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How Zomato Works, Zomato Business and Revenue Model Explained

Chances are, you have used Zomato at least once. But do you know how this popular restaurant discovery and food delivery platform works behind the scenes? This blog post will deeply dive into the Zomato Business Model , revenue streams, and operations. From its humble beginnings as an online menu card to its current status as one of India’s most successful startups with global reach, we’ll explore everything that makes Zomato tick! So sit back, relax, and get ready to learn all about How Zomato Business Works ! It currently operates in 24 countries. The company provides menus, user reviews, and restaurant contact information.

What is Zomato & How Did Zomato Start?

Zomato is an Indian multinational restaurant aggregator and food delivery company. It was founded by Deepinder Goyal and Pankaj Chaddah in 2008.

In July 2008, Deepinder Goyal and Pankaj Chaddah, both graduates of the prestigious Indian Institutes of Technology (IIT), joined forces to establish Zomato, initially known as Foodiebay. The inception of Zomato stemmed from Deepinder’s observation that his colleagues often struggled with paper menus while ordering food from various restaurants. Recognizing the need for a more convenient and accessible solution, they embarked on transforming restaurant menus into a user-friendly digital platform.

Within a mere nine months, Zomato emerged as Delhi’s premier dining directory, swiftly expanding its reach to other cities fueled by its initial success. By 2012, Zomato embarked on an ambitious international expansion, venturing into countries such as the United Kingdom, South Africa, Sri Lanka, New Zealand, Brazil, among others. However, to avoid potential legal conflicts arising from the resemblance of its former name ‘Foodiebay’ to ‘eBay,’ the company underwent a rebranding in 2010, officially adopting the name ‘Zomato.’

In 2015, Zomato diversified its portfolio by venturing into the food supply business and introducing Gold in India, a subscription-based product offering complimentary food and beverage items to subscribers. Additionally, Zomato launched HyperPure, a venture aimed at collaborating directly with farmers to enhance the quality of food products supplied to restaurants, ensuring freshness and sustainability.

Funding History:

Zomato has garnered a staggering $909.6 million from various investors throughout its journey. Notably, the leading investor is Info Edge, with significant contributions from Ant Financial, Delivery Hero, Shunwei Capital, Vy Capital, and several others, contributing to Zomato’s global prominence.

Let’s delve into some key milestones in Zomato’s funding history:

November 2013: Secured $37 million from Sequoia Capital and Info Edge India.
November 2014: Raised $600 million from Vy Capital, Info Edge, and Sequoia Capital.
September 2015: Raised $60 million from Temasek and Vy Capital.
October 2018: Received $250 million investment from Chinese company Alibaba.
Additional funding of approximately $150 million was raised from Ant Financial in 2018.
Operational Insights:

Zomato boasts a workforce of over 5,000 employees across various roles and pay scales. Monthly user base: 80 million users. Availability in multiple languages including Spanish, Czech, Turkish, Italian, and Vietnamese. Presence in 24 countries. Remarkably, Zomato adds a new restaurant to its platform every 30 seconds. Zomato’s relentless innovation and strategic expansion have solidified its position as a global leader in the food technology industry, catering to millions of users worldwide with unparalleled convenience and efficiency.

Types of Zomato Business Models

Zomato operates using several business models to serve its diverse customer base and meet various needs within the food industry. Here are the key types of Zomato business models:

Aggregator Model:

Zomato acts as an aggregator platform, partnering with restaurants, cafes, and eateries to list their menus, prices, location details, and customer reviews. Users can browse these listings, place orders for delivery or pickup, and make payments through the Zomato app or website. Zomato earns revenue through commissions from restaurants for facilitating orders and transactions.

Delivery as a Service Model:

In addition to aggregation, Zomato provides delivery services to partner restaurants through its logistics network. This model involves managing the entire delivery process, from order fulfillment to doorstep delivery. Zomato charges delivery fees to restaurants for using its delivery services, offering a seamless end-to-end solution for food delivery.

Zomato Gold Subscription Model:

Zomato Gold is a subscription-based program that offers exclusive deals, discounts, and complimentary items at partner restaurants to subscribers. Users pay a subscription fee to access these benefits, while restaurants benefit from increased customer traffic and loyalty.

HyperPure by Zomato:

HyperPure is Zomato’s venture into the food supply chain business. It works directly with farmers and food producers to source high-quality ingredients and supplies them to restaurants. This ensures fresh and premium food products for Zomato’s partner restaurants, enhancing the overall dining experience for customers.

Advertising and Promotions Model:

Zomato also generates revenue through advertising and promotional services for restaurants. It offers marketing tools, sponsored listings, targeted advertisements, and promotional campaigns to help restaurants increase visibility, attract customers, and boost sales.

