 Lakhs. 

It offers a return of 2 to 4 lakhs to the inventors. Presently, Zomato is having 180 affiliate kitchens. Zomato is always in search of passionate entrepreneurs for setting up Zomato kitchens. 

Zomato Hyper pure

Zomato under the Hyper pure program collaborates directly with the farmers to enhance the quality of raw ingredients supplied to the restaurants at the most competitive rates. The hyperpure venture was launched in August 2018, and within a few months, the concept rapidly grew in numbers. 

By November, Zomato was supplying raw ingredients to 350 restaurants across Bangalore, and approx 1,000 restaurants as of now. The significant increase in demand led to encouraging Zmato to considerably invest in large scale operations to meet the growing raw material requirements. 

Recently, Zomato bought a warehouse of 6,000 sq. ft in Bangalore, having a capacity of 4,000 metric tons. They are in the process of setting up an even bigger warehouse in Delhi, and then expanding to nine other cities by the end of the year, and eventually exploring the international markets. 

Multiple Business Partnerships

Zomato has a key partnership with Uber Taxi. The App has a feature that allows its users to book a ride to the Zomato restaurant they want to dine at. 

Zomato is in collaboration with London & Partners to boost their online presence in the European regions. Their other big business partnerships include PayPal and Visa. 

What is Zomato’s Future?

In the  Zomato business model case study, let’s talk about Zomato’s future. Zomato’s IPO is re-imagining the future of food in India. 

Their IPO was the biggest hit in India in 2021. They raised approx  Rs 8,250 crore via an initial share sale. 

When the COVID-19 pandemic and swerve restrictions have hard-hit most of the Indian sectors, Zomato stayed strong during these challenging times. 

They brought in more funds to grow their business. Their delivery boys worked tirelessly to deliver orders to even the containment zones throughout the country. This allowed for foodies to enjoy their favourite food from the comfort of their homes even when there is lockdown everywhere. 

“ We need to continue to invest in three core areas for the growth of our business which includes a) customer and user acquisition, b) delivery infrastructure, and c) technology infrastructure. We have made these investments in the past, and we expect these to continue to be critical for the gro wth of our business in the future,” Zomato said. 

The next couple of years looks good for Zomato, with coronavirus is here to stay, even when the global vaccination drive is happening at a rapid pace.  

The future plans of Zomato include setting up hyperpure in some of the major cities throughout the country . They will be expanding their food delivery services to about 500 cities across India. 

They also have big plans of expanding in foreign countries. Drone delivery is the new buzz in the food App delivery, especially internationally, and in coming years, it is expected that it will come to India. Zomato will also be adding new cities to their Zomato gold subscription. The Zomato infinity dining expansion is the next big thing to happen. 

In the end, we hoped that you learned the right lesson for this Zomato’s business model assement and case study, that if you have an idea, determination and success will come hunting you. 

Do you have anything to add to this, why Zomato has been so successful in India, even when people here are used to ordering delivery from restaurants near them? Share it with us in the comment section below, our readers would love to hear your thoughts.

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Zomato Business Model Explained [Case Study]

Supti Nandi

Updated on: April 6, 2024

Hungry? Grab your favorite meal through Zomato!

Well, the above line is not just a statement but an emotion of today’s generation. With the evolution of the digital world, having a meal delivered from the restaurant of your choice is a like a cakewalk. Now, you do not need to travel to the restaurant or stand in a long queue anymore to eat delicious food. All thanks to the food delivery apps for making this process super easy for you. One of the popular on-demand food delivery companies is “Zomato.” Do you know that Zomato has expanded a lot within 14 years of its existence?

The Zomato app will not only deliver your favorite food to your doorstep but will also help you to explore the food of new restaurants with honest customer reviews and by offering appealing discounts on various dishes. Have you ever wondered how it earns huge profits despite offering exclusive discounts and food at affordable prices? The secret lies in its business model . This article explains the “ Business Model of Zomato. ”

Zomato’s business model comprises of three essential components, namely-

Working Strategy

Marketing strategy, revenue sources.

