CONTENTS

SR No. Subject Page No.

Introduction
1.1 About Food Startup Industry 02-04
1.2 About the Topic 05-06
1.3 Zomato:- Company Profile 07-12
1.
1.4 Swiggy:- Company Profile
1.5
1.6
1.7
2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

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 Chapter No. 1: Introduction
1.1 About Food Start Up Industry :-
The Indian government announced "Start-Up India" in 2015, with the primary goal of
promoting the startup culture in the country and creating a robust and inclusive environment
for innovation and entrepreneurship. This plan worked admirably, laying the groundwork for
plenty of successful businesses across the country, many of which went on to become
unicorns, meaning companies worth more than a billion dollars. According to (Kashyap,
2022), India is currently placed 3rd internationally in terms of unicorn rankings, with 101
unicorns in the country as of June 2022. In addition, with rapid growth of the internet and
globalisation of the market, the number of businesses using internet and technology as a
crucial tool for their functioning has rapidly grown (Kumar & Ayodeji, 2020). Today majority
of the unicorns that India has are technology based startups which use the internet as an
essential part of their business functioning as it helps them to reach a large pool of consumers
easily. An important factor driving the growth of the online businesses and retail in India can
be put down to the growth of internet penetration and increase in technological infrastructure.
According to (Statista, 2022), the number of internet users is projected to grow to over 1.5
billion users by 2040 from 749 million in 2020 thus indicating a big market potential in
internet services for India.

This dramatic increase in the number of internet users in India along with a strong framework
for doing ease of business has eventually resulted in the emergence of new business sectors in
the country and therefore the focus of this paper will be on one such flourishing market inside
the Indian startup space i.e., the online food delivery business. Online food delivery is a
service that allows clients to order food online and have it delivered to their door. It involves
technology that helps restaurants to accept and manage online orders. While surfing the
website from the comfort of their own homes, Indian customers can choose from a vast choice
of cuisines offered by various eateries.

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Food delivery over the internet has become one of the most rapidly growing aspects of e-
commerce. Consumers can choose from a variety of restaurants listed online anytime,
anyplace, which has transformed the overall picture of the food industry. Furthermore, clients
have the flexibility of no minimum purchase along with variety of payment options.

Consumers today can choose from variety of payment options such as digital banking digital
wallets cash on delivery etc. they also have the flexibility and leverage of no minimum
purchase amount which only leads to boost in delivery orders and caters to a vast segment of
consumers.

Because of urbanisation and easy availability to cell phones, the growth of online grocery
delivery systems is rising. The online grocery/food business category in India achieved a
value of up to US $ 750 million in 2017, with revenue growth of 150 % YOY (2016 and
2017), and a CAGR of over 140 percent since 2014.

Traditionally, online meal delivery has been limited to restaurants, with customers ordering
food directly from their websites. This has slightly been modified since the introduction of
“aggregator business model," which provides a "single" online window through which
businesses can purchase food from a variety of eateries listed on the portal. The curator
gathers a set percentage of the restaurant's orders and then handles the actual delivery of the
food.

However, the business model of food delivery industry has rapidly developed to the point
where curators now provide food delivery, disrupting the market. The emphasis has shifted
entirely away from technology and toward logistics. The main expense factor in the sector is
logistics. The fact that Zomato has almost 50,000 eateries listed is the major reason for its
great profitability.

Swiggy comes in second with over 35,000 users, followed by Foodpanda and UberEats with
approx. 15K and 12K users, respectively. Uber Eats has only been in the country for a few
years, but its monthly growth has accelerated to about 50%, and orders have nearly doubled in
the previous three months. The massive investment in Zomato and Swiggy, the leading
players who are extensively backed by foreign investors, indicates the future of India's online
food delivery market.

With a $ 200 million investment from Ant Financial, Zomato's valuation surpassed $ 1.1
billion. This investment is expected to develop technologies while also broadening the global
reach of Zomato. Swiggy, Zomato's competitor, isn't far behind, having raised $ 100 million
in capital from Chinese e-commerce business Meituan Dianping and its previous investor
Naspers. This will improve our market position, as well as our ability to provide new services
and products. In addition, Foodpanda, a food delivery service, has agreed to a $ 200 million
transaction with Ola, which has bought Foodpanda's Indian operation to promote local
expansion.

