Name : Pooja Vitthal Ghuge

Roll no : MBA2518076

Guide by: Prof.Chitra Deshpande

Dr.Babasaheb Ambedker Marathwada University, Aurangabad

Mahatma Gandhi Mission Institute Of Management, Aurangabad

Part I
Name of company and industry
Parent company : info edge

Category : mobile application based

Sector : food and restaurant guide Zomato

introduction
Helping people discover great places around them.

gathers information from every restaurant on a regular basis to ensure that the data is fresh.

Building amazing experiences around dining.

Starting with information for over 1 million restaurants (and counting) globally, it is making
dining smoother and more enjoyable with services like online ordering and table reservations.

Globally spread From

Vancouver to Auckland, Zomato is used by millions every day to decide where to eat in over
10,000 cities across 24 countries.

One team

over 2000 passionate Zomans strong across 24 countries, and growing by the day. At last
count,its team represents 32 nationalities, and speaks twice as many languages.

Some start-ups in the Indian Food & Beveragesindustry have revolutionized the way we look
around forplaces to dine. The scenario has changed from previouspractice when we had to actually
go to restaurants toselect the restaurant and have the experience. Today,choice for the best places
to have food is just a clickaway. One can choose the best rated place and thendecide to enjoy there
with friends and family.

Zomato
Zomato is an online website which provides restaurantsearch and discovery service. It provides its
customers a platform to evaluate choices for great places to eat. It has setfoot on 22 countries including
India. The Gurgaonheadquartered company Zomato was named among the top25 most promising internet
companies in India bySmartTechie Magazine. Because of its
consistent performance and success, it has been successful in gettingregular investments from Info Edge
(India).
II PURPOSE
The purpose of this case study is to do an analysisof the way Zomato has scaled up its operations,
expanded its business into various countries. We also plan to find out thestrengths, weaknesses, future
opportunities and threats oftheir business model. This will ultimately help us understandthe F&B industry
and build our opinions about few businessscenarios which will help us build solutions to them.

PART II profile

1. industry profile
 a) History

Indian company that started as foodie bay back in 2008 from Gurgaon before it was rechristened
to Zomato in November , 2010. Zomato, founded in 2008, is India’s largest restaurant guide
listing over 42,000 restaurants across 12 cities in the country – Delhi NCR, Mumbai,
Bangalore, Chennai, Kolkata, Pune, Hyderabad, Ahmedabad, Jaipur, Chandigarh, Lucknow
and Indore. Zomato was started by IIT Delhi alumni in July 2008 for Delhi NCR and has
expanded its services over a span of 4 years to 12 cities in India. Info Edge has invested over
$6.5M in Zomato since 2010. Zomato has recently forayed into print as well with the Citibank
Zomato Restaurant Guide 2012. Zomato is headquartered in New Delhi and currently employs
150 people. Zomato has expanded into the international markets with the launch of their end
of 2012.

b) GROWTH
With an increasing demand from everywhere, it was evident that it was now time for Zomato to
grow and increase their reach and resources. It was time for the company to generate some
income too, so they first got a revenue model in place. The revenue model developed and
followed till date has the following attributes to it:

1. Restaurant advertising: This department accounts for approximately 75% of the revenue wherein they
place ads of customer restaurants.
2. Event advertising: In this stream they earn revenue promoting events on Zomato for restaurants based
advertisers accounting for 5% of the revenue.
3. Event ticket sales: Here they take commissions on tickets sold through Zomato which accounts for 15%
of Zomato’s revenue.
4. Consulting services: Restaurant chains ask for advice on where to open their next outlet/branch. They
research the same and charge consulting fees for providing that info.
Within a year of the first investment, Zomato was able to manage another investment of USD $
3.5 Million from Info Edge to for resource expansion and investment in refining technology.
They used this investment to make and launch applications for iOS, Android, Windows Phone
and BlackBerry devices. Followed by that, they also covered other cities like Chennai,
Hyderabad and Ahmedabad.
They also launched an events section on Zomato.com in 2011 but got it shut down soon after it
started because it overlapped its announcement of second round of funding.
In the years 2012-13, they raise more funds from Info Edge (India) worth USD $2.5
million & USD $10million respectively.
With these rounds of investments, Zomato first launched a Magazine of the content of the
website in collaboration with Citibank, named “Citibank Zomato Restaurant Guide” followed
by its first ever overseas expansion in countries including Dubai, UAE, Sri Lanka, Qatar, United
Kingdom, the Philippines, South Africa in 2012 and then Auckland, Wellington and Hamilton in
New Zealand in the year 2013. Zomato was everywC:\pooja project\map.webphere by now.
 But during all this glam-sham’ed hype and the fund raising Zomato was also facing a huge
crunch when it came to generating profits. Zomato Media Pvt. Ltd., the actual owner of the
website, reported a loss of INR 7.22 crores in FY2011-12 when the revenue was just INR 2.04
crores followed by a loss of INR 10.03 crores with revenue being INR 11.38 crores in the
FY2012-13.
Now in the FY2013-14, Zomato again booked a loss of INR 41.28 crores but at the same time
managed to generate revenue of INR 30.06 crores. This gave rise to a fund raiser worth a
whooping USD $37 million from Sequoia Capital and Info Edge collectively. With this round of
investment, Info Edge (India) Ltd. now holds a 50.1% shareholding in the company.
But at the same time, the fund raiser gave rise to the expansion of the company in Chile and most
parts of Europe as well in the year 2014.
 THE ULTIMATE SUCCESS
“With ultimate growth comes ultimate success. It is evident that the company is making losses
but it is also important to note that in the initial stages most of the companies go through losses
because they are at a stage where they are more concerned about generating strong, loyal and
reliable customer base. Such companies with such huge financial backing focus firmly on
strengthening the base of the company and making sure the company’s reach is not limited to
any boundaries. And the stats below point at the same thing:
1. In 2010, Zomato.com was named among the top 25 most promising internet companies in India by
SmartTechie Magazine.
2. Zomato reported around 2.5 million visitors on its website in March 2012 and currently it has a user base
of approximately 62.5 million.
3. It started-off with annual revenue of merely INR 0.06crores in 2008 and in the last fiscal they have
managed to reach INR 30.06 crores which shows a stable & gradual growth.
4. Zomato holds three international acquisitions; New Zealand’s Menu-Mania, Czech Republic’s
Lunchtime.cz and Slovakia’s Obedovat.sk, giving them a huge platform and recognition internationally.
5. Zomato now holds a post-money valuation of around INR 1,000 crore or around $158 million because
Sequoia Capital lately picked around 17.2 per cent stake as part of the latest investment. (FYI, this
happened on the day Deepinder Goyal became a father and he literally juggled between his wife in labor
and cracking a huge deal of which papers were awaiting to be signed on the nurse’s table)
6. Zomato.com currently has an Alexa Ranking (traffic ranking of a website) of 973, has 450,532 Facebook
Fans and 30,427 Twitter followers.
7. Zomato.com is currently termed as “Asia’s largest restaurant guide”!

