Zomato Findings
Zomato Findings
Zomato Findings
of ~30.55% (based on revenue) and ~10.19% (based on the number of users) during the 2020-
2024 period, to generate a revenue of INR ~1,334.99 Bn and develop a user base of ~300.57 Mn
by 2024. Major players currently operating in the Indian online food delivery market include
platform-to-customer service providers like Swiggy (Bundl Technologies Private Limited),
FreshMenu (FoodVista India Private Limited), Faasos (Rebel Foods Private Limited) and Zomato
(Zomato Media Private Limited). Apart from these, there exist certain companies that operate
with a restaurant-to-customer delivery model like Box8, Domino's (Domino's Pizza, Inc.), and
KFC (Yum! Brands, Inc.).
As of 2019, millennials accounted for ~63% of the overall user base of the online food delivery
market. This is owed to increasing disposable income of the millennials, especially in the urban
regions in India. Also, millennials prefer ordering food online since it is easy to handle and saves
time and energy of cooking at home.
In 2019, out of the major online food delivery service providers, Zomato held a share of ~38% in
terms of user base. Swiggy held a share of ~27% in the online food delivery user base of India in
2019. High adoption rates in tier I and tier II cities, as well as swift delivery services has helped
these two companies to gain the high share in the Indian market.
In the recent years, the number of working women has increased in the Indian workforce,
especially in the city-based organized sectors. As a result, the number of double income families
in also on the rise. With both the partners working and maintaining hectic working schedules, it
become difficult for people to get time and energy to cook at home. Moreover, the dual income
scenario has increased the overall spending capacity of the families. Also, the key players like
Swiggy, and Zomato keep on announcing lucrative offers for the customers, both existing and
new, in order to keep up the stiff competition in the online food ordering market. This in turn is
leading towards people’s preference towards ordering food online and enjoying their favourite
cuisine at home at an affordable price, thereby increasing the overall value and user base of the
online food ordering market in India.
Recently, there have been several instances of spurious and closed restaurants; and food shops
taking orders on food platforms, only to be informed later that either the shop cannot be located
or had shut operations. Cases were reported where certain outlets registered on these food
delivery apps have turned out to be makeshift, or operate out of home joints, with hardly any
focus on hygiene and quality. This has caused annoyance among both the customers and the
food delivery executives. Also, consumers are becoming concerned about the quality of food
since such unauthorized food stalls seldom maintain hygiene both while cooking and packaging.
This, in turn, is developing dissatisfaction among the customers of the online food delivery
market in India.
Although the players are mainly concentrated in the urban regions of the
country, with Bangalore, Delhi and Mumbai representing the three largest
markets, vendors are now also targeting smaller cities, as they have strong
growth potential. Moreover, the rising trend of the on-the-go food items and
quick home delivery models that offer convenience, ready-to-eat (RTE) and
cheaper food delivery options are escalating the demand for online food
delivery services in the country. Furthermore, owing to the rising cases of
COVID-19, some of the leading players like Zomato, McDonald's Corporation
and Domino’s Pizza Inc. have introduced contactless delivery services. These
services ensure that the food reaches the customer without being touched by
bare hands and is delivered safely with adequate social distancing measures.
Looking forward, IMARC Group expects the India online food delivery market
to exhibit strong growth during the next five years.
Mobile Applications
Websites
Order Focused
Logistics Based
Full-Service
Online
Cash on Delivery (COD)
Regional Insights:
North India
West and Central India
South India
East India
Competitive Landscape:
Introduction to Zomato :
Chaddah came on board to help Goyal launch Foodiebay in 2008, which let
users check restaurant menus and review the properties. Today, more than
a decade later, the company has added components to its business such
as online food ordering, restaurant reservations and loyalty programmes,
enablement for restaurants, consultancy services and a lot more.
Over the years, Zomato has been through many highs and lows and has
kept up with rival Swiggy in the online food ordering segment. From raising
funds from major investors to the exit of Chaddah, Zomato has stayed in
the public eye even as business boomed and funding kept coming in.
The company has strengthened its presence in Tier 2/3/4 markets over the
past year with its expansion, but at the same time it is embroiled in a long-
standing battle with restaurants to change its discount-happy ways.
Whether this has a deep impact on Zomato’s overall business is yet to be
seen, but the fact is Zomato has opened up many more channels for
revenue through its business model diversification.
Food Delivery
Subscription Programmes
Live Events
With Zomaland, Zomato entered the branded live events market last
year. Zomato charges users an entry fee to attend Zomaland, where
besides food, they can witness live musical performances and other
acts. In 2018, it had organised the entertainment carnival in Delhi,
Pune, and Bengaluru, where Zomato claimed over 100K people
showed up. This year, Zomaland is going to Pune, Delhi, Bangalore,
Hyderabad, Mumbai, Jaipur, Pune, Chandigarh, and Kolkata.
Zomato Kitchens
As it has grown in size and scale, Zomato has tried to reduce the reliance
on cash-burn reliant models and streamlined to enter enablement and other
user-generated streams of revenue. Zomato’s cash burn is mostly in
retaining users against its rival Swiggy. However, being in the line of fire for
deep discounting practices, Zomato may soon be able to earn from other
parts of its business model.