These diverse business models collectively contribute to Zomato’s success as a comprehensive food technology platform, catering to both consumers and businesses in the food industry.

A Step-by-Step Guide: How Zomato Works for Restaurants and Customers

1 Search for Restaurants: Zomato’s home page allows users to search for restaurants in their area by entering their location, cuisine preferences, or restaurant names. Users can also browse through popular restaurants in their area, top-rated restaurants, or restaurants offering discounts or deals.

2 View Restaurant Details: Zomato provides users with detailed information about the restaurant once a restaurant is selected. Users can view the restaurant’s menu, pricing, photos, location, and user reviews. The platform also provides information about the restaurant’s operating hours, contact details, and delivery options.

3 Place an Order: If a user wishes to order food from the restaurant, they can do so directly through Zomato. The platform allows users to select items from the restaurant’s menu and add them to their cart. Users can customize their orders by specifying additional requirements, such as dietary preferences or allergy concerns.

4 Payment: After placing the order, users can proceed to payment. Zomato supports various payment methods, including credit and debit cards, net banking, and digital wallets. Users can also opt for cash on delivery in some cases.

5 Delivery: Once the payment is confirmed, the restaurant prepares the order and sends it to the user’s address. Zomato’s delivery partners then pick up the order from the restaurant and deliver it to the user. Users can track their order status in real-time through Zomato’s app or website.

6 Review: Users can provide feedback about their experience with Online Food Delivery Apps in India . Zomato encourages users to rate the restaurant and leave detailed reviews to help other users make informed decisions.

Besides Online Food Ordering , Zomato also offers a restaurant discovery platform where users can browse and review restaurants in their area. The platform also provides restaurant owners with tools to manage their business listings, menu, and customer reviews.

Understanding the Zomato Business Model: How Does It Work?

Zomato’s business model is based on providing a comprehensive and convenient online platform for users to search for restaurants, view menus, read reviews, and make reservations. The company earns revenue through advertising and subscription fees from restaurants.

1. Restaurant Discovery: Zomato’s platform allows users to discover new restaurants based on location, cuisine preferences, and other criteria. Restaurants can create listings on the platform for free, but they can also pay to have their listings featured more prominently. This is a significant source of revenue for Zomato.

2. Online ordering and delivery: Zomato offers online ordering and delivery services, allowing users to order food from participating restaurants. Zomato charges a commission fee for each order, typically around 10-15% of the total order value. This is another significant source of revenue for Zomato, and the company has been expanding its delivery services in recent years.

3. Advertising: Restaurants can also pay to advertise on Zomato’s platform, which includes banner ads and sponsored listings. Zomato uses targeted advertising to reach specific audiences, such as users interested in a particular cuisine or type of restaurant. This is another important revenue stream for the company.

4. Premium subscription services: Zomato offers premium subscription services to restaurants, which provide additional features and benefits such as enhanced visibility and analytics. Restaurants can pay a monthly or annual fee to access these services. This is a relatively new revenue stream for Zomato, but it has grown in popularity as more restaurants looking to improve their online presence.

5. Data insights: Zomato collects and analyzes user behavior and performance data to provide insights to restaurants and other industry stakeholders. This data is valuable to restaurants as it can help them optimize their menus, pricing, and marketing strategies. Zomato also uses this data to improve its platform and services.

Zomato Business Model generates revenue through multiple channels, including advertising, online ordering and delivery, and premium subscription services. Zomato has become a leading player in the online food industry by providing services to users and restaurants. The company’s focus on technology and data has also helped it stay ahead of the competition and continue to grow its business.

Zomato Business Model Canvas

Zomato’s Revenue Streams: How Does the Food Delivery Giant Make Money?

Zomato’s revenue model is based on multiple streams, including:

Commission on Online Orders: Zomato earns commissions on every order placed through its platform. This commission is typically around 10-15% of the total order value. This revenue stream has become increasingly important for Zomato as it has expanded its delivery services.
Premium Subscription Services: Zomato offers premium subscription services to restaurants, which provide additional features and benefits such as enhanced visibility and analytics. Restaurants can pay a monthly or annual fee to access these services. This revenue stream is based on recurring subscription fees.
Data Insights: Zomato collects and analyzes user behavior and performance data to provide insights to restaurants and other industry stakeholders. This data is valuable to restaurants as it can help them optimize their menus, pricing, and marketing strategies. Zomato also uses this data to improve its platform and services. This revenue stream is based on data licensing fees.
Events and Reservation Fees: Zomato also earns revenue from hosting events and providing restaurant reservation services. This revenue stream is based on event fees and reservation fees.