Now it is obvious that the company has yet not attained its success but looking at all these factors
it becomes certain that the company is on its way to ultimate success and when we will look at
them a few years down the line, there definitely will not be a doubt about it in our minds.
Tags: Adobe, Amazon, eBay

c) International and national scinerrio

When Zomato had acquired Urbanspoon in the US and subsequently laid off employees
in India, critics had said that it had spread itself too thin. The company wasn’t
profitable in India, and it had tried to make its mark in competitive markets abroad.
Zomato had trudged on though, and eventually expanded to 23 markets globally.

It seems to have worked out well for them. In a blogpost, Zomato CEO Deepinder
Goyal has said that in terms of monthly users, Zomato is the number one player in 18
of the 23 countries they’re present in. Of these, 6 markets are profitable as well.

And the cities that Zomato’s doing well reads more like travelers’ checklist than an
Indian company’s international portfolio – Zomato’s a big player in places
like Auckland, Melbourne, Dubai, Manila, Istanbul and Jakarta.There are some names
that are conspicuously missing in the list, most particularly the US cities which
would’ve come to Zomato’s portfolio with the acquisition of UrbanSpoon. But Goyal
has earlier said that Zomato wants to focus on markets where it can be the dominant
player, and the US, which is heavily dominated by Yelp, doesn’t seem to figure in
Zomato’s future plans in a big way.

Instead, Zomato is focussing on smaller markets, such as Auckland in New Zealand.

Goyal goes on to explain that even though Auckland is small (you can fit 42 Aucklands
into NCR), and has fewer listings than NCR (6k compared to 16k), the higher average
order value in these markets, thanks to dollar rates, could make these cities crucial
to Zomato’s overall business.

And perhaps the number that jumps out of the report is this – 80% of Zomato’s traffic
comes from outside India. Zomato started its international expansion just 4 years ago.
Since that time, its number one spot in the restaurant reviews category in India has
been untouched, and after waiting for the longest time to jump in, has also become a
big player in the food ordering market . All this while, it has been furiously expanding
internationally, so much so that a vast majority of its users are not Indian.

While there are still the niggling questions of profitability, one thing’s for certain –
Zomato’s gone international in a way that has no precedent in the Indian consumer
sta When Zomato had acquired Urbanspoon in the US and subsequently laid
off employees in India, critics had said that it had spread itself too thin. The company
wasn’t profitable in India, and it had tried to make its mark in competitive markets
abroad. Zomato had trudged on though, and eventually expanded to 23 markets
globally.

It seems to have worked out well for them. In a blogpost, Zomato CEO Deepinder
Goyal has said that in terms of monthly users, Zomato is the number one player in 18
of the 23 countries they’re present in. Of these, 6 markets are profitable as well.

And the cities that Zomato’s doing well reads more like travelers’ checklist than an
Indian company’s international portfolio – Zomato’s a big player in places
like Auckland, Melbourne, Dubai, Manila, Istanbul and Jakarta.
There are some names that are conspicuously missing in the list, most particularly the
US cities which would’ve come to Zomato’s portfolio with the acquisition of
UrbanSpoon. But Goyal has earlier said that Zomato wants to focus on markets where
it can be the dominant player, and the US, which is heavily dominated by Yelp,
doesn’t seem to figure in Zomato’s future plans in a big way.

Instead, Zomato is focussing on smaller markets, such as Auckland in New Zealand.

Goyal goes on to explain that even though Auckland is small (you can fit 42 Aucklands
into NCR), and has fewer listings than NCR (6k compared to 16k), the higher average
order value in these markets, thanks to dollar rates, could make these cities crucial
to Zomato’s overall business.

And perhaps the number that jumps out of the report is this – 80% of Zomato’s traffic
comes from outside India. Zomato started its international expansion just 4 years ago.
Since that time, its number one spot in the restaurant reviews category in India has
been untouched, and after waiting for the longest time to jump in, has also become a
big player in the food ordering market . All this while, it has been furiously expanding
internationally, so much so that a vast majority of its users are not Indian.

While there are still the niggling questions of profitability, one thing’s for certain –
Zomato’s gone international in a way that has no precedent in the Indian consumer
startup ecosystem.

d) Some prominent companies in the industry,their performance/contribution

Competitors

Bookatable UK
Marketing - Subsidiary
LimeTray
Marketing - Private

Swiggy
Food & Beverage - Private

Just Eat
Food & Beverage - Public
2) company profile

Vision mission quality policy zomato

is basically a 9 year old ‘startup’, that provides reviews and listings about restaurants. At the moment,
they are in more than 20 countries and aim to get into 30 others. You can follow their updates via their
blog site - Here. Moreover, there is an interesting presentation about Zomato - Here. It provides a nice
overview of the startup as well as their strategy execution.

At the moment, Zomato does not seem to have a formal mission and vision statement, but according to
Pankaj Chaddah, co-founder and COO of Zomato, “We want to be the 'Google' of food. Our vision is to be
the global platform when someone is looking for food locally”. And according to its site, Zomato’s aim -
“Our mission is to ensure nobody has a bad meal”.

The mission is as simple that nobody has a bad meal! Life is too short to miss out on fun and food.

 Helping people discover great places around them.

Our team gathers information from every restaurant on a regular basis to ensure our data is fresh. Our vast
community of food lovers share their reviews and photos, so you have all that you need to make an informed
choice.

 Building amazing experiences around dining.

Starting with information for over 1 million restaurants (and counting) globally, we're making dining smoother
and more enjoyable with services like online ordering and table reservations.

 Enabling restaurants to create amazing experiences.