At the moment, revenue generation is concentrated in a few major cities. According to

RedSeer's data, India's top five cities account for more than 85% of total online food orders
(2017), with Bangalore leading the way with a 32% share and Delhi NCR 20 percent. The
graph below depicts the share of online food orders in India by the top five cities. Bangalore,
Delhi NCR, Mumbai, Pune, and Hyderabad accounted for around 40% of the total commodity
value in the eatery industry of India.

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1.2 About the Topic :-
A closer look at the trends in India's top five cities for online food delivery reveals that
Mumbai has the most stores listed as online delivery partners, followed by Delhi NCR.
Bangalore has the most monthly online orders per Internet user, with 37 percent, followed by
Pune with 23 percent. Furthermore, there are 60 online vendors in Delhi NCR, compared to
50 and 38 in Bangalore and Mumbai, respectively.
These cities have a high population of young working people with a lot of disposable income
and easy access to the internet. India's internet food market is booming. Furthermore, as the
proportion of women working in these fields increases in large corporations, online orders are
increasing.

Although India's internet distribution sector is quickly expanding, with the industry predicted
to reach $ 100 billion by 2025, market penetration remains low in comparison to other major
economies. India’s food delivery industry is still in the initial stages comparatively and
accounts for only 2% of global online delivery business (online orders account for percent of
all delivery orders), whereas the UK is well-established, with a global penetration rate of
about 32%. US and China are at roughly 13% and 11%, respectively (numbers are shown in
the graph above). High penetration is attributed to high discretionary wealth in major
industrialised countries, which leads to structured personal consumption, cheaper and faster
delivery, a sophisticated interface, and other benefits. Another cause for India's poor
penetration is the lack of internet connection. This represents only 26% of the world's
population of approximately 1.3 billion people.

Furthermore, because India's online delivery and shipping market is still in its infancy,
businesses are putting forth significant effort to maintain market share by offering competitive
prices, discounts, and lower shipping rates. These businesses compete by delivering quick
delivery and excellent after-sales support. Another element that distinguishes one aggregator
is its partnership with a restaurant known for its high-quality meals. Because the supermarket
delivery model is so reliant on order volume, businesses are doing everything they can to
make
it easier. One such initiative to improve order numbers was the unveiling of Zomato and
Swiggy's "Cloud Kitchen Mockup”.

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It should also be noticed that these businesses have recently taken initiatives to raise the pay
of their delivery partners by offering incentives depending on delivery completion and
distance travelled. These organizations are also aggressively trying to leverage from artificial
intelligence and machine learning by actively investing in them which are mostly driven by
data and trends.

As a result, the most difficult problem is lowering wasteful expenses while improving
logistics and technology on both the front and back ends, resulting in large orders. This
means that, despite increased sales and consumer numbers, businesses are still losing money.
The graph below depicts the losses suffered by three of India's largest online grocery retailers
in 2017. Zomato's net loss was Rs. 3.89 billion, followed by Swiggy's loss of Rs. 2.05 billion
and Foodpanda's loss of Rs. 450 million

With variety of features available on their portal, such as restaurant search, online ordering,
table bookings, and chat feature for customer support, Zomato has the biggest amount of food
orders, which means more revenue opportunities, but it also means greater maintenance and
logistical costs, as well as higher advertising expenditures.
Despite this, Zomato's sales growth rate has been stable, with the above sales activities
expanding at a CAGR of around 180 percent over the last five years. Furthermore, according
to the most recent financial report from Info Edge, a Zomato investor, the cash balance of the
organization is at a comfortable position for now and is approaching break-even soon. In this
approach, it can be noted that the food delivery industry has not only developed and focused
on consumer benefits and conveniences but has also awakened the company's revenue-
generating potential. Online aggregators give restaurants access to a huge customer base that
extends beyond their current customers. The clients/restaurants have found new sources of
revenue in the form of provided online model, which account for around 35% of overall
revenue. As a result of the advantages of restaurant availability, more and more restaurants
are expected to be obliged to join with online distribution platforms.

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1.3

Zomato :- Company Profile

Zomato, which was founded in 2008 went by the name of Foodie Bay in the earlier days. The
founders, Deepinder Goyal and Pankaj Chaddah came up with the idea of curating food
menus of restaurants nearby on web for users to become more aware of restaurants serving
near them and many consumers were unaware of hidden gems around their locality when it
came to eateries.
Headquartered in Gurgaon, Zomato has been the leading brand when it comes to restaurant
discovery and now meal ordering. This business model aims at benefiting both the clients –
restaurants as well as the consumers.