Advertising on their website and appZomato’s advertising is to the point, when
users search for specific keywords, ads of restaurants are shown for that
specific keyword. This makes it highly targeted. This is also hyper local.
98% of restaurants fall within the first year and Zomato can help in this!
Zomato sits on a pile of data and information. They have an in-built analytics
platform that run a lot of queries and get important information out. Say if a
person wishes to open a new food point, they can approach with Zomato and
find out the success rate of opening a restaurant in a particular location. Food
point owners can also find out what is the most popular type of food in the
area, understand the needs of the customers and provide a complimenting
service that will help build their business.
Zomato Events
Zomato has forayed into the events space by partnering with restaurants and
creating limited events. They make a sale through the price of the tickets. A lot
of Zomato hosted annual parties were held.
Online Food Ordering
Very late to the game, Zomato started their online food delivery service.
Different from other players like Swiggy, Zomato does not have their own
delivery system, they let users place the order through the website or the app
and the restaurant fulfil that order through by their own.
Zomato started food point guide for the famous cities in India. They tied up
with the e-commerce behemoth, Flipkart and hoped to sell around 200,000
copies. The last of this food point guide was created in 2012 and has not been
updated since.
At the rate they are spreading and making a strong eco system, At one point
like this , zomato will take a huge piece of Yelp’s business.
Genesis of Zomato
The seed of Zomato was sown approximately 12 years ago. Back in 2008, the
thought was conceived in the minds of three passionate foodies who despised
waiting for so long in colossal queues. It was the need to have access to all
restaurant menus digitally at one place and the passion to make it available for all
that gave birth to Zomato. That idea was their baby, and now that baby has grown
into a vision that drives a team of 5000+ people every day.
Zomato wasn’t Zomato from the beginning. It started as ‘Foodiebay,’ which
was an online restaurant directory. CEO Deepender Goyal felt the need to
change this name as it resembled ‘eBay’ and he visioned to create a
unique identity of own. Hence the christening ceremonies happened, and
since then, it’s known as Zomato. From a home project, it has lengthened
into a large food aggregator that operates globally. With its footprint in
almost 24 countries and over 10000 cities, it is constantly working towards
its vision of better food for more people. In addition to discovery and
delivery, Zomato has also entered various segments like restaurant
reservations, loyalty programs, and live events. Zomato not only functions
as the connecting link between food and people in every context, instead it
sets an example by cooperating and working with restaurants closely to
enable a sustainable ecosystem.
Business Model
Zomato is immensely loved for the way it works. Zomato is premised on the
QAAA model, i.e., it promises and delivers Quality, Accessibility, Affordability,
and Assortment to its customers and partners. Following are the value propositions
of Zomato, which makes Zomato unique and admirable:
A big share of 72% of total revenue comes from restaurant advertising and
marketing. Approximately 12% of the revenue comes from ticket sales. Even
advertising contributes about 4% of the total revenue. 3% and 2% comes
from consulting and food delivery services, respectively. Zomato Gold and other
analytical services contribute around 7% to the total sum of revenue.
Key Resources
Zomato recently published Mid-COVID Report for India. In their report, they
shared this finding that the Food delivery sector has recovered with some regional
flavors to it and in fact, grown beyond pre-COVID levels in myriads of large
pockets of the country, with some affluent residential areas being the forerunners
in this recovery. Due to the advent of lockdown and everything moving back at the
home trend, many premium restaurants are being receptive to the idea of online
delivery, and that is attracting a lot of affluent customers. In fact, during the
lockdown, it was observed that customers started to rely more on online deliveries.
As people are indulging in taking up more quality time with their families and
loved ones, group ordering is becoming a frequent reality. Ongoing IPL and the
festive season has bolstered the growth in the food delivery sector. Hence good
times are ahead for Zomato.
Zomato has revolutionized the entire food industry by turning the concept of
universal access into reality. If you’re envisaging to create an online marketplace
just like Zomato, you can fearlessly trust our tool Yelo. No coding, no setup fee &
launch within a day! And the surprises don’t just end there. Yelo is an industry-
leading product with features crafted perfectly to run a full-blown online
marketplace globally. From browsing to making payments and all the technical
nitty-gritty that goes inside, Yelo takes care of it all.
Hyperpure is the big step we are taking towards creating the future of food.
It is a clean food supply chain for restaurants to buy fresh and high-quality
ingredients. Responsible local farmers and suppliers are signing up on
Hyperpure to find responsible restaurateurs who will buy their produce —
without the usual middlemen.
https://www.zomato.com/blog/annual-report-19
Early indications are that platforms need more people than ever to
order through them. They need more supplies to build a business
beyond metropolitan cities. They will also need to be more effective
than home-cooked food.
Platforms will need to make peace with restaurant owners. A good
part of 2019 was marked by a tussle between NRAI and Zomato
through multiple "log out" campaigns by restaurants. The year 2020
is lost to a pandemic. The industry cannot stand divided in 2021.
