This can be an absolutely stupid question to ask, but have you guys heard of ‘Zomato’?
If you are a foodie, then bet you would have definitely heard of it (and even if you are not a foodie, common guys! it is a famous brand, you must know this name)
But while ordering food from it, have you ever thought how does it make money?
That is what we will be discussing today in this article.
We will be discussing the ‘Zomato Business Model’ today.
An Overview of Zomato
- Company Name: Zomato
- Founder and CEO: Steve Easterbrook
- Founded in: 2008
- Headquarters (location): Gurgaon, Haryana, India.
- Number of Employees (2020): 5000+
- Type of Company: Private
- Monthly Active Users (2020): 70M+
- Valuation (as per 2019): $2 Bn
- Annual Revenue (FY19): $206 Mn
- Loss -Net income (FY19): -$294 Mn
Introduction to Zomato
Zomato is a popular online food platform where you can rate/review restaurants, order food, and submit feedbacks for several countries (around 24) all across the world.
You might not know this, but ‘Zomato’ was not the startup’s initial name choice. It was initially called- Foodiebay (till 2010 November)
Zomato is an amazingly designed and managed company. It offers its customers with authentic information.
How does Zomato Make Money?
Since 2008, Zomato has come a long way.
Started from scratch, and now it is a popular brand-How on this holy earth didi that happen?
How did a normal Gurgaon based startup is now a household name?
All the credit for this goes to Zomato Business Model!
The overall effect on the entire Zomato Business is because of its Business Model.
And to be more precise, the reason for Zomato’s expansion and success is that it had opened various other channels for revenue(Business Model Diversification).
Wondering what these channels are?
Here is the simple answer:
- Restaurant Listings
- Food Delivery
- Live Events
- Zomato Kitchens
- White Lable Access
#Complete part-by-part analysis of the Zomato Business Model!
As of now, Zomato earns a lot! A LOT!
And the simple theory behind this is that they did not restrict themselves to only one source (Business part).
Zomato distributed its resources to several business parts.
Most of us know Zomato as the online food Ordering App. But it is much more than that. Trust me on this!
Let’s discuss each business part in detail.
1) Restaurant Listings
You know what?
At the start, Zomato was just a restaurant directory and listing platform.
But how did it made money?
The money came from the restaurants that joined hands with Zomato for advertisings and other purposes.
This was the scene earlier! Now it has changed.
After the addition of the food delivery part and restaurant reservations, the company now charges money(Commissions) from the restaurants to get a place in their feed.
Restaurants also pay Zomato for promoting their events, banners, and other stuff.
#Benefits of this!
This method has helped Zoamto to improve its overall visibility and conversion rates.
More and more now know about Zomato.
2) Food Delivery!
Food Delivery is like the trademark of Zomato.
Many of us know Zomato as only a delivery app. But it’s not!
Everyone can understand how Zomato earns via delivery. It is not that hard to grasp.
Zomato charges a commission from restaurants (on the basis of orders).
Every delivery earns Zomato a commission.
This commission is then distributed among the company and delivery partners.
But it is not like that every order you place will get Zomato a big commission. The commission rates vary on the fact that if the restaurants have used its own riders(for delivery) or not.
However, on the whole, food delivery doesn’t help make much profit because of massive competition n this field of work. Also, due to significant discount rates and offers, the company’s profit is less.
Many of the readers out there would definitely have the Zomato Gold subscription.
We live in an era where the subscriptions are a must-have(no matter if it is for Zomatoor for Netflix/Prime)
And you might not know this, but companies are earning a lot from your subscriptions.
The same is the case with Zomato.
I can not say A LOT but, it surely gets a steady flow of revenue (without a doubt).
On Zomato, the user can access the Zomato Gold Loyalty Programme by paying a particular fee (for subscriptions).
Also, Zomato makes users pay for Zomato’s Bouquet of Offers (wide variety of offers).
Besides, Zoamto also makes its users pay for the miscellaneous services throughout the month.
Some examples of Miscellaneous Services are:
- Packaging (Tamper-proof)
- Live Tracking
And this is how Zamt earns a smooth flow of revenues throughout the year.
4) Live Events
Zomato is not a small company; it is a famous company all across the country.
Whenever we think of ordering online food, the first two name s that pop up in our minds are Zomato and Swiggy.
na, that is the proof that Zommato is a band now.
And like all other Brands, Zoamto also organizes events where users have to pay for attending the program.
For instance, you all must have heard of Zomatoland. Now, everyone who attends that event has to pay fees for the same.
And it is not like you only pay money for food.
You get several other services like live music performances.
Back in 2018, Zomato organized a carnival event in the country capital(Delhi), Pune, and Bangalore.
And approximately 100K people attended it.
Now imagine the money that would have been made.
Isn’t that amazing!
5) Zomato Kitchens
Zomato is now also setting up Zomato Kitchens under the various labels.
They are doing so with the help of several entrepreneurs.
But why are they doing so?
The simple reason behind Zomato Kitchens is that the company wants to provide Kitchen infrastructure for the restaurant operators that are working for them.
Does it really help?
Zomato Kitchens help the entrepreneurs fund restaurants in the proper location. This takes up an investment of Rs 35 L INR and even more.
However, the company claims that it gives returns in the range of Rs 2 Lakh INR to Rs 4 Lakh INR per month to the investors.
They have about more than 180 affiliate kitchens already up and operating.
Partners of Zomato!
Some of the crucial partners of Zomato are:
- Uber: They have an alliance with Uber Taxi so that users can book a ride to the restaurant/food place where they are planning to eat.
- London & Partners: This is a collaboration that has helped Zomato to enhance its virtual foodie presence in the European regions.
The Final Word!
Today this popular startup is serving more than one platform. They are also successfully running several operations that are extended to cover more than 21 countries all over the world.
Currently, they are reaching out to millions of people and continuously expanding its customer base.
Zomato continues to expand its boundaries and improve the already existing ones.
This article was meant to explain the Zomato Business Model in such a way that all the new startups out there can take some notes from this successfully running company.