With dedicated engagement and management tools, we're enabling restaurants to spend more time focusing on
food itself, which translates directly to better dining experiences.

At Zomato, we're working on solving the challenges that take us a step closer to our mission every day !

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Related Questions

Organizational sturcure Zomato has a flat hierarchy

Edit:

Responsibilities of the employees at different level listed below:

Sales Team
 Its responsibilities include pitching to the clients, building networks,
contracting and payment collection.
 Working in teams and meeting the targets allocated.
 Reporting to Area Sales Manager
Area Sales Manager
 Maintains the overall financial health of the area.
 Allocates targets and incentives for the sales team
 Manages teams to handle client relationships.
 Pitching, negotiating and billing critical clients. Troubleshoots problems
related to complex clients.
 Formulates Area Reports (Revenue, Acc. Payable, team performance,etc.) and
reports to Sales Head of the city.
City Sales Head
 Holds the revenue responsibility of a city; Creates and monitors operating
plans for the city in coordination with the Business Head / Country Head.
 Ensures complete Product and Sales training of new sales joinees.
 Responsible for Networking in the merchant’s community and represents the
company at various B2B events.
Sales Manager (Brand Ambassador)
 Sells advertising space on Zomato to restaurants. Searches for prospective
clients and generate sales lead. (Small joints or a 5 star hotel).
  Distributes Zomato merchandizes for display at restaurants. Advises clients,
design marketing campaigns to amplify impact. Formulates result reports for
advertising campaigns and interpret them for clients. Works alongside
Graphics team to contribute to campaigns and maintain client relationship.
Country Sales Head
 Develop strategies to enter new cities and looks over the city Sales Heads as
well as the Sales Managers.
 Maintain financial levels of performance and records.

2) company profile
There has been a lot of confusion amongst our users, restaurateurs, and the media about our “cloud kitchen”
service. “Cloud kitchens” is a new phrase which doesn’t yet have a definition and is used for a wide variety of
business models.

With this note, we are hoping to clarify what we are planning to do, and the underlying business model.

Zomato Infrastructure Services is a kitchen infrastructure service where we will work with current restaurant
business owners to expand their business to more locations without incurring any fixed cost.

Key points to note about ZIS

What does “infrastructure” mean in this context?

Think of these infrastructure services as delivery only food courts in locations slightly off the premium
locations (think much lower rentals, but accessible); we will not have take-out or dine-in at these
locations.
Each location that we create for ZIS will have 4 or more restaurant brands co-located with each other,
leading to shared (and thus lower) costs; each restaurant brand will have its own space of roughly
300 sq ft.
These restaurants can choose to have owned/shared/outsourced delivery personnel – thus increasing
delivery efficiencies.
Locations are selected based on Zomato data – the initial pilots are being conducted in locations
where we know that the demand is high, and good quality (highly rated) supply is relatively low.
Most of these locations are densely populated mid-income areas in large cities, and second tier
cities in India.
Zomato will provide the real estate, build the kitchen and supply all the equipment for these brands to
just ‘walk in’ and start their business in a matter of hours.
Build out cost for these kitchens is low – we have invested time and energy in frugal and durable
engineering to make sure that we don’t incur large capex while constructing these kitchens for our
partners to use.
 To acquire cooking equipment, we are using Zomato data to identify restaurants which have recently
shut down in the vicinity and are acquiring this (almost new) equipment at a discounted value;
having said that, we are only procuring the best quality equipment which meets robust safety
standards.

What’s the tech angle?

The entire tech stack these kitchens would need is provided by Zomato free of cost to restaurants and
is part of the “infrastructure” services.
Zomato Base (POS), and Zomato Trace (Delivery Dispatching and Routing) are the two key
components of the tech that will go into these kitchens.
We can assume that these kitchens will be some of the most technically advanced kitchens ever
made.
We will use our data to help our partner restaurant brands create the right menu, and also have the
right pricing in these locations to maximise the probability of success of our partner brands.

Which brands will be able to use ZIS?

Zomato will not be cooking food by itself in these kitchens – unlike what some of the other aggregators
are doing, we don’t want to compete with our own customers (restaurateurs).
Only renowned and reliable operators will be eligible to use these kitchens (minimum rating on Zomato
cutoff will also apply).
Over time, this will help us help our closest partners to expand to markets outside their core cities of
operation. For example, we would love to bring Paradise Biryani to Delhi using Zomato
Infrastructure Services.
Restaurants which use our services do not have a lock in period. They are free to walk out (with one
month’s notice period) if this is not working for them. In this case, we will get some other brand in
that place.
Over time, we will allow multiple brands to share the same kitchens. For example, a pizza chain could
use a particular kitchen spot during the day, and a burger place could use the same spot at night for
late night deliveries.
FYI – these brands are not expected to be exclusive to Zomato for delivery. We will let these brands
list themselves on any other aggregator platform. In general, any new business by us will not
misuse the scale of any of our other businesses. All new businesses are expected to become
successful on their own, on the basis of their standalone P&Ls.

What’s in it for our users?

That’s the fun and most exciting part. The “front of the house” in these kitchens will be common. As a
user, you will be able to select dishes from multiple brands to build a single food order. So if you
 want to eat shawarma, and your friends want to eat pizza, that can be done in a single order. How
about also including a frappuccino, and an ice cream with your order?
This is something that’s very new, and is probably the first time in the world that this is being
introduced at scale. We are very excited about how our users will use this power feature which will
only be available on Zomato.

What’s the business model?

There won’t be any fixed cost for restaurant brands to use Zomato Infrastructure Services. In fact, we
will only charge them a nominal percentage of their revenue – we win only if these brands win. Our
ZIS team will act as a key partner for them to make their business successful, and in the process,
our business successful. Talk of win-wins – business doesn’t have to be, and shouldn’t be a win-
lose situation.
Restaurants will pay on top of this nominal fee for any other services that they use – e.g. Order Lead
Generation, Advertising, etc.
Over time, as we scale this business, our costs of operation should come down further and increase
our return on capital.

Who is leading this at Zomato?

Arvind Dixit – he was the COO of Wendy’s India in his previous role. He has been working with large
scale QSRs for all the 18 years of his work life.
The team’s plan is to stay lean and only grow up to a max of 5 people until we have about a 100
locations. A lot of the non-tech work is being outsourced to agencies who know how to handle
physical buildouts best.

What can go wrong?