Overall, Zomato’s revenue model is based on generating revenue through multiple channels, including online orders, advertising, premium subscription services, data insights, online ordering and delivery fees , and events and reservation fees.

Zomato for Businesses: The Ultimate Guide to Benefits and Opportunities

Here are some benefits of using Zomato for businesses:

Increased Visibility: Zomato has a large user base, and by listing your business on the platform, you can increase your visibility and reach potential customers who may not have heard of your business before.

Increased Foot Traffic: Zomato can help drive traffic to your restaurant by featuring your business in search results and recommendations to users looking for restaurants in your area.

Reviews and Ratings: Zomato allows customers to leave reviews and ratings of your business, which can provide valuable feedback to help you improve your offerings and service. Positive reviews can also help attract new customers.

Targeted Marketing: Zomato offers targeted marketing options, allowing you to reach specific audiences based on location, cuisine, and price range.

Cost-effective Advertising: Advertising on Zomato can be a cost-effective way to reach potential customers, as the platform offers a range of advertising options at different price points.

Analytics and Insights: Zomato provides businesses with analytics and insights to help them track their performance on the platform, including data on page views, user interactions, and customer demographics.

Overall, Zomato can be a valuable tool for businesses in the Online Food Delivery Industry looking to increase their visibility, attract new customers, and improve their offerings and service.

✅ Want to Know? The Cost Estimation for Developing App Similar to Zomato

Navigating the Changing Tides of the Food Delivery Industry: Challenges Faced by Zomato

The platform has faced several challenges over the years. Below are some of the significant challenges faced by Zomato:

Intense Competition: Zomato operates in a highly competitive market, with several players, including Swiggy, Uber Eats, and Foodpanda. The intense competition puts much pressure on Zomato to keep innovating, offer better services, and keep prices low to retain and attract customers.
Logistics and Delivery Challenges: One of the primary challenges faced by Zomato is the logistics and delivery of food. The company has to ensure that food is delivered on time and in good condition. Delays and mishandling can lead to dissatisfied customers, negative reviews, and loss of business.
Managing Quality Standards: Zomato works with numerous restaurant partners, and it can be a challenge to maintain consistent quality standards across all partners. Ensuring food is prepared, served correctly, and adheres to hygiene and safety standards is essential for customer satisfaction and brand reputation.
Dependence on Third-party Vendors: Zomato relies on third-party vendors for many of its operations, including logistics and payment processing. This dependence can create challenges, including disruptions in the supply chain and increased costs.
Regulatory Challenges: The food delivery industry is heavily regulated, and Zomato has to comply with various regulations, including food safety standards, taxes, and labor laws. Complying with these regulations can be challenging, time-consuming, and costly.
Managing Growth: Zomato has experienced rapid growth, expanding into new markets and adding new services, such as online ordering and table reservations. It can be challenging to manage this growth and ensure the company maintains its brand identity and customer base.
Data Privacy and Security: Zomato collects and stores sensitive customer information, including payment details and personal information. Ensuring this information is kept secure and protected from data breaches is crucial to maintaining customer trust and complying with data protection regulations.

In conclusion, while Zomato has become a household name in the Food Delivery Apps in India & USA and the restaurant discovery industry, it faces various challenges. These challenges require constant attention and innovation to ensure the company stays ahead of its competitors and meets its customers’ needs.

Zomato is a revolutionary food delivery service that has overtaken the world. It has become one of India’s most successful tech companies by leveraging its deep understanding of customers and creating an efficient online platform. Zomato’s Business and Revenue Model is simple yet effective and has enabled them to build the largest food-ordering network in the country. With its continuously expanding reach, Zomato will remain dominant in this space for many years.

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Zomato Business Model | How does Zomato make money?

Company: Zomato Founder & CEO: Steve Easterbrook Year founded: 2008 Headquarter: Gurgaon, Haryana, India. Number of Employees (2019): 5000+ Type: Private Monthly Active Users (2019) : 70Million+ Valuation (Oct 2020): $2 Billion Annual Revenue (FY2020): $394 Million Loss |Net income (FY12020): -$293 Million

Table of Contents

Introduction to Zomato

Zomato has proven to be a phenomenal foodie platform, providing a convenient way to review restaurants, feedbacks, listings in (now) over 24 different countries. The platform is even capable of giving insightful analytics for the restaurant to help route their business to exponential growth.

Zomato is a restaurant-café search and discovery service platform, idealized in 2008 by Deepinder Goyal and Pankaj Chaddah . The brand was originally known as Foodiebay till November 2010.