The way how the business works determine the success rate of the company. You are already aware of the fact that the major function of Zomato is to recommend and take orders from the neighboring eateries and to deliver them to your doorstep. Before jumping into the core of the working strategy of Zomato, let us quickly sum up the steps involved in this food delivery app-

• Step 1 : Open the Zomato app and browse the meals to order them from whichever restaurant you like. Also, you need to give the location of receiving the food.
• Step 2 : The owner of the restaurant will receive an order request upon which they initiate the preparation of the dish.
• Step 3 : After the dish is prepared, the restaurant owners hand over the food to the deliveryman.
• Step 4 : The deliveryman delivers the meal to your location. In the meantime, you can also track the location of your order (food) on the Zomato app.
• Step 5 : You can make the payment for the food either with COD (Cash-on-delivery) or digital payment channels.
• Step 6 : After having the dish, you can site the ratings and reviews regarding it based on your experience. It will help other customers to decide whether to buy that meal or not.

The working strategy of Zomato involves the partnership with restaurants and retailers, hiring delivery providers, and collecting the data of users (like food choices, restaurant preferences, geographical location, and mode of payment) for smooth delivery of food. The three key players involved in the working model of Zomato-

• Users : The users are the customers like you who purchase meals from restaurants via Zomato and the food is delivered to your preferred location.
• Restaurants : Zomato offers a reliable and effective platform to local restaurants and their owners to attract the target audience (foodies) and market their business.
• Delivery Providers : They provide part-time or full-time delivery services on a contractual basis. This helps them to establish a rational revenue stream.

Zomato launched multiple features and services like Zomato Gold, Dining, Advertising, Hyperpure (Supply fresh ingredients to restaurants), Blinkit (Acquired grocery delivery service) etc.

Do you remember the day when you heard the name or saw the logo of “Zomato” for the first time? Never mind if you don’t! Probably you might have seen the advertisement of Zomato in the banner, youtube ad, or any meme on social media. Well, these are nothing but the marketing strategy. The marketing strategy of Zomato involves a combination of online and offline marketing. These are described in the following points-

• Online Marketing – Online marketing also called “Digital Marketing” involves SEO strategy, social media marketing, email marketing, etc. It effectively hits the target audience and increases conversion rates.
• SEO Strategy – This is the backbone of digital marketing. Here, Zomato creates relevant content that is heavily focused on its users and keenly optimized for search engines like google, bing, etc. They effectively use keywords with high search volumes and relevant URLs. All these things enhance the relevancy of their pages due to which you can access their products easily.
• Social Media Marketing – Zomato has successfully mastered the technique of “ Meme Marketing .” which helps to create a good amount of organic traffic. Zomato also uses paid ads campaigns to reach new users by using taglines related to restaurants and the delivery of food. They run various types of campaigns on social media platforms like Facebook, Instagram, and Twitter that help in the creation of a good amount of organic traffic. 
• Email Marketing – It is one of the most effective digital marketing techniques that directly influence the target audience. It helps to create awareness regarding the products to its customers by directly sending emails to their inboxes.
• Offline Marketing – Offline marketing is effective to target a broad range of audiences. It involves television commercials featuring various celebrities, advertisements in print media, and outdoor advertisements by installing billboards, banners, and hoarding to grab the attention of the public. It also supplements online marketing.

Zomato has produced a considerable number of revenue sources that effectively aided to strengthen its presence in the food delivery market worldwide. The major revenue sources of Zomato are-

• Advertisements : As you know, advertisement plays a significant role in increasing the revenue of a company. Zomato effectively utilizes this strategy. Do you know that Zomato earns more than 70% of its revenue through advertisements? It offers a reliable advertising policy to restaurants in the form of banner ads and small pop-ups. The restaurant owners showcase their banners on Zomato to increase the visibility to the audience.
• Delivery Charges : Zomato charges a commission of 20-35% from the restaurant based on the placement of each order. It earns through the restaurants that pay commissions for each delivery. Then, it splits the earned money among the personnel and delivery partners of the company.
• Subscription Fees : It is the major revenue source of Zomato. Have you ever wondered how you get so many discounts on your favorite food whenever you search for it? The reason behind this is the huge database of Zomato that knows various details of the customer like food preferences, location, and the food you are searching for, etc. It offers analytical tools and consumer data to restaurants by charging a certain amount of fee on monthly basis. This tool is also called “Zomato Order.” Thus, restaurants use this tool to flash their appealing discount offers on your feed.

Latest News: Empowering Zomato’s Delivery Partners with Vital Lifesaving Abilities

Zomato introduced a first-responder training program for its delivery partners in India. The initiative aims to teach delivery partners medical first-aid & CPR through certified training programs under the ‘Serving India’ initiative. Over 5,000 delivery partners across Delhi-NCR, Mumbai, Bangalore, Hyderabad, and Pune have been trained as first-response emergency heroes.