Like anything, this also carries execution risks. Execution risks are too many to jot down here. But we
think we are well prepared, and we will execute well here.

OK cool. Where’s the first kitchen? And what are the expansion plans?

The pilot kitchen is in Dwarka. Starting to cook in the first/second week of March. We won’t have
another location for another 2-3 months. There’s a lot to learn from the first one.
Once we learn the business model’s nuances, and reasonably know how to bypass Murphy’s law, we
will expand to 5 locations very soon. Post that, after one more big iteration of the business model,
we will scale in second tier cities. We think we can really help expand the restaurant industry
beyond the top 7 metros with ZIS – and that’s where the real opportunity for ZIS lies.
 Our initial estimates tell us that with some hard work, we can have a 100 locations by the end of 2018.
As of now, we are not sure when and how this model will scale to our other strongest countries of
presence.

Why are we doing this? And what gives us the confidence that we as a company, are well positioned to
pull this off?

There are three unique advantages that we have as Zomato to be able to pull this off –

User penetration – we can generate demand for these locations through our app traffic, thus
minimising the chances of failure for these locations.
Data, tech – from our app traffic data, we know the most conspicuous locations with a supply/demand
mismatch.
Supplier Relationships – we are in the good books of most of the restaurant industry – our
relationships with the most prominent restaurant owners give us the leverage to help expand the
industry in a good way.

Technology and generating critical insights from terabytes of raw data are still the same,” he revealed.

Driving a data-driven culture at Zomato

Presently, the 150-strong engineering team at Zomato includes data scientists, product managers and analysts. “At
an individual level, I continue to be fairly hands-on working directly with data which takes 40% part of my time.
Another 30% of the time is spent in meetings with team members – clearing roadblocks, ensuring alignment
between data scientists/statisticians and ML engineers/developers who are putting models in production,” he shared.
Another 20% of Mehta’s time goes in meeting stakeholders from other teams – since the work directly impacts
different business verticals and product features, so alignment with business heads and product managers is critical.
“The rest 10% is dedicated to learning and developing – data science domain is evolving very fast, and it is crucial
to stay abreast of recent developments. For example, if we solely look at tree-based models, basic CART got
replaced by RF which got replaced by GBMs which is now being replaced by ensemble models – all this in last
three years,” he said.

Get started with deep learning using MATLAB

Staving Off Competition In The Foodtech Market With Machine Learning

According to a report by TechSci Research, the foodtech market in India is projected to grow at a robust pace, at a
CAGR of over 12% during 2016 – 2021. The growth is expected because of the increasing internet penetration and
proliferation of smartphone users coupled with budding e-commerce market and rising young working population.
In this backdrop, the number of foodtech players and aggregators have swelled –Swiggy, FoodPanda, InnerChef and
FreshMenu.

So, how does Zomato, an extremely data-driven company maintain a competitive edge? Gurgaon-headquartered
company is using machine learning to improve product UX, through personalisation and superior features, as well as
to drive more efficiencies into our commercial and operational verticals across both online ordering and restaurants
listing business.

At a time when every company is trying to position itself as a AI/ML company, Mehta emphasises how Zomato
firmly believes in and consciously practice “AI for business”. “There is no point building extremely advanced neural
net architectures to solve a problem which barely moves the needle for business KPIs. Entire prioritisation of all
kind of things that can be done through AI/ML is done on the basis of what the business and more importantly the
end user needs,” he shared.

When quizzed about the nascent machine learning engines at Zomato, Mehta said that the Zomato ML team has
been around for more than two years now. The initial focus was on user generated content moderation that involved
image processing, reviews NLP. This gradually increased to include product optimization,
personalisation/recommendation engines, feature improvements among other areas and is now extended into
commercial/operational aspects of the organisation.

Personalization @Zomato

Talking about personalization, Mehta shared it is a subset of recommendation engine – when you have enough data
points, one recommends restaurants on the basis of user’s affinity to specific cuisines, establishment types, locations,
and price bands. Else you resort to what is the most popular and/ or exclusive/new at a given location & time. “We
have observed that the click-through rates and overall order conversions (in case of Online Ordering flow) improve
by almost 15% when it is possible to personalise recommendations vs when we have to recommend the most
popular options,” he shared. The engineering team also performs NLP on reviews that enables the team to extract
the most discussed/popular dishes for a restaurant along with the sentiment of each review which then feeds into the
overall sentiment for food, ambience and service of the establishment. This further helps the team present the user-
generated content in a summarised way as review highlights.

Technology Stack @Zomato

Talking about the machine learning infrastructure at Zomato, Mehta shared the team uses Scala pipeline which
ingests data from S3 and performs ETL operations needed for machine learning algorithms. “Most of the machine
learning modelling happens in Python and leverages scale transformed historic raw data as input. The model once
finalised is then set up as a service in production, deployed on dedicated servers as dockerized REST APIs using
Elastic Beanstalk/ECS. Relevant user and item attributes are cached as much as possible for a quicker real-time
rendering of the model output,” he said.

Learning @Zomato happens via tech talks and huddles

Though tech talent crunch is a real problem in the National Capital Region, we are always on a lookout for the best
talent which is why despite the fact that we probably have one of the leanest engineering teams for a consumer
internet company, we are able to accomplish so much, shares Mehta. At this consumer internet company, a lot of the
learning is driven via internal tech talks and external huddles, and “on the job” training one gets in tech team. The
employees at developer level work under a very high degree of ownership and are entirely entrusted to solve the
problem at hand. “This drives them to think and articulate more as product managers and business owners, leading
to faster deployments and quicker resolution of the said problem. Technology/ engineering team hence becomes a
mean to an end, the end being able to provide an improved user experience that drives overall business growth,” said
Mehta, in closing.

Revenue profitThus begins Zomato’s recent blog and, apparently, the adage holds true for
the company too. The nine-year-old startup released a short form unaudited annual report for
FY2017. The numbers came as a surprise since the restaurant discovery and food ordering
platform was scaling back operations, trimming workforce, and facing valuation markdown until
last year. But these unaudited numbers reveal that the unicorn might well be back on track to
consolidate itself strongly in the food ordering space.