The platform is ideal for both food lovers and restaurant owners. Users can also view pictures and menus for restaurants that do not have a website of their own.

Any restaurant owner who wishes to list a menu can, regardless if the restaurant has an online presence or not. The platform allows restaurant owners to increase their restaurant business visibility through listing advertisements and special promotional menus through the Zomato platform.

The Zomato platform is designed with smart search engine filters, meaning that it will search for only relevant restaurants as per to the searched relevant keyword.

Zomato acts as the key-bridge to providing relevant information on potential restaurants for users that searches with keywords or keyphrases relevant to the restaurant.

Zomato has grown rapidly from a small food review website to a multinational giant serving over 70 million people every month, both in the food and entertainment business. It is now gearing up for a public listing in the first half of 2021 and focused on raising over $146.5 million in a Series J financing round. In October 2020, it raised close to $52 million from Kora Investments and $5.1 million from Pacific Horizon Investment Trust, which had previously invested $5 million in March 2020. Zomato has already raised over $270 million in 2020 alone from major investors like Tiger Global, Temasek, and Ant Financial. [ 1 ]

The following is a compilation of Zomato Business Model Canvas .

Business Model Canvas: Zomato

1. customer segments.

Zomato has three customer segments:

Users – Zomato platform is explicitly designed for users to find and locate restaurants in a range of various cuisines. Zomato is perfectly geared for customers who prefer home delivery .

Local Businesses – The platform further stands significant for restaurants who want to promote the business or restaurant name to help reach the target audience . Zomato was built on market and trend research. Marriot International is one of the latest global hotel chains to join Zomato’s long list of customers. Zomato will work alongside Marriott on Wheels to enhance its corporate outdoor catering services and home delivery services in partnership with close to 30 hotels across all major cities in India. [ 2 ]

Reviewers (content contributors) – these are active reviewers, who add reviews and photos of local restaurants or businesses on Zomato platform.

2. Value Propositions

Zomato is an exceptional platform for diners to review a wide range of different restaurants in their serving area. At the same time, it allows restaurant owners to differentiate themselves in the market place, even if they are the owners of more than one restaurant.

Zomato further serves as a bridge between restaurant owners and hungry customers.

Screenshot showing Zomato’s mobile app and its features

Zomato provides a comprehensive pricing model for the food delivery services , providing insightful details to the overall cost, duration, etc. of the delivery order.

Additionally, Zomato provides membership and loyalty program to build loyal customer base. For example, Zomato Gold membership and Piggy Bank loyalty program ensure that customers get additional value for their money. In 2020, Zomato moved all Gold members to the newly unveiled Zomato Pro. Users on Zomato Pro get a variety of features and upgrades like instant food delivery services and a money-back guarantee from newly registered hotels, bars, and lounges. [ 3 ]

Super excited to introduce Zomato Piggybank – https://t.co/I4xs5NHHwd pic.twitter.com/h1Hrxhqy6t — Deepinder Goyal (@deepigoyal) July 10, 2018

3. Key Partners

Zomato has built an alliance with Uber Taxi for users to book a ride to the restaurant that they plan to dine at.
The clever innovation eliminates users from dealing with two different apps. Especially when customers are trying to review, pick, and find the best place to dine, all in a smooth, simple way.

London & Partners

Zomato has built an alliance with London & Partners to help expand their virtual foodie presence in the European regions. London & Partners were responsible for aiding Zomato with:

Finding an office location in London.
Assistance with the staff hiring process
Insightful advice on salaries
Management recruitment
Work placements
Market research
Advising on accountants and legal procedures, policy, and compliance.

Other business partners – These are electronic payment companies like Visa, PayPal .

Seasonal partners – Zomato partners with companies from time to time, particularly during the holidays. For instance, Zomato partnered with the Singapore Tourism Board to stage an elaborate digital event called Zomaland in June 2020. The virtual event enables the tourism organization to engage Indian consumers successfully while maintaining social distance. [ 4 ]

4. Key Activities

The business model is incomplete without analyzing the key activities of a company. Although Zomato’s primary purpose was to make restaurant hunting exceptionally easy and convenient, it also has various key activities which are listed as follows.

