Food-Techie At Zomato

WHAT STARTED AS a modest concept, “Foodiebay”, in July 2008, aimed at solving the lunchtime dilemma of finding restaurant menus, has since transformed into Zomato (renamed in November 2010 to avoid any possible conflict with eBay), India’s leading food and grocery delivery platform. The man behind the transformation is Deepinder Goyal, an alumnus of the Indian Institute of Technology (IIT) Delhi. At the time, Goyal was a senior associate consultant at Bain & Company. Recognising the potential of the online platform he had developed, Goyal made the bold decision to leave his corporate career and dedicate himself full-time to Zomato. The company has since innovated with products and strategic acquisitions, achieving unicorn status in 2018 and going public in 2021, cementing its position as a leading force in the food-tech industry.

As India embraced the smartphone culture with the advent of Android phones in 2008, soon Goyal’s platform, accessible on mobile browsers, offered a convenient solution for consumers seeking to discover restaurants and browse their menus. This made it easy for people to choose a restaurant before visiting or waiting at the establishment. In less than two years (November 2020), Goyal announced in a blog post that the platform had garnered 2 million customers and 8,000 restaurants. However, it wasn’t until 2015, a year after rival Swiggy pivoted into food delivery that Zomato ventured into this domain, a service it is now known for. At that time, India’s trust in e-commerce was still nascent, with even Amazon entering only in June 2013. The idea of ordering food online was unfamiliar to many, and building trust in this new service required time and effort.

Goyal’s passion for innovation and solving real-life problems led to the introduction of services such as restaurant reservations and the Zomato Gold membership programme. Zomato Gold was an exclusive dining and social drinking membership that offered perks, including a complimentary dish and drinks at participating restaurants. As Goyal explained in a blog post, “Gold can be used at our partner restaurants and bars in a very limitless way — any day, any hour, on the entire menu. That means Zomato Gold members get to save on every visit and all you need is your phone!” Members also enjoyed exclusive invitations to curated events such as wine-tasting sessions, new menu previews, pub crawls, chef cook-out sessions, food walks, and restaurant openings.

Despite its growth, Zomato faced challenges. In 2016, an HSBC analyst report lowered the company’s valuation to $500 million, citing concerns about its advertising heavy business model, lack of profitability in 23 markets, and increasing competition. Goyal swiftly responded with an email to 2,100 employees he calls Zomans, addressing each concern in detail and reassuring them that they were only at the beginning of their journey. The perseverance paid off in February 2018 when Zomato achieved unicorn status with a valuation of $1.1 billion.

By prioritising innovation and customer experience, the company introduced user-generated reviews, restaurant ratings, and analytics for restaurant owners, solidifying its position as a comprehensive food discovery platform. Just before the pandemic in January 2020, Zomato acquired Uber Eats India, cementing its dominance in the Indian food delivery market.

An unforeseen roadblock emerged in the form of Covid-19. Lockdowns imposed across countries weighed heavily on the company. While restaurants were allowed to operate for takeaways, delivery boys faced challenges, and consumer sentiment was negatively impacted by fears of ordering food online. Despite these obstacles, in the long run, Zomato’s food delivery business continued to grow. According to the FY24 annual report, of the key businesses Zomato operates in B2C and B2B, gross order value of its food delivery business stood at ₹32,224 crore, a 23% growth YoY, while adjusted revenue increased 27% YoY to ₹7,792 crore.

The company responded to the pandemic by introducing services such as no-contact delivery, contactless dining, and extending Zomato Gold memberships. It expanded into grocery delivery in over 80 Indian cities to support essential supplies. As Goyal acknowledged, “our delivery network is second only to India Post, and we’re committed to using it to serve the community.”

Next, the rapid growth of quick commerce led Zomato to prioritise this segment, culminating in the acquisition of Blinkit in mid-2022 for $568 million. Goyal believed this acquisition would strengthen Zomato’s core food business and ensure long-term success. Unlike its competitor Swiggy, which integrated grocery delivery within their main app, Goyal maintained Blinkit as a separate brand. This strategic decision has yielded results, as Goldman Sachs recently valued Blinkit higher than Zomato at $13 billion.

In July 2021, Zomato filed an initial public offering (IPO) to raise ₹9,375 crore. It debuted with a nearly 65% premium. To further expand its offerings, the company is developing a new District app, poised to compete with platforms such as BookMyShow. This app aims to be a comprehensive platform for dining, movies, sports ticketing, live performances, and more. Zomato has already acquired Paytm’s entertainment ticketing business to bolster its position in this market.

Zomato’s consolidated revenue surged 71% YoY to ₹12,114 crore in FY24. EBITDA stood at ₹42 crore, while PAT reached ₹351 crore.

Amidst fierce competition, Goyal’s vision for Zomato goes beyond mere business growth. He is committed to building a sustainable company, and has set ambitious goals, including achieving 100% electric vehicle-based deliveries by 2030 and attaining net-zero emissions across its food delivery value chain by 2033. The company is focusing on sustainability by ensuring all food delivery orders are 100% plastic-neutral through voluntary recycling initiatives and by partnering with restaurants to minimise food waste.

Zomato supports Feeding India, a non-profit organisation that has served 170 million meals to date. Having a history of organising charity concerts to raise funds for hunger relief efforts through its partnership with Feeding India, the upcoming concert in November featuring international singer Dua Lipa is already sold out, demonstrating strong public interest. These events, featuring popular artists and bands, have not only generated significant funds but have also played a crucial role in enhancing Zomato’s brand image among Gen Z.