Zomato founder Deepinder Goyal shared a video on the X platform highlighting the initiative, calling Zomato delivery partners ‘India’s Emergency Heroes.’ Rakesh Ranjan, CEO of Food Delivery at Zomato, stated that over the past three months, more than 5,000 delivery partners have received professional first-responder training, including first-aid, BLS, and CPR.

Each trained delivery partner will receive a comprehensive first-aid kit to provide immediate medical support to peers and customers.

After this news, Zomato’s shares increased by 2.25% to ₹122.55 at 1:45 pm on Thursday (4th April, 2024). SoftBank Group divested a 1.1% stake in Zomato for ₹1,128 crore through an open market transaction earlier this month.

After the transaction, Softbank’s shareholding in Zomato decreased to 1.09% from a 2.17% stake.

The business model of Zomato has been proven to be highly effective to reach heights in the food delivery market in a short period. Its key activities include the management of various networks of restaurants and customers, advertisements, and customer care service to increase the brand image by providing the best quality meals at your doorstep within a short time.

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First things first. Why do you need a business plan?

The restaurant industry is still known to be an unorganized one. Which is exactly why a business plan needs to be in place. It also is important to have a business plan so you can show your investors where their money is being put and even to get that bank loan you’ve been waiting on. A business plan is the blueprint for your restaurant where you chalk out the restaurant’s goals – short and long term ones, what your vision is for the restaurant and how you plan to make it a success. There are plenty of modules, guides and even softwares that can help you make these plans. But before any of that, you need clarity on what you’re going to do.

You need to define your business for yourself and for the investors.

What kind of restaurant will yours be? Cafe, fine dining, casual dining, QSR, or any other.

What cuisines will you serve? Based on location, demographic and your own business interest, understand what cuisines will work for your restaurant.

What will be the USP? A unique theme or cuisine, events, or anything else.

A cafe serving American cuisine with a circulating library within the cafe and live music on Friday evenings. Here, the library and live music can be your USPs and something that customers will be drawn to.

Key factors to succeed

In all businesses, there are a few key factors that ensure the success or failure of it. It’s not different with the restaurant business as well.

Location – List of ideal locations and why you want to open a restaurant there.

Demographic – The kinds of people you’re targeting – age group, floating population or locals.

Staff – Are you hiring experienced staff or new ones to be trained? What are your staff retention plans?

Food costs – How are you going to control food costs? Have you spoken to multiple suppliers before finalizing on the ones that would work out for your business?

Investors need to know your strategy to success. We mentioned key factors earlier, but without a strategy, they are only just points on paper. From operations to staff, you need to have a clear strategy that you intend to follow.

Operations – Number of people required in various shifts, whether you’re going to be open all day or just for lunch and dinner services, supplier management, etc.

Home delivery – Do you have enough staff to run delivery operations? You can sure improve on profit margins, but can you handle the volume? Will it work in the locations ideal to run the restaurant in? Will you use a third party for delivery or in house staff? Will you go online or stay off it?

Costs – How are you pricing your menu – starting low and bump it after 6 months, or keep it stable for a year and raise it according to market later?

Financial analysis

A business plan cannot be complete without a mention of financials. Even if it isn’t elaborate, you need to cover the important points. Cash flow, profit and loss statements, risk analysis, pricing, cost control, operational costs, sales forecast, quarterly and annual growth rate, etc. It’s not easy to work on financials if you don’t have experienced people working with you to guide you in the right direction. There is a lot to consider at the beginning so you don’t suffer later in the business.

Future plan and vision

Even a restaurant, however unorganized the industry may be, should have a vision and a plan to achieve set goals.

Expansion – Do you plan to open other outlets in other locations of the city? Financially, will you be in a position to do so in the time set to achieve this goal? Do you want to expand the brand or open different kinds restaurants?

Diversification – Do you intend to add cuisines? Or events? How else do you plan to keep your restaurant relevant?

A good business plan should basically talk about what your restaurant will be like on paper and how you intend to run it bearing in mind the financials and other practical aspects. You must have an executive summary for your business plan where you condense everything into just two or three pages. A lengthy powerpoint presentation is outdated and tiresome to compile as well as read. Keep it simple and as clear as you can.

More for you to read

Restaurants

Read more about Zomato Restaurant Hotline that provides holistic solutions to the needs of restaurant partners.