Manage Network effects : As aforementioned, Zomato provides local restaurant search service to the users, currently operating in 24 countries. It provides details and reviews of restaurants. The information includes data about the food items, contact info, and address of the restaurants.
Manage and Utilize Advertising : Zomato has an enormous user database which it uses for advertisement. The company makes the most of its solid presence and brand popularity by posting advertisements for various restaurants, generating a considerable amount of revenue.
Drive Customer Experience Initiatives : Zomato initiates a lot of activities to improve its customer’s experience and keep updating its features as per the trends. In April 2020, it expanded its online food aggregator platform to include contactless dinin g features that allow diners to scan a QR code on the table to check the menu, then place orders and make payments using the app. The feature reduces interaction and contact between staff and diners when they visit restaurants. [ 5 ]
Enhancing Brand Image : Zomato maintains its brand image by providing a sense of community for foodies and facilitating people the exact information about “What to Eat and Where to Eat.”
Expand and Diversify their service offer:
Online food delivery and subscription : Zomato was not a delivery service at the beginning, but eventually it launched it’s delivery and subscription feature as well. However, the section does not generate much revenue for the company as it faces fierce competition from Swiggy .
Consultancy to Restaurant Owners : Zomato has a massive database of users, revealing many significant facts about their behaviors, likes, and dislikes. Zomato offers data consultancy services to many eateries and new restaurants in town.
Zomato Whitelabel: Zomato also provides service for restaurants to develop their own app through a platform known as plug and play.

5. Key Resources

Zomato has a massive database on restaurants, café, and similar business places across cities in 24 countries. Zomato aims to build new alliances and capture the global market.

High-Quality Database – Massive Database of restaurants and businesses

Employees – that are working diligently to extend its outreach, apart from the current 24 countries.

Zomato Platform

A community of content contributors or reviewers

Zomato brand reputation

Funding Partners – Zomato were able to raise millions through funding channels. Top investors include Ant Financial, Sequoia Capital, Temasek Holdings, Info Edge, and Vy Capital. In the recent past, other investors have joined Zomato, including Asia Growth Fund, Steadview Capital, Luxor Capital Partners, Lugard Road Capital, and ASP India LP. The investors are part of a $525 million financing round, which is estimated to reach around $600 million. Currently, India’s company regulator values Zomato at $3.4 billion. Zomato is also set to raise more capital once it debuts for the 2021 IPO. It seeks to issue 34,873 class J7 CCPS shares to the investors at Rs 300,235 per share to raise Rs 1,047 crore ($141 million). [ 6 ]

Cloud and Zomato Kitchens – It provides kitchen infrastructure services by partnering with entrepreneurs to set up and operate Zomato Kitchens in selected restaurants under different labels. Entrepreneurs first have to find restaurants in the right location that they wish to fund, and then Zomato invests INR 35 Lakh or more. Zomato has already set up over 180 affiliate kitchens with its partners and eliminated exclusivity for cloud kitchens, which allows its restaurants to list on rival platforms such as Swiggy . [ 7 ]

6. Channels

Zomato offers its platform accessible through multiple access points:

Application (smartphone or tablet)

Zomato Official Website

Food Porn (Zomato has also created a site specifically for the food porn industry, providing an exclusive photo of exotic foods from around the world)

7. Customer Relations

Convenient Self Servicing : Zomato provides its customers independence to make the right choice, providing all the options and information which leads to comfortable self-servicing.

Up to Date Ratings and Reviews : Users enjoy Zomato’s transparency in their ratings and reviews, providing authentic information to users about the quality and service of restaurants. It started testing a new feature in October 2020 that allows consumers to post their reviews of restaurants , photos of their favorite foods, and a short story on the app for their friends and food bloggers to see directly from the app’s feed. [ 8 ]

Customer Engagement Activities : Zomato initiates customer engaging activities like offering coupons and tickets.

Active Communication Channel and Customer Support : Zomato has a reliable customer support service platform and maintains effective communication with its customers.

8. Zomato’s Cost

The total cost of Zomato’s FY18 was $80 M, which has increased to $500 M in FY 19 . An immense shift indicating how much the business has expanded.

The annual cost of $ 500M is utilized in the following operations.

Platform development

Zomato invests graciously on improving its online presence, brand value by enhancing its online portal, customer service, and enhanced marketing operations.

Branding and advertisement cost

Zomato launches a lot of various marketing campaign top maintain its popularity, which of course requires a great deal of investments. In 2019, it introduced the Zomato Premier League with a diversified kitty of TV ads and offers like predicting the winners in particular matches to get further discounts. ZPL’s gamification and offers appealed to the foodies watching cricket and attracted over 4 million participants within the first three weeks of the IPL in 2019. [ 9 ]

Credit card processing fees

Zomato pays for its credit card transactions operations as well.

Legal and accounting fees

Zomato pays other legal fines and payments for acquiring different licensees and taxes.

Office maintenance cost

Zomato operates from 24 countries including Portugal, India, United Arab Emirates, Qatar, Turkey, Indonesia. The company bears office maintenance cost for all of its offices.

Employee’s salary

Zomato has over 5000 employees overall with different pay scales.