ADVERTISEMENT

Here’s how its financials stacked up in FY2017:

 The restaurant discovery and food ordering platform witnessed an 81% drop in the annual
operating burn for FY17 at $12 Mn compared to the $64 Mn in FY16.
  Revenues for the company’s Indian operations surged to $49 Mn– an 80% rise over FY16.
 March 2017 revenues alone have touched the $5 Mn mark paving the way for an annual
revenue run rate of $60 Mn in FY17.
 The average monthly cash burn for the period of December 2016 – March 2017 is a little less
than $250K globally, down from $4.2 Mn last March.
 The company crossed 2 Mn orders in March 2017 – a move that gave it a 23% month-on-month
growth.
 Food ordering revenue grew to $9 Mn in FY’17, 8x of FY16.
 Ad sales revenue grew to $38 Mn in FY17, an increase of 58% over 2015-2016.

The company also claimed that “user retention and increasing frequency is so good that even if
we don’t acquire any new users in April 2017, we will still grow 8% over our March volume.”

But that isn’t all. The company, in another blogpost, which went live last week, mentioned that
March will see ~23% growth over February 2017. Till date, they have served over a million
orders.

Zomato had a turbulent 2016 where it battled high cash burn and was solidly
consolidating/rationalising international operations. Amidst rising losses, it rolled back
operations from nine countries out of 23 overseas markets, in May last year. Investor HSBC
Securities and Capital Markets (India) Pvt. Ltd also slashed its valuation by about half to $500
Mn, leading to an erosion in valuation. In 2015 its advertising and promotional expenses
amounted to $3.54 Mn(INR23 Cr), rising to $6.78 Mn(INR44.15) Cr in 2016. Meanwhile,
salaries rose from $15.39 Mn( INR100 Cr) to $55.11Mn(INR 358 Cr) in 2016.

What Is Zomato Banking On?

The year 2017 comes with a significant turnaround for the company. Zomato is confident it is on
the road to profitability. As per the firm, what has helped is the focus on reducing burn,
ramping up revenue, and not compromising or cutting down on any growth engines.

More so, Zomato has been steering clear of a discount-based customer acquisition strategy. Last
month, in a blogpost the firm spoke about how there’s more to growth than discounts. “All that
matters is getting the right users/customers to try out your product and keep using it.”

The company, over the past one year, has brought in a number of strategy changes and launched
numerous new features to gain traction. The foodtech venture was founded by Deepinder
Goyal and Pankaj Chaddah in 2008 and has raised over $200 Mn in funding, and made 10
acquisitions.

Related Article: Riding The Wave Of Good Fortune, Foodtech Unicorn Zomato Gets Valuation
Markup To $1.4 Bn By Nomura
Let’s take a look at what’s working in Zomato’s favour:

A Recalibrated Ad Strategy

To start with, in mid-2016, Zomato redesigned its ad serving product to drive more value to users
as well as merchants. Thus, it stopped accepting advertising from low-rated restaurants. The new
product provided smarter targeting, simpler interface and greater visibility to the well-rated
advertisers. As per Zomato’s claims, this product rolled out globally by September 2016 helped
its merchants realise a 3x increase in value from advertising on Zomato.

The result – a significant 58% jump in ad revenues.

Further, its focus on enhancing the efficacy of its sales team led to over 83% growth in
productivity (revenue/headcount) in the ads business.

Launching Zomato Infrastructure Services

Newer initiatives too did their job in ramping up growth. For instance, the platform’s new
initiative for cloud kitchen services through Zomato Infrastructure Servicesand efforts to scale up
food ordering delivery along with table reservations gave the company an 8x surge in food
ordering revenues. More so, the focus was increased on user onboarding, experience, and
retention along with restaurateur experience and real-time payment settlements. This is what
helped in hitting 2.1 Mn monthly order volume in March while keeping unit economics positive.

The food ordering business – which contributes 20% to the company’s top line – is currently
present in 13 Indian and three Middle Eastern cities. Interestingly, this makes Zomato one of
the few Indian unicorns to have a global presence. While last year, it had rolled back
operations from nine countries, it will be launching soon in Beirut. Outside of India,
Melbourne, Dubai, Lisbon, Auckland are strong markets for Zomato.
 ADVERTISEMENT

Zomato is also banking on its cloud kitchen which rolled out in Delhi NCR recently. With this
service, the company will create kitchen spaces in areas where there is a lack of good
restaurants. Under the service, partnering restaurants will prepare and deliver food
exclusively for Zomato through these kitchens.

Table Reservations

The Table Reservations product was launched in July 2016 where users could book tables
via the Zomato app and website. This comes after Zomato acquired Nextable, in April 2015.
Currently, Zomato offers the table reservation option across24,000 restaurants in 12
cities. In the month of March, it claims to have seated 600K guests via the table
reservations product.

Zomato Gold

In March 2017. it also launched a premium membership programme, Zomato Gold, in

Lisbon and Dubai. The programme will be rolled out in India around June with Delhi,
Mumbai and Bengaluru being the initial stops. Simply put, it is a membership programme for
a premium nightlife experience in the cities of Dubai and Abu Dhabi, allowing users to have
an affordable experience. For this, it has partnered with 200+ restaurants, bars, and
lounges, so far.

Zomato Base

Another product it is banking on is the Point of Sale (PoS) product Zomato Base, which
is undergoing paid beta trials at over 200 restaurants. It is expected to see greater
 uptake this year across India, UAE and beyond. Zomato Base is an Android-based POS
system that helps a restaurateur manage day-to-day operations from a single platform. It
offers a variety of features for including menu, recipe, and inventory management, a built-in
payment solution that accepts debit and credit card payments, CRM, and real-time
analytics.

Zomato, meanwhile, faces tough competition in the food ordering space

from Swiggy among a clutch of competitors which include Foodpanda and Runnr. As per
a Mint report, the company’s filing with the Registrar of Companies showed that Swiggy’s
cash burn stood at around $2 Mn (INR13 Cr) per month in FY16.

Space is marred with high customer acquisition costs. Deepinder, however, allays these
fears by ending with his oft-repeated quote – “We are only 1% done”. It will be interesting to
see Zomato’s remaining 99% as the battle in the food ordering space further intensifies.

A Glimmer Of Hope

Zomato’s financials come a day after another Indian unicorn InMobi also declared that it has
become profitable. However, despite the high market opportunity, Indian consumer internet
companies are still struggling to generate revenues and become unit positive. In February,
Mint published a report on the financial health of 41 consumer Internet companies in
India.