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It is one of the few businesses which is globally recognised, and the model has been adapted
elsewhere. Today Zomato hosts millions of restaurants on their app for both discovery and
delivery features.

Zomato
Headquarter Gurugram, India
Sector Food Delivery
Founders Deepinder Goyal & Pankaj Chaddah
Founded 2008
Valuation $8 Billion (July 2021)
Revenue $540.61 mn (Rs 4192.4 crore in FY22)
Total Funding $2.1 billion
Parent Organization Zomato™ Media Pvt Ltd.
Website zomato.com

 Zomato :- History
and Origin
Zomato's origins
can be traced
back to the founders'
realisation that many
individuals were
unaware of the
restaurants and
eateries around
them. The founders
of Zomato aimed at providing the full menu of such eateries on web for discovery purposes.
Geographically, Zomato initially focused on Delhi NCR region only until it started gaining
recognition. Now it has expanded on a global level.
The entrepreneur then chose to change the company's name. In 2010, Foodie Bay was
renamed Zomato. Ever since, Zomato has expanded in terms of location and operations
around the country. It has also started a worldwide company and now has over 10,000 offices
in 24 countries around the world. Zomato is used by millions of people around the world
daily to explore and try new eateries around their locality or city or a new place while
travelling.

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 Zomato :- Financing and Fundings
To date, Zomato has raised close to $2.1 billion in funding. Recently (Feb 2021) Zomato
closed a $250 million funding round, led by existing investors Tiger Global, Kora, and
Fidelity. Zomato's valuation touches $5.4 Billion. In this round, Kora pumped in $115 million
while Fidelity invested $55 million and Tiger Global invested $50 million.
The $660 million round led by Kora and Tiger Global Management and the $250 million
round led by the same investors with Fidelity and some other investors joining them are two
of the largest rounds that Zomato received in recent times. The Ant Financial led $210
million funding round that came in October 2018 was the last major before these rounds.
Alibaba and other Chinese investors have largely contributed to the growth of the food-tech
startups in India, where both Zomato and its rival Swiggy have received funds from Chinese
giants like Alipay, Ant Financials, and more.

Zomato raised funds worth Rs 4,196 crores from its marquee anchor investors, which is
supposed to be a part of the anchor book allocation. This fundraising round comes a day
before the brand goes public, as per the reports on July 14, 2021. Info Edge India is Zomato's
largest shareholder with over 18.4% stakes.

Zomato turned unicorn in March 2018. The food tech giant entered the famed unicorn club of
Indian startups in the same month when its co-founder Pankaj Chaddah moved out of the
company.

Date Stage Amount Investor

February 2021 Venture Round $250M Kora, Tiger Global, Fidelity

December 2020 Series J $660M Kora, Tiger Global

November 2020 Series J - -

October 2020 Series J $52M Kora

September 2020 Series J $166M Tiger Global

April 2020 Series J $5M Baillie Gifford

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 January 2020 Corporate Round $150M Ant Financial

March 2019 Corporate Round $55M Delivery Hero

February 2019 Series J $35M Glade Brook Capital Partners

October 2018 Series J $210M Ant Financial

February 2018 Series I $200M Ant Financial

April 2017 Series H $20M Sequoia Capital India

September 2015 Series G $60M Temasek Holdings, Vy Capital

April 2015 Series F $50M Info Edge, Vy Capital

November 2014 Series E $60M Info Edge, Vy Capital

November 2013 Series D $37M Info Edge, Sequoia Capital

February 2013 Series C $10M Info Edge

September 2012 Series B $2.3M Info Edge

September 2011 Series A $3.5M Info Edge

 Zomato :- Acquisition
In 12+ years of its existence, Zomato has acquired 15 companies. FITSO was the last
acquisition of Zomato that came on January 20, 2021, in a deal worth over Rs 80 crore. After
this, the popular foodtech giant acquired Blinkit on June 24, 2022, which is the latest
Zomato acquisition.
The acquisition of Uber Eats - India, which was materialised on Jan 21, 2020, remains one of
the most prominent acquisitions of the company. Zomato acquired Uber Eats - India for $350
million. Through this acquisition, Zomato added over 70K active delivery partners that
existed with the Uber Eats network.
Zomato had first declared that it would be acquiring around 9.3% stakes in Grofers as per
the filing with the Competition Commission of India. Though this stake was a minor one,
the company looked to acquire Grofers in the long run, as per some sources on request for
anonymity. Through its tweet dated August 13, 2021, the Competition Commission of India
(CCI) sanctioned the Zomato-Blinkit (then Grofers) deal where the former company will be
acquiring 9.3% stakes in Grofers (Blinkit).
However, since it has pivoted, Blinkit lost its unicorn status and was struggling with a lack of
funds, when Zomato thought it fit to help Blinkit. This is why Zomato extended a $150 mn
loan to Blinkit on March 16, 2022, after investing nearly $100 mn in the same month. The
two startups eventually looked for a merger, which will be materialised via an all-stock deal,
valuing Blinkit at $725 million. However, the Zomato Blinkit merger was the pending