9. Zomato’s Revenue

Zomato’s revenue similarly increased in FY19 compared to FY18. In FY19 , Zomato’s revenue is $206 M – a total of three times more than the FY18 (which was $68 M )

How does Zomato make money?

Now let’s see how Zomato makes money based on a few high-level categories:

The delivery service, dine out membership, advertisements, promotional deals, exclusive offers that Zomato offers are the primary revenue generators for Zomato.

The commission from delivery transactions constitutes about 75 % of the total revenue for FY 19.
Zomato delivery services earned $38M in FY18, while in FY19, the revenue from the services increased, generating almost $155M , indicating 4 times more growth than the last year.

Dining Out

Zomato has partnered with restaurants to provide complimentary food and drinks to its subscribed members. The membership is called as Zomato’s Gold membership program . The annual membership fee is Rs 1,199 , and the program has over 1 million active subscribers. All subscribers under the Gold program were upgraded on August 1, 2020, to its new subscription package called Zomato Pro that offers to dine out privileges and discounts on the best restaurants. As of July 2020, 50% more partner restaurants had already signed up on Zomato Pro than on Zomato Gold. [ 10 ]
The dining out section also saw an increment in sales with $30 M in FY18, while $49M in FY19.

Ticket Sales

Zomato also sells tickets for several of events and shows. Zomato earns a commission through these types of sales and deals. Zomaland is one of the most successful live events organized by Zomato, which attracted over 100,000 visitors when it debuted in 2018 across Delhi, Bengaluru, and Mumbai. In 2019, it expanded to over 10 cities and enticed major partners like the Singapore Tourism Board. In 2018 and 2019, Zomato increased its revenue by charging attendees entry fees but was forced to live stream virtual Zomaland@home carnival in June 2020 on its app and the Zomaland pages on Facebook, Instagram, TikTok, and Helo to avoid gatherings and interactions. [ 11 ]

Consultation Services

Zomato also offers consultation services and data analytics services for clients, prospects.

Sustainability:

In the past few years, Zomato has shifted its focus on being a transactional company instead of relying a hundred percent on its advertising revenue. The company is trying to balance its both features the delivery and the dine out which has generated a revenue of $2M in the sustainability department. In the early years, more than half of its revenues came from ad sales that grew from $38 million in 2017 to $46 million in 2018, representing 62% of its total revenues in FY18. Even though Zomato continues to charge commissions for listing and promoting restaurants on its app’s feed, it stopped considering ad sales as a standalone revenue stream. In 2020, Zomato considered reducing its commission charges by 5% after it received a request from the hotel association. [ 12 ]

Final Thought

Zomato happens to be one of the most successful platforms that was originally launched in India. Today it’s serving platforms and operations have extended to over 21+ countries and are determined to continue to grow its customer base.

Zomato is working on many new business endeavors. However, this doesn’t limit Zomato from further implementation and improvement to their existing platforms and software applications.

References & more information

Bhallah, T. (2020, Nov 6). Zomato to raise $146 mn as it preps for IPO in 2021 . Live Mint
PTI (2020, June 12). Marriott enters into a pact with Zomato to expand the home delivery service . Deccan Herald
Flick (2020, July 5). Zomato Pro: New Features like ‘Money-Back Guarantee’ & More . Flick-on-Click
Editor (2020, June 4). Singapore Tourism Board Partners with Zomato to bring a virtual weekend festival experience . Indian Newz
Tandon, S. (2020, April 18). Zomato plans contactless dining post-covid-19 . Live Mint
Rai, S. (2020, September 11). With food delivery bouncing back, Zomato plans IPO next year . The Print
Shrivastava, A. (2020, Feb 05). Zomato lets go of exclusivity for cloud kitchens . Economic Times
Harsh, U. (2020, Oct 20). Zomato pilots feature to post stories and reviews through the feed . Entrackr
Pragati, B. (2020, April 20). A guide to the winning Zomato marketing strategy . Talk Walker
Nandi, T. (2020, June 30). Zomato Gold is now Zomato Pro: Here are the extra benefits for customers . Live Mint
Dash, S. (2020, June 2). Zomato’s popular carnival Zomaland goes online as large gatherings remain banned due to Covid19 . Business Insider
FE Bureau (2020, October 14). Hotel association writes to Swiggy, Zomato, to cut commission charges on takeaway services . Financial Express

Tell us what you think? Did you find this article interesting? Share your thoughts and experiences in the comments section below.