According to the report, Flipkart leads the charts, accounting for 75% of the clubbed
revenues of all, but only 46% of the total losses, for the financial year ending March
2016. Snapdeal, Paytm, ShopClues, followed Flipkart to mark the second, third and fourth
position on the ladder, respectively. Sector-wise, as expected, ecommerce rules the
industry, amidst eight other sectors including health, auto, hyperlocal, services,
finance/insurance, real estate, travel and messaging service.

Hence, profitability and attaining positive unit economics still remain sore points for most
hyper-funded consumer internet businesses. In 2016 alone, 50 startups in the foodtech
space raised $152.3 Mn in investor funding, as per Inc42 Datalabs. The year also saw
over 37 shutdowns of foodtech startups. In such a scenario, Zomato’s path to reducing cash
burn, ramping up revenues is a beacon of small hope that after years of struggle, some
startups might finally begin to get it right soon – using energy and persistence to conquer all
things.

Achievements:

 The CEO has honored with NDTV Indian of the Year.

 Zomato generated its 95 % of revenues from the commercial advertisement in the financial year 2013.
 Zomato is in 77th position in Top 100 starts up in India.

Facts and Figures

1. The company has shown a very strong revenue growth over the years 2.5 CR(FY11-12),
11.38 CR(FY12-13), 30.6CR(FY13-14).
2. The company is still in the investment phase and not been able to make any profits as yet.
Operating profits recorded are -7.22 CR(FY11-12), -10.03 CR(FY12-13), -41.28 CR(FY13-
14).The company is currently running on the money it has raised from investors.
3. Zomatos five rounds of fundings have been as follows :- $ 1 million (August 2010), $3
million (Sep 2011), $2.3 million (Sep 2012), $ 10 million (Feb 2013), $37 million (Nov 2013)
4. Info Edge has invested in Zomato in all the five stages, with Sequoia Capital joining in the
last round.Info Edge now holds a stake of 50.1% in the company.
5. After their latest acquisition in eastern Europe, Zomato now has a presence in 15
countries:the UK, the Czech Republic, Slovakia, UAE, South Africa, New Zealand, the
Philippines, Portugal, Brazil, Chile, Turkey, Indonesia, Sri Lanka, and Qatar, and over 100
cities across India.
6. It claims to provide information on 250,000 restaurants, and currently sees over 23 million
monthly visits globally, across its web and mobile platforms.
7. The company earns about 95% of its revenues from advertising by listed restaurants. Ad
rates vary between Rs 5,000 and Rs 3 lakh a month, depending upon location, cuisine and
other factors. Other revenue streams include revenues from ticketing and restaurant
booking.

Why we believe the company is poised for strong growth

1. A very clear focus -Zomato has targeted a niche market and has been able to successfully
capture this market.Zomato has focused on building a simple to use yet effective product
making its users come back again and again.With every acquisition Zomato is building a
comprehensive product portfolio in its niche market. Even their latest acquisitions-
Lunchtime and Obedovat – have strong business models that cater to the local market
needs of discovery of lunch menus.
2. Monetization of the mobile app- We know that we are very much in the mobile era today.
Zomato receives a large part of traffic from its mobile app.Zomato’s mobile app has not
been monetized as yet leaving a huge potential revenue stream unexplored. Zomato also
plans to start charging its customers for table bookings from this year.
3. New product line – In an attempt to give their customers a cash free experience, Zomato is
coming up with a product which will allow users to pay restaurant bills through mobile
application. They plan to launch the product within 3 months starting with India and UAE.
Zomato recently added a social layer to restaurent discovery allowing its users to build
networks of foodies they trust, provide and seek recommendations and chronicle their food-
related experiences.
4. Global expansion plans -Zomato is also looking to enter the Canadian market, after which it
plans to focus on the holy grail of businesses – the North America market. They further plan
to expand to Vietnam, Jordan, Kuwait, Saudi Arabia and Ireland.
5. A very strong team -Zomato has a very interesting way of hiring employees to capture
newer geographies. It invites ex-entrepreneurs to build business from scratch. These
candidates are then allowed to spend an all expense paid week at Zomato’s Delhi office
and work with the company’s team on real, live projects . If things work out well, they are
hired. This has allowed Zomato to build a very strong team with an entrepreneurial mindset.

o
Deepinder Goyal, Founder & CEO, Zomato, is the Founder and CEO
of Zomato. Prior to starting Zomato, Deepinder worked as a management
consultant with Bain and Company in New Delhi. It was at Bain that
Deepinder conceived the idea of an online restaurant information service
after seeing the demand for menu cards among his colleagues. He left Bain
in 2008 to start Zomato (then foodiebay) out of his apartment and has since
overseen strategy and product development. Deepinder graduated with a
Mathematics and Computing degree from IIT Delhi in 2005 and hails from
Muktsar in Punjab.

Deepinder Goyal's Zomato

Zomato, if you have not used it yet, is a restaurant discovery website and mobile app. It lists information
on restaurants — menus, photos, reviews curated for credibility and contact info — for 180,500
restaurants in 36 cities.

It is currently in 11 countries (including India) and plans to be in 22 new countries in the next two years. It
makes its money from ads restaurants place on their pages. Restaurants advertise with Zomato because
of better targeting. They can pay only to be displayed when someone is searching for a location —
'Colaba', for instance — and further narrow it to be displayed only for 'take outs in Colaba'.

Deepinder Goyal and Pankaj Chaddah started Zomato (Foodiebay, in an earlier avatar) while still working
as consultants at Bain & Co in Delhi. A recent deal valued Zomato, the company Goyal started in his
bedroom four years ago, at Rs 1,006 crore ($161 million). The founders' equity — the stake held by him,
his co-founder and some employees — is now worth Rs 328 crore.

Zomato, founded in 2008, is India’s largest restaurant guide

listing over 42,000 restaurants across 12 cities in the country –
Delhi NCR, Mumbai, Bangalore, Chennai, Kolkata, Pune,
Hyderabad, Ahmedabad, Jaipur, Chandigarh, Lucknow and
Indore. Zomato was started by IIT Delhi alumni in July 2008
for Delhi NCR and has expanded its services over a span of 4
years to 12 cities in India. Info Edge has invested over $6.5M in Zomato
since 2010. Zomato has recently forayed into print as well with the Citibank
Zomato Restaurant Guide 2012. Zomato is headquartered in New Delhi and
currently employs 150 people. Zomato has expanded into the international
markets with the launch of their Dubai section and will expand to more
cities in the Middle East and South East Asia by the end of 2012.
Replying to Anil Mascarenhas of IIFL, Deepinder Goyal says, “Over 4
million Zomato users come to the website every month to search places for
dining out, home delivery, catching up or nightlife.”