We are excited to announce the launch of Zomato Wings, a platform to connect investors with restaurants.

Another step towards helping the restaurant ecosystem get back on its feet quickly.

The bar at any restaurant is underrated and sometimes undersold, even. More often than not, it acts as a buffer…

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Zomato investor funding elevator pitch deck ppt template

Zomato is an Indian multinational restaurant aggregator and food delivery startup created in 2008 by Deepinder Goyal and Pankaj Chaddah. Zomato offers restaurant information, menus, and user ratings, as well as food delivery services from partner restaurants in various cities. Pitch deck is specifically designed to present short summary of Zomato showing general overview of the company and company outline, what does company do and some statistics related to the company. Also, this powerpoint presentation provides information about Zomatos core competency, value proposition, business model of the Zomato, history and customer experience details of Zomato. Additionally, this pitch deck provides details on social media following of the company, valuable customers of the company, competitor analysis, SWOT analysis and best practices that are followed by the company.

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This in-depth and intuitively designed Zomato Investor Funding Elevator Pitch Deck Ppt Template. It is a resourceful tool for every organization. Use it to showcase your services and present a strategic outlay of your business activities. This complete deck helps give a quick overview of the companys viability. It also targets various topics of interest, thus being a comprehensive tool that you can download and use. Take advantage of this PowerPoint pitch deck to discuss your business plans and vision in an impressive manner. You can also use this deck to give a quick demonstration of your product and its USP that can be shared on Google Slides or PowerPoint. This complete deck comes in an editable format and two aspects ratios, thus increasing its applicability and visibility. It also acts as a visual reinforcer to make your presence felt in the industry.

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Business Model of Zomato – How does Zomato make money?

June 9, 2023 | By Hitesh Bhasin | Filed Under: Business

The business model of Zomato revolves around providing food delivery services, information, user reviews and menus of partner restaurants.

Zomato’s business model has revolutionized the food business industries by incorporating various restaurants and making it convenient for people to find restaurants, provide feedback, check listings, and availability according to their choice of cuisine.

This food-platform is available across 24 countries in the world, providing insightful analytics to various restaurants. These analytics helps the restaurants to improvise and enhance their business.

In this post, we will be unraveling the key idiosyncrasies of the Zomato business model and understand how it manages all its operations and generates revenues. So, let us get started right away –

Table of Contents

Introduction to the Business Model of Zomato

Zomato is an Indian food-based application that provides various services like restaurant search & discovery, online delivery, and a plethora of different cuisines to choose from depending on your price ranges.

The popularity and applications of Zomato have increased manifold in the last few years, which makes people wonder about the actual Business model of Zomato.

In the next few sections, we will be going through the various verticals of the Business model of Zomato, but first, let us have a look upon its creation and some other associated historical aspects-

Creation and Essential history of Zomato

Before analyzing the Business model of Zomato, it is better to know a little about the background of Zomato. Zomato was created by two Indian IIT graduates Deepinder Goyal and Pankaj Chadda in 2008.

Initially known as FoodieBay, the idea of Zomato popped up when Deepinder found his roommates searching for leaflets of menus to order food. By incorporating the menus of various restaurants in one single application, the task of choosing a restaurant and ordering food can be tremendously eased.

This led to the creation of Zomato.

Zomato has tremendously developed from a simple home project to one of the most used online food-based platforms in the world. It accommodates a list of restaurants and cafés belonging to various price ranges and cuisines.

But the real factor that makes Zomato so successful lies in the robust and robust business model which is initially presented. Different services that are offered by Zomato business model are-

• Restaurant Search & Discovery
• Online Ordering
• Table Reservations & Management
• POS Systems
• Subscription Services

Different Segments of the business model of Zomato 

The Business model of Zomato is hugely different from its contemporaries Swiggy and Foodpanda . This application was the pioneer of online food-based applications, and hence, it was a more significant challenge for Zomato to make the market accept the concept of “online restaurant-searching.”

The Business model of Zomato is a well-orchestrated plan which consists of various aspects for the smooth functioning of the application. Following are some of the critical elements of Zomato-

1) Customer Segments

Zomato consists of three primary segments i.e., Users, local businesses, and reviewers.

• Users- Zomato provides a platform for people to search and locate restaurants according to their budget, location, and preferred cuisine. It also provides an online-based efficient food delivery service.
• Local businesses – Zomato also provides a platform for restaurants and local cafes to promote their business and to reach a target audience, thereby generating revenue for various outlets.
• Reviewers- Reviewers or content contributors are the people who provide positive ratings and comments. These comments are mostly synonymous with the quality of food and services provided by the restaurants.