A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

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Unlocking Success: Understanding Zomato's Business Model and Revenue Strategies

PV Vyshnavi , Apoorva Bajj

Zomato is an Indian restaurant search, discovery, and online food delivery service . The food tech unicorn was founded by Deepinder Goyal and Pankaj Chaddah in 2008. Zomato is well known throughout the country and has also managed to venture into many international markets over the years. It currently operates in 10,000 cities in 24 countries, including the USA, India, Australia, Brazil, New Zealand, Singapore, the United States and in the Middle East Qatar.

Today, Zomato focuses on online food ordering, restaurant reservations, loyalty programs, consultant services, and a lot more. Zomato is also a food search engine that works the same as Google's search engine but explores a wide range of food and restaurants. The company has grown from a home project to one of the world's largest food aggregators. Zomato not only connects people to food in every context but also works closely with restaurants to enable a sustainable ecosystem.

With its unique and sustainable business and revenue model , as well as a well-defined organizational structure of Zomato, the company has managed to remain a top player in the market. Zomato has become successful because of factors such as affordability, easy accessibility, and assortment, which have built trust among people from the years of service. Zomato continues to work on finding innovative ways to serve its customers.

Zomato - History Zomato - Business Model Zomato - Revenue Model Zomato - Value Proposition

Zomato - History

Founders of Zomato - Deepinder Goyal and Pankaj Chaddah

Zomato, which was earlier known as Foodiebay , was established in July 2008 by two IIT graduates, Deepinder Goyal and Pankaj Chaddah. The idea first struck Deepinder when his colleagues consistently had a demand for paper menu leaflets from different restaurants to order food. That is when he thought of converting the restaurants' paper menus to a digital app, which is far more accessible and easier to use.

In a matter of 9 months, the company grew to become the largest restaurant directory in Delhi and later expanded to other cities due to its success. By 2012, Zomato had started expanding internationally to countries like the UK, South Africa, Qatar, Sri Lanka, South Africa, New Zealand, Brazil, etc. During this course, the company had to change its name since its last four letters of ‘Foodiebay’ coincided with ‘eBay’ ; the company name was changed to Zomato in 2010 to avoid any legal issues.

In 2015, the company forayed into the food delivery business and went on to launch Gold in India, which was a subscription product under which subscribers would get access to complimentary food and drinks. Zomato also launched Hyperpure , which directly works with Farmers to improve the quality of food produce and supply fresh produce to restaurants. The company now views its business as a combination of three key large pillars: Delivery , Dining Out, and Sustainability.

Zomato - Business Model

During the initial phase of the company, Zomato used to scan the menu of the restaurants and keep it on the site, and the menu was received by people. It still follows the same formula but has also added other services to its operation. The business model of Zomato is quite different from that of other food delivery such as Swiggy and Foodpanda . The key partners of Zomato are Uber and London & Partners, which could launch Zomato in the UK within the expected timeline.

While the company's key resource is its large database of restaurants across 10,000 cities in 24 different countries , the business model is based on providing local restaurant search services, collecting data on food menu contacts, and providing relevant information to their customers. The main channels for Zomato are mobile applications and its website. The target audience of the company is the users who try to find local restaurants of various cuisines and restaurants who want their name to reach a large number of people.

Zomato also caters to customers who prefer home delivery; it helps out database and market research of companies . At the same time, the online service is built with a mandatory rating mechanism. Zomato's business model has revolutionized the food industry by incorporating various restaurants and making it convenient for people to find restaurants, provide feedback, and food business industries by incorporating various listings and availability according to their choice of cuisine.

How is Zomato Profitable when Swiggy and Dunzo are Burning Money

Zomato - Expansion & Impact

Zomato employs over 5,000 individuals, spanning diverse roles and compensation levels.
The monthly user base is 80 million users.
Zomato continually expands its platform, adding a new restaurant every 30 seconds.
Presence established in 24 countries.
Available in multiple languages, including Turkish, Portuguese, Indonesian, English, Hindi, and some regional Indian languages.

Zomato - Revenue Model

Zomato, in itself, does not offer the products to customers, but the revenue model of Zomato is massive. Zomato is not just a food business ; it is also in the advertising business . Zomato's business has two parts: one is the delivery business, and two is the advertising business. Today, Zomato has multiple revenue streams besides online ordering, which most consumers would be familiar with.

Restaurant Listings and Advertising

Zomato first started as a restaurant search and rating service. This brought in the advertising revenues from restaurants who joined the platform. They further extended this feature to food delivery and restaurant reservations; for this, Zomato charges commissions from restaurants that want to be placed on the feed. Advertising is Zomato's major source of revenue . The restaurants can promote their banner on the site in order to get better visibility and appeal to a large section of the audience via Zomato.