Did the idea to start Zomato come from the demand for menu
cards among your colleagues?
Yes, after graduating, while I was working at Bain and Company, I noticed
people queuing up in the pantry everyday trying to look for menus to order
food and that’s when the idea struck me – what if we could access these
menus online. The users can use this website that will provide in-depth
information about restaurants and events (e.g. menu cards, contact details,
pictures, directions, rating and reviews) to its users helping them make a
well informed decision before stepping outside their house. One can also get
an opinion about the restaurants through the reviews written by people who
have already visited the place.

Explain to us your business model. To what extent is it scalable?

Besides the website, how else do you reach out?

We have always maintained that Zomato is platform agnostic – apart from
the website, we have apps for all major smartphones (Android, iPhone,
BlackBerry, Nokia OVi, Windows, etc) and are now also available in print
with the Citibank Zomato Restaurant Guide 2012. We want to reach out to
users across platforms and make the process of what to eat and where to
find it as easy as possible for them.

How did you go about convincing initial investors? What were

their apprehensions?
When it comes to consumer facing portals the biggest apprehension is
around the famous chicken and egg problem - customers find value only if
we have the most exhaustive in-depth information on restaurants while
restaurant owners find value only if we have enough customers. We solved
this problem though by providing a rock solid content platform which
provides all possible information for ~99% of restaurants across 12 cities in
India. This combined with the fact that we were able to find level headed
people to work with us gave our investors the confidence to invest in us.
YoChef puts the spotlight on emerging businesses and reputed personalities to help young
entrepreneurs learn from their experiences. Watch out for posts published under YoChef to
discover entrepreneurial journeys and life lessons.
1.
1. • Indian company that started as foodie bay back in 2008 from Gurgaon before it was
rechristened to Zomato in November , 2010. • features restaurant information such as
scanned menus and photos sourced by local street teams, as well as user reviews and
ratings. The company also provides cashless payment, online ordering, white-label apps,
table reservation, and point-of-sale systems. • In 2012 , it spread wings globally and started
acquiring restaurant listing companies in emerging markets.
2. 2. Deepinder Goyal (co-founder and ceo) • worked as a management consultant with Bain
and Company in New Delhi prior to Zomato. • It was at Bain that Deepinder conceived the
idea of an online restaurant information service after seeing the demand for menu cards
among his colleagues. • left Bain in 2008 to start Zomato (then foodiebay) out of his
apartment and has since overseen strategy and product development. • Deepinder
graduated with a Mathematics and Computing degree from IIT Delhi in 2005 and hails from
Muktsar in Punjab.
3. 3. Business expansion and strategy of Zomato •The six year old company currently operates
in 23+ countries including India, Dubai, UK, Brazil, Canada, Australia, Turkey, Poland and
New Zealand. •However, with on paper companies, Zomato's presence has crossed to over
40 countries in the world. •In 2011, Zomato started its operations in various cities like
Hyderabad, Pune, Chennai, etc. and also launched applications for cellular devices.
4. 4. Cont… • In the same year only, Zomato came up with a out of the box idea and created a
website named “zomato.xxx” , a site dedicated to food porn • Later on Zomato also
collaborated with Citibank to launch a print version of the content on the website known as
the “Citibank Zomato Restaurant Guide”. • On 15th October, 2015 Zomato changed business
strategies from a Full-Stack market to an enterprise market. This led to Zomato firing 10% of
its workforce which equals about 300 people.
5. 5. Acquisitions by Zomato • NextTable • Urbanspoon was its largest acquisition for $52
million in January and marked its entry into the US, Australia and Canada markets. • Last
year, Zomato had acquired dominant local restaurant search players in New Zealand,
1. • Indian company that started as foodie bay back in 2008 from Gurgaon before it was rechristened
to Zomato in November , 2010. • features restaurant information such as scanned menus and
photos sourced by local street teams, as well as user reviews and ratings. The company also
provides cashless payment, online ordering, white-label apps, table reservation, and point-of-sale
systems. • In 2012 , it spread wings globally and started acquiring restaurant listing companies in
emerging markets

6.

1. Poland, the Czech Republic, Slovakia, Turkey and Italy.

2. 6. Major Competitors of Zomato There are lots of competitors available but majorly

there are 3 Competitors

Bookatable UK
Marketing - Subsidiary

LimeTray
Marketing - Private

Swiggy
Food & Beverage - Private
Just Eat
Food & Beverage - Public

What is Zomato?

Zomato is an online portal which lists the information on restaurants, cafes and nightclubs also including
information on home-delivery options and other dine-out choices. Zomato was originally started by Deepinder
Goyal, IIT Delhi to help out his colleagues in search for menus of restaurants. It started as a small database of
restaurants’ menus which Deepinder circulated among his colleagues to help them save time while ordering food.
The activity took off very-well and Deepinder took it to an official level, naming the website Foodiebay.com.
Officially launched in July, 2008, the website started by listing over 1200 restaurants in Delhi-NCR region and by
the end of 2008, it had already crossed the mark of 2000+ restaurant listings. In the next 6 months, Foodiebay
expanded to Kolkata and Mumbai. Deepinder knew that local knowledge of the city is more advantageous while
assigning the job, hence, he carefully chose his executives.

Capital Investment

Zomato received an initial investment of Rs.4.7 crore from Info-Edge India in August, 2010. Due to high growth
rate of the company, they witnessed an increase in capital fund investment by Info-Edge. Info-Edge subsequently
invested Rs. 13.5 crore in September, 2011 followed by a $2.5million and $10million investment in year 2012 and
2013 respectively. By the end of this period, Info Edge almost had 57% share in the company. With its plan of
expansion to different countries and other cities of India, Zomato was blessed by a whopping $37million investment
from Sequoia Capital and Info Edge in November, 2013.