2) Zomato Provisions

Zomato provides information on the restaurants and cafes to the customers based on their location, their choice of cuisine as well as the specified budget.

It also builds a bridge and facilitates communication between the partnered restaurants and the customers.

Zomato also has an organized and well-orchestrated pricing model for the online delivery services that they provide.

Their quality of services has also been enhanced due to the inclusion of Zomato Gold and Piggy Bank.

3) Notable alliances of Zomato

In recent years, Zomato has also partnered with various companies like Uber Taxi, London & Partners as well as online or electronic payment companies such as Visa and PayPal .

These partnerships have also played a significant role in enhancing the Business model of Zomato .

Having partnered with London & Partners, there were various ways in which the company aided Zomato. Some of them are specified below-

• Finding a location to set-up an office
• Assisting in staff hiring and, management recruitment procedures
• Work placements and market research
• Providing useful advice on policies, legal systems, handling of accounts, etc.

Now, after going through different aspects of Zomato business model, the time has come to delve into its revenue generation strategies -

How does Zomato Make Money?

Zomato’s revenue took a significant leap this year as its valuation increased from $68M in the financial year of 2018 (FY18) to $206 M in the Financial Year of 2019 (FY19).

Various aspects of Zomato act as a contributory factor in the current generation of revenue. Following are some of the major factors-

• The commission earned due to delivery services constituted about 75%of the total revenue generated in the year 2019. This is equivalent to an estimated amount of $155M, almost four times more than $8M made last year.
• The newly introduced system of Zomato Gold provided complimentary food and beverage service to customers with gold-membership. This service alone generated about $30M in 2018 and $49M in 2019.
• The ticket sales for various events organized by restaurants in partnership with Zomato generate a certain amount of revenue in the form of commissions. At the same time, consultation provided by Zomato to various restaurants to improve their business also adds to the Business model of Zomato.
• Unlike the past few years, Zomato is now trying to balance and form an equilibrium between all its sources of revenue generation by not prioritizing advertising revenue more than the other sources. This again has been a contributory factor in the efficient Business model of Zomato.

Zomato is known to bring in massive revenue due to its various business operations , but most people are still doubtful of the actual revenue-generating system of Zomato.

The Business model of Zomato consists of various sources through which the application generates revenue. The following are some of the operations undertaken by the app-

Sources that play key role in helping Zomato make Money

1) Zomato Advertising

Zomato provides people, access to multiple restaurants and allows them to rate the quality of the business that these restaurants offer.

These ratings are often reliable and useful. Various restaurants can promote their businesses by posting banners and pictures on Zomato.

This advertising method proves to benefit not only for restaurants but also for the app itself.

2) Zomato Subscription

Restaurants pay a certain amount of money to Zomato in exchange for various analytic tools and services provided by Zomato.

The food-based app has a variety of analytic tools and databases of information about the consumer through the use of cookies.

3) Zomato Event Organization

Zomato also organizes various events and food-based festivals by collaborating and partnering with multiple restaurants across the world.

The attendees pay a specified amount for the ticket. Zomato receives a certain percentage of the money collected. Hence, this aspect also proves to be very helpful for the app to generate revenue.

4) Zomato Food Delivery Services

Other sources of revenue for Zomato include Online food delivery service.

Zomato charges a certain sum of money called commission from restaurants in exchange for food delivery services.

5) Zomato Gold

Started in April 2018, Zomato Gold offers premium services based on membership.

In the facility, customers with gold-membership receive complimentary food and beverages from partnered restaurants.

Statistical analysis of Zomato’s revenue sources

As mentioned earlier, the Business model of Zomato is highly efficient, involving numerous sources which play a crucial role in generating revenue.

Following are some of the helpful statistics in understanding the Business model of Zomato-

• Restaurant Advertising and marketing constitutes about 72% of the total revenue.
• Event advertising contributes approximately 4% of the revenue generated.
• A total of 12% of the total revenue is generated by the ticket which is sold during events organized by Zomato.
• Consulting services and online-food delivery services constitute about 3% and 2% respectively.
• Zomato Gold and other developed services are generating 7% of the total revenue to the customers.

Wrapping it up!

Zomato has wholly changed the functioning of the food and restaurant industry by bringing in the concept of creating universal access for various restaurants and cafes.