Food Delivery

Through the food delivery business, Zomato charges a commission to the restaurants based on orders . The company earns through restaurants that pay a commission for each delivery, which is then split among the delivery partners and the company. Zomato imposes a commission ranging from 20% to 25% on each order made at a specific restaurant, with potential variations in commission rates from 5% to 7% in certain regions. However, online food delivery only contributes a low percentage of income compared to other revenue streams because of the huge competition and the need to provide deep discounts .

Subscription Programs

The next major source of revenue for Zomato is a subscription fee. Restaurants pay a certain fee monthly; in return, Zomato offers them the analytical tools . Zomato has a huge number of databases that know what a customer wants to eat, where he/she wants to eat, and what the consumers are searching for, and it is given to restaurants, which helps them know about all this information through the cookies. It has a tool called Zomato Order which is given to restaurants, which tells them about consumers' interests. The restaurants then use this tool to flash their discount offers on food.

Live Events

Zomato has forayed into the events space by partnering with restaurants and creating limited events. By which they made a sale through the price of the tickets. Zomato recently introduced Zomaland and entered the live event market in 2019 . Zomato charges users an entry fee to attend Zomaland, where, besides food, they can witness live musical performances and other acts. Zomato also organized an entertainment carnival in 2018 in Delhi, Pune and Bengaluru , where more than 100 thousand people showed up.

White Label Access

The next source of revenue is app development. Zomato launched a service called Zomato Whitelabel, under which they give offers to restaurants to develop customized food delivery apps . It also works with cloud kitchens and restaurants for consultancy services . Zomato works with selected restaurant operators to help in identifying locations for expansions at a minimal fixed cost but with increased options for the user. It provides the requisite licenses and operational enablement for such restaurant partners.

Zomato Kitchens

Zomato also provides kitchen infrastructure services to select restaurant operators; it works with entrepreneurs to set up and operate Zomato kitchens under various other labels. This helps entrepreneurs fund restaurants in the right location with an investment of INR 35 lakhs. It also claims to offer returns in the range of INR 2 lakh to INR 4 lakh per month to investors and has so far completed more than 180 affiliated kitchens.

Zomato Gold

Zomato Gold is a premium subscription service offered by Zomato, providing members with exclusive dining benefits. Subscribers enjoy complimentary dishes or drinks at partner restaurants, making dining out a more rewarding experience. The service aims to enhance the dining lifestyle by offering special privileges and discounts at a wide range of top-rated eateries. Zomato Gold caters to food enthusiasts seeking unique culinary experiences while enjoying cost-effective perks. It has become a popular choice for those who appreciate both quality dining and savings.

Zomato - Value Proposition

Zomato Revenue Breakdown

The total revenue generated by Zomato in FY 22 was INR 4192 crore whereas its turnover in FY 2023 was INR 7079 crore.

The business model of Zomato offers a variety of value to its customers , while Zomato's revenue model focus has been on creating something new and extra that the customers cannot get anywhere else. Zomato is a one-stop shop for dinners and offers a way for restaurants to differentiate themselves. Restaurants have an option to create differentiation by keeping the listing updated, responding to criticism positively, and also by being accountable for their action.

Zomato's business plan believes in creating value for its customers to sustain its business operations. The company endeavors to bridge the gap between customers and restaurants by providing efficient technology applications, which, as outlined in the business plan, has played a crucial role in reducing delivery times and enhancing overall service quality.

What is Zomato?

Zomato is an online platform that offers food delivery and helps users discover restaurants with various dining options available.

What is the business model of Zomato?

Zomato operates on a commission-based model, charging restaurants a percentage fee for orders through its platform. Revenue is generated via subscription services, including Zomato Gold, which grants exclusive dining benefits.

What is the revenue of Zomato?

Zomato's revenue is ₹7079 Crores (2023).

How to contact Zomato for business?

You can contact Zomato through email to start a business with them.

What is Zomato for business apps?

The Zomato for Business app is for business owners. It is an interface with powerful features to get the most out of your Zomato listing.

Zomato operates in how many countries?

Zomato operates in 10,000 cities in 24 countries, including the USA, India, Australia, Brazil, New Zealand, Singapore, the United States, and in the Middle East Qatar.

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Decoding the Zomato Business Model. How does Zomato make money?

In this blog, we decode the zomato business model to help you understand how zomato makes money..

Zomato, a leading food delivery and restaurant discovery platform, has experienced tremendous growth since its inception in 2008. Its innovative business model has helped it transform the way people discover, order, and experience food. In this blog post, we’ll delve deep into the business model of Zomato using Alexander Osterwalder’s Business Model Canvas (BMC), a strategic management and lean startup template that enables businesses to describe, design, challenge, and pivot