Business Model
 Zomato follows a simple business model. While starting
afresh in the new city, one person is assigned in each city to collect data about the restaurants and clubs around the
city. There is a centralized team based out of NCR which processes and cross-checks the data to confirm the
validity. The data is then processed to be put up on the website. There is a separate team for advertising, which sells
the website to the restaurant owners and attracts them to advertise with Zomato. 95% of the revenues are earned
from advertisements from the local restaurants, while the rest can be attributed to event ticketing and restaurant
booking.

Financial Analysis

Even though the company grew at a tremendous rate during its initial years, it witnessed an exponential growth after
rebranding itself with the new name. It is now a source of 600-odd jobs. The website observed a response from 8
million unique visitors by the end of 2012. The metros were the highest revenue earners and the company saw the
EBITDA break even in December, 2012.

The company generates its revenue from hyper-local advertising. It saw a remarkable amount of revenue amounting
to USD 2 million at the fiscal year ending March 31,2013. They now witness monthly revenues close to USD0.5
million.

Adapting with Demands

Zomato revamped its website to adapt itself to the changing requirements of the users. The revamped website had a
more focused approach on human opinions. The features of the new website are a better search feature with
additional filters as per user requirements, a more organized form of presenting the data, easy upload of photos.
They also re-modified the presentation of the reviews and added a personalization layer to the whole website.
Zomato is now viewed more as a social-network of foodies.

Marketing Strategies of Zomato

Reasons for success

Zomato is very high product focused. They ensure their customer gets the best products and they are happy. This
increased the brand loyalty among the users and they are happy to return to the website. Strategically, Zomato has
first mover advantage in the business they are in. Even though the business model is not inimitable, with the kind of
evolution Zomato is undergoing they are well set for future.

Effective use of analytical tools like Tweetdeck to gauge the interaction Zomato is able to extract from Twitter, to
track what’s happening in the network and respond quickly to loyal customers. They have been using Sproutsocial
tool as well to ease up responding to customers and monitor performance on social media.

Competitor Analysis

Just like Zomato, Google Maps started showcasing restaurants, different businesses etc. Even though it can be
considered as a competition because of similar business model, Zomato has a first mover advantage and has already
occupied large cities and fan base. In the Google maps model, only one thing which can be drawback for Zomato is
the accessibility. Many users use Google maps for navigation and Google has integrated maps with this data base
which reduces the intention to use Zomato in users. Zomato considers websites such as Justeat.in as substitutes
which have equal potential to eat up the market share of Zomato. Burrp is another website which has a similar
business model as Zomato. But Zomato also has a differentiator over other websites. While all websites just lists the
restaurants’ names and their ratings, Zomato takes a step further and gives the user, menu of the restaurant which is
updated every 90 days.

There are a lot of competitors in the market which give a tough competition. Some of the big names include Burrp!,
Yelp and Google. In addition to that, they also face a lot of challenges due to varying market demands in different
countries and different cities. They also see varying user behavior in different countries which poses a challenge to
design the market strategy for each market.
Future

With current valuation close Rs. 1000 Crore, Zomato is aiming to become a global internet brand. They have a plan
to use latest funding round to reach 22 more countries within next two years. Another goal they have set for
themselves is that in next three years they want to get enlisted on public exchange. Apart from India and UAE while
other countries are a tough nut to crack, Zomato is still working on globalising their business model and strategy to
set better future.

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Labels: Journey of Zomato. Manager's view MBA Guide zomato

What is Zomato’s revenue model? Zomato Business Model

One thought that comes to everyone’s mind is that Zomato is earning from this very business and

generating income source from this restaurant research business. How does Zomato earn money?

Think about the Zomato Business Revenue Model. Here are few sources explained briefly about the

same:
Online Advertisement
Zomato basically advertises the restaurant brands and showcase their specialties in a very sophisticated

way. Most of the revenue, we can say around 75% comes from this advertisement only. it is somewhat

similar to the Google app as whenever we enter our locality, we come across the various restaurants that

are located nearby along with their all the details. These are basically given the restaurants only to the

Zomato so as to make it appear in their search. This form of advertisement is obviously not free for any of

the restaurant merchandise.

Online Order for Food
Whenever some orders online for the food through the Zomato app, the implicit fee is charged to the

restaurant but not to the users for using their platform to make the orders. Well, it is the duty of the

Zomato to make the delivery at their doorsteps and this is what they will be charging for. This nominal fee

is also added to the revenue of the company.

Pre-booking of The Table
If some customer wishes to book a table in advance in any of the restaurants for the dine-in, then this

could be done through the Zomato app as this facility is also available in the some of the countries but not

all. The Zomato charges nominal fees to the restaurant for using the Zomato platform to book a table in

their respective restaurant. Zomato Whitelabel is the exact platform that manages all these tasks such as

booking of the table by giving a prior notification to the specific restaurant only that one has booked for.
Other Software Tools
The other tools used by people such as billing, search history, restaurant information, reviews, and

feedback are also getting through the Zomato app. Each and every tool used by the people to search for

a particular restaurant is chargeable but not free.

Business Page for The Restaurant
The restaurant can claim a particular page on Zomato by giving a preferable link in their cards or other

receipts. Well, the management of reviews and replies on this restaurant page also generates a good

amount of revenue for the company, Zomato.

Organizing Events
Restaurants organize various events on Zomato so as to allure the maximum mass to their brand and

engage them in various interesting activities. This event organization and offers and discount coupons are

chargeable by the company. on some eve, parties are organized at the restaurants with the venture of

Zomato and ample of tickets and passes are being sold. This is the undoubtedly the great form of

revenue generation for any company and eating point too.

The Restaurant Guide for People
Zomato started a new innovative idea of launching the restaurant guidebook for the people so that they

can know every nook of the restaurant in their localities and also know the minutest details of each one of

them. The book contains all the specialties of that particular restaurant and also acknowledges you with

the approximate cost for the dine-in for two people. This actually gives you an idea for your expenses
 which may tell you if a certain eating junction fits your budget or not. This s quite a practical knowledge

but very important also for one to know before their visit any place.

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Wrapping Up on Zomato Business Model

Well, this online food merchandise business is no doubt worth investing but one must have a strong base

and software to deal with all the masses. As dealing with all of them with such strong rivalries in the

market is not as easy as it seems to be. One must invest time in giving something new as newer is also

better and impressive to the people. Also, you need a good business model as Zomato Business Model.

So, any such is entertained only if a better version arrives.