Zomato makes available outlets based on the location, choice of cuisine, and the budget specified by the clients. It also provides online-delivery service to customers which makes the process of “ordering food” smooth and efficient.

Zomato also proves to help enhance the business models of various restaurants, bistros, and cafes by providing them consultation as well as the chance to promote their business by uploading pictures and posters on the Zomato application. Zomato also organizes various events and festivals in partnership with multiple restaurants to generate revenue not only for themselves but also for the restaurants involved.

The Business model of Zomato is well-organized and orchestrated, encompassing the various aspects which act as revenue sources for the company.

Restaurant advertising, event advertising, ticket-selling during organized events as well as specialized services like Zomato Gold and Piggybank are some of the significant revenue-generating sources of Zomato. The food-based application not only focuses on advertising but also provides equal importance to other sources which are the primary reason why Zomato earned five times the revenue earned this year in comparison to the previous financial year.

Intending to enhance the revenue-generating system as well as to develop the services provided, Zomato also partnered with various companies this year, creating helpful and beneficial alliances.

These include Uber Taxi, PayPal, and Visa. All these reasons make Zomato one of the most efficient applications of recent times.

So, how effective, profit-driven and inspiring do you consider the business model of Zomato? Share with us in the comments below.

Liked this post? Check out the complete series on Business Models

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About Hitesh Bhasin

Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

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Zomato's future plan - focus on three key areas

Online food delivery platform Zomato has decided to narrow its focus on three key areas of food ordering and delivery; supplies to restaurants through 'Hyperpure' and quick commerce, company Chairman Kaushik Dutta said on Tuesday.

In his address to shareholders at the company's annual general meeting, Dutta said the move was part of strategy to focus "only on areas that have the potential to become meaningfully large businesses ten years from now".

In FY22, he said Zomato was able to achieve strong top line growth while keeping its "adjusted EBITDA burn under control", despite multiple challenges such as disruptions due to Covid-19 pandemic, macro-economic uncertainty, rising inflation, fuel prices, among others.

This year after reflecting on the strategic priorities as a company, given the size and scale of the platform now, Dutta said it was decided that the focus would be only on areas that have the potential to become meaningfully large businesses ten years from now.

Subsequently, he said Zomato would narrow its focus to three key areas -- food ordering and delivery; Hyperpure and quick commerce.

Zomato's core food delivery business is stable and headed for profitability, he said, adding in India food delivery still has a large runway for growth.

While restaurant food consumption has increased in the past few years, its overall penetration in India is still significantly low as compared to global counterparts, he reasoned.

On Hyperpure -- Zomato's supply platform for restaurants for fresh items, he said the company is now starting to see strong adoption of its services by restaurant partners.

"We think that this business has the potential of becoming as large or even larger than our food delivery business because the addressable market here is potentially larger than food delivery," he added.

On quick commerce, he said the acquisition of Blinkit was completed this month and the integration of the two teams has started.

In June this year Zomato had announced acquisition of Blink Commerce Pvt Ltd (formerly known as Grofers) for Rs 4,447.48 crore in a share-swap deal as part of its strategy of investing in quick commerce business.

Dutta said Zomato considers quick commerce as a natural extension to its core food delivery business and increases its addressable market manifold.

It has the potential to help the company build a more profitable business by cross leveraging existing customer base and increase hyperlocal delivery fleet utilisation, he added.

"With this, we now have a clear execution plan around these three businesses and our focus as a team will be to get these businesses to meaningful scale and profits," Dutta said.

He also said Zomato's dining-out and certain other segments saw a revenue decline of 15 per cent in FY22, due to discontinuation of most of its international operations as well as certain non-core businesses.

The dining-out business was adversely impacted in FY22 by Covid-related lockdowns.

He also said the company is making progress in its efforts for adoption of electric vehicles with around 4,500 active EV based delivery partners and around 18 per cent of orders delivered on bicycles as of March 2022.

In reply to shareholder queries, Zomato founder & CEO Deepinder Goyal said the company does not expect to make any other strategic minority investments for the foreseeable future as it has made all the investments that needed to for its future plans.

On safety of delivery partners, he said it has always been a priority for Zomato and "no compromises have been or will be made here", while also asserting that the platform does not incentivise riders to be on time.

Goyal also said Zomato will put a phone number on the bags of its delivery partners for people to call and report if any one of them were found to be speeding.

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