Platforms will have to make their models more efficient. Can there
be time slots for deliveries instead of a flat 30-minute promise? If a
rider can make multiple deliveries in one run, the cost will be
justified.
The reason that Zomato. chose this specific changing style was to avoid the resistance to
change, which might be due to the inefficient communication and education (Will, 2015). In
addition, changing style between direction and coercion guaranteed the speed of the change
because every single person involved in the changing process would be clearly instructed and
directed (Hempel, & Martinsons, 2009) which ensured that no time was wasted in debating
and negotiation.
https://www.hcltech.com/blogs/change-management-during-covid-19
Employee safety first: Educate and support employees in managing the crisis through Central
Response Centers, and create awareness about precautions, regulatory compliances etc.
Business continuity with employee safety: Remote working, empowered virtual teams, and
customer support for emergency services.
Future state of organization: The COVID-19 situation offers both opportunities and challenges to
business leaders and they are responding based on the culture and vision of the organization.
The progressive organizations are looking to transform their business models and ways of
working in place of merely reacting to the current situation.
This pandemic will drive multiple transformations in an organization’s ways of working and
require a differentiated change management strategy focused on consistent communication,
coaching, training, and learning to adopt new ways of working that were never envisaged earlier.
Some of the key initiatives that will be enabled through effective change management in the post
COVID-19 era are:
Building a Sustainable Post-COVID 19 Future
During COVID-19, organizations have experienced a pause in their growth acceleration, though
each one of them has adopted different strategies to survive in these tough times. For
organizations, it is a moment to break from the past inertia, adapt to the new normal, and think of
changes to be made in the current people, processes, and technology dimensions to make itself
a healthy and resilient organization. The reinvention of the organizational DNA, driven by an
effective change management program, should help build a sustainable future where employees
work in a safer environment and collaborate effectively to deliver organizational goals.
A Redseer analysis reveals that from $4.4 billion, the food delivery
gross merchandise volume fell to a billion dollars during the
lockdown that started on March 25. In May, some restrictions were
lifted and that helped the business but it has been slow march
recovery.
https://www.moneycontrol.com/news/business/startup/whats-next-for-zomato-and-swiggy-
after-the-coronavirus-clobbering-5622581.html
Post Covid more people are expected to get back to cities to return to offices, which will also
coincide with the festival season, a time when consumption tends to go up.
https://www.moneycontrol.com/news/business/startup/whats-next-for-zomato-and-swiggy-
after-the-coronavirus-clobbering-5622581.html
3. Change Levers –
https://www.zomato.com/blog/mid-covid-report-2
4. Customers are now relying on food delivery even more than usual when
a city goes under a lockdown. Some cities such as Kolkata see more
customers ordering online when the city is (more or less) shut, but
restaurants are open.
6. As customers spend more time with their families, group ordering has
become more relevant than ever. Order sizes, i.e. items per order, have
increased by 20% over pre-COVID levels. Recovery on single person
meals, which constituted nearly ~60% of all orders pre-COVID, lingers at
50-70% level for most regions. On the other hand, orders with meals for 3
or more persons have recovered well and are higher than even pre-COVID
levels currently.
With the ongoing IPL season and the subsequent festival season, we
expect food delivery in both metros and smaller cities to make a full
recovery soon – and resume growing over pre-COVID levels.
The pandemic has had a massive effect on the restaurant industry. Over
the last few days, we reached out to thousands of restaurants and
customers across various cities in India to understand the current state and
future outlook of the industry. In this report, we will present our findings for
the two key components of the restaurant industry – delivery, and dining
out.
KEY TAKEAWAYS
1. Some areas in some cities are clocking higher GMV than before (affluent
neighbourhoods no longer fear contagion from food delivery, and are
combining home entertainment with outside food). Predictably, residential
areas are doing 50% better than commercial areas. Restaurants in and
around commercial districts are expected to take the longest to recover.
5. With companies giving employees the option to work from home, there
has been a mass exodus of people from metros to other cities across India
– 1 in every 5 Zomato customers in metros (pre-COVID) have opened their
app from a smaller town recently. Out of these relocated folks, one third
have already started ordering food again from their new location.
6. Interestingly, ordering frequency of customers after their first order mid-
COVID is the same as pre-COVID, which shows that the first order mid-
COVID is key for customers to cross the hump of safety perception.
7. Recovery trends are strong and we estimate the industry to hit pre-
COVID levels of business in the next 2-3 months.
KEY TAKEAWAYS
1. Even in cities where restrictions have been lifted, only 17% dining out
restaurants are open for business at the moment which are also running at
low capacity.
2. Out of the 83% restaurants that are not open for business, 10%
restaurants have already shut down permanently and we anticipate an
additional 30% restaurants to not reopen at all. Remaining 43% are closed
right now but likely to open, as the situation becomes better.
We thank all our restaurant partners and customers for their candid
participation in this study. We hope this gives restaurant owners some
useful data and points of view to plan for the future of their businesses.