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Business Model Of Zomato

Last updated on July 7th, 2020 at 12:45 pm

Business Model Of Zomato

Founded by Deepinder Goyal Pankaj Chaddah in the year 2008 Zomato is an online food delivery and restaurant aggregator company.

You can get the menus of the restaurants, can also see the reviews about the particular restaurant, and also you can order your food from Zomato application from the restaurants listed on their application.

These days Zomato also entered a new sector because of the Covid-19 pandemic where they deliver groceries to its users.

They have expanded their services in almost 24 countries and more than 10,000 cities all over the world. 

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Before moving to the Business Model of Zomato and its revenue model lets first see some of the facts and figures about Zomato.

Founders Of Zomato

Deepinder Goyal

He is the founder and CEO of restaurant aggregator and food delivery company Zomato, and before starting Zomato he was in New Delhi working as Management Consultant with Bain and Company.

While working in Bain and Company he got the idea of providing online restaurant information services and the idea came to his mind when he saw his colleagues demanding menu cards.

He belongs from Punjab and graduated from IIT Delhi in the year 2005.

Pankaj Chaddah

Another IIT Delhi graduate Pankaj Chaddah is Co-founder of Zomato, Deepinder and Pankaj were working in the same company Bain and Company and they became good friends and they shared the idea about starting an online restaurant information services company. 

History Of Zomato

Initially, Zomato was started as Foodiebay in the year 2008 but in the year 2010 they changed the name into Zomato and the name doesn’t have any specific meaning it is just a rhyme of Tomato.

In the year 2010 Deepinder and Pankaj went to a cafe to have their meal and there they got the idea that it will be much better if customers can get all the things in a go, and from their thought about building a mobile application.

And that was the time when the boom started coming in the smartphone industry and then they went to their chief technical officer and asked them to build a mobile application and after one and a half months they launched their application.

Then Zomato expanded its service to different cities like Mumbai, Chennai, Bangalore, Kolkata, and Pune. 

Then in the next year, they expand their services to even different countries like the UK, UAE, New Zealand, and many other different countries.

And as they gradually grew they expanded their business and launched many different features.

And today Zomato is very successful in 2/3/4 tier cities and doing great with their rivalry Swiggy.

Funding

Zomato Funding Rounds

They have raised their first funding between the years 2010 and 2014 which was approximately $16.7 million USD from the company Info Edge India.

And then in November 2013, they raised a whopping amount of $37 million from the company Sequoia Capital and Info Edge.

After reaching a valuation of $600 million in the year 2014 Zomato raised a funding of $60 million from three different Investors Vy Capital, Sequoia Capital, and Info Edge India.

Then they raised their next funding in April 2015 and the trio invested $50 million and again in September of the same year the company raised funding of $60 million from Vy Capital and a Singapore investment firm Temasek.

Then one of the biggest funding for Zomato was made in the year 2018 from Alibaba’s payment and financial $210 million and with this investment the company owned a 10% stake of Zomato and this funding increased the valuation of Zomato to $2 billion.

Acquisitions

If you see most of the startups when expanding their business they in the different countries prefer to acquire the business who are already in the same sector so that the startup doesn’t have to start from scratch in that particular country.

And if they acquire a company in the same country they mostly acquire those companies who can indirectly grow their business or maybe their rivals so that they can get the data of their customers and can increase their sales.

So the same thing Zomato did and acquired companies which can help them grow their business and here is the list of the acquisitions.

Till now Zomato has acquired about 12 different companies and they made their first acquisition in the year 2014 where they acquired Menu-Menia and the amount was undisclosed.

And then in September 2014 they bought 2 other companies which were lunchtime.

CZ and Obedovat.sk and for that, they paid a whopping amount of $3.2 million.

And then in the same year, they acquired Gastronauci and Cibando for an undisclosed sum.

In the year 2015, they have bought a Seattle based company for an amount of $60 million which was Urbanspoon.

Then in the same year, they acquired another three companies which were Mekanist, MapleGraph, and NexTable, a US-based startup.

They acquired Sparse Labs and Runnr in the year 2016 and 2017 respectively.

Then in 2018 for a huge amount of $18 million and stock deal TongueStun Food, Then for an undisclosed amount they acquired TeachEagle which works in drones which were Lucknow based startups.

And then in the year 2020, they made the biggest acquisition of UberEats which was a rivalry of Zomato and has a good market share in the food delivery market and that was as an all-stock deal.

Controversies

As you start becoming big many problems start coming into your path so Zomato also gets criticized many times for many different tasks.

The one which was criticized the most was the incident where one of the Zomato boys was caught eating the food from the food box of the customer.

After that Zomato fired that employee and apologized from their customers about the incident and after that incident, they started using tapes that were once used can not be used again properly.

And the next incident happened in Jabalpur where a Hindu guy asked Zomato to allot him a Hindu delivery boy but Zomato refused to do that by saying food has no religion.

After that people start criticizing them by saying if food has no religion then why would they fix halal and jhatka or Jain food in the food box.

And countering what Zomato said, those tags were fixed by the restaurant owners and not by Zomato.

Business Model Of Zomato

How Zomato Works?

Have you ever thought about how they are able to deliver the food to you so fast? How do they know where you are going to place your order?

They have developed their application in such a manner that whenever you place an order it first goes to the restaurant owner and then the signal goes to the delivery boys who are the closest to that restaurant.

If any of the delivery boys were free then he accepted the order and reached the restaurant where he showed the order he accepted then the restaurant owner handed him the order and he delivered you the order.

The secret of their quickness is the delivery boy was near the restaurant and the owner of the restaurant also cooked the food quickly.

How Zomato Earns?

How Zomato Earns Money

Zomato earns from the commission restaurants pay to register themself in their platform and they also charge from the restaurants if they want to promote their offers and also want to place themself at the top of the feed.

So this is all that you need to know about the business model of Zomato and if you have any questions regarding the Business Model of Zomato feel free to ask in the comment section.

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