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sanction of the board of Zomato, which has finally revealed to conduct a meeting on June 17,
2022, and give its nod regarding the deal of acquisition of Blinkit.
It has also been revealed that Zomato will not need the Competition Commission of India's
(CCI) nod for this acquisition deal, and will be evoking the 'de minimise' exemption, as per
the reports dated June 7, 2022. However, that didn't happen. Zomato eventually mentioned a
board meeting that will be conducted on June 24, 2022, where the Zomato board will be
discussing the potential acquisition traction, which will likely be providing its consent to the
Zomato-Blinkit acquisition. This deal, which was worth $568 mn then, was meant to be
approved on June 24, 2022, but it was pending some shareholders' approval, but now
the majority has approved the same.
As per the deal, Zomato will acquire up to 33,018 equity shares of Blink Commerce Pvt Ltd
from its shareholders. This was materialised for a total consideration worth Rs 4,447.48 crore
in stocks. As a result, it is prominent that Blinkit received a 43% haircut in its valuation.
Zomato's acquisition of Blinkit has been approved by 97% of its shareholders, as per the
company's BSE filing accessed on July 28, 2022.

Acquired Date Price

blinkit June 24, 2022 $568M

FITSO January 20, 2021 $10.51M

Uber Eats India January 21, 2020 $350M

TechEagle December 2018 -

Tonguestun Food Network Pvt Limited September 2018 $18M

Runnr September 2017 -

Sparse Labs September 2016 -

Nextable April 2015 -

MapleGraph Solutions Private Limited April 2015 -

Mekanist January 2015 -

Urbanspoon January 2015 $55M

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 Cibando December 2014 -

gastronauci.pl September 2014 -

Lunchtime August 2014 -

Obedovat August 2014 -

MenuMania July 2014 -

 Zomato :- Growth and Revenue

Zomato has grown far and wide ever since it brought in the disruptive idea of food delivery in
the Indian ecosystem of startups. As part of its new growth initiative, the company is looking
to come up with ultra-fast food deliveries for which Zomato is in talks with restaurant
partners and cloud kitchens. As per this new initiative announced on March 18, 2022, Zomato
will be launching a faster food delivery service that will deliver food within 10 minutes of
ordering. Zomato has already tried this experiment briefly in Bengaluru in 2021 and might
pilot this in some cities in the coming April 2022.
Zomato Co-founder and CEO, Deepinder Goyal has mentioned that Zomato is racing towards
profitability, and at the same time, keeping growth in mind. Furthermore, it is also looking to
protect the long-term view of how the Zomato business would look in the next 10-20 years
from now. Goyal said, “even our largest cities like Delhi are growing as fast as the smallest
towns. Every small area within Delhi is equal to a small town. The penetration is going up,
and the frequency at which customers order is going up.”
Zomato now has 3 different brands in operation - Zomato, Blinkit, and Hyperpure. This is a
reason why Zomato now needs a parent entity, as per Zomato chief Deepinder's words. This
entity would allegedly be named "Eternal", as of August 1, 2022. Zomato's food delivery
business, Blinkit, Hyperpure, and Feeding India will likely be a part of the "Eternal"
umbrella. The Zomato parent would also reveal a new logo soon.  
 Zomato :- Future Foundation
Zomato Future Foundation will be designed as a Zomato entity that will cover the costs of
education of up to 2 children of all the Zomato delivery partners. The total costs covered by
Zomato Future Foundation would be Rs 50,000 per child per annum on actuals. However, the
particular employee who will be able to avail of such a benefit will have to exhibit a quality
performance that should be over a certain benchmark and has to be associated with Zomato
for 5+ years.
Once the employee crosses the 10-year mark in his service in Zomato, the amount of the
education expenses covered by the company will become Rs 1,00,000 per child per annum.
Furthermore, Zomato will also provide scholarships for higher education over and above
these limits for children who will be exceptional in their performance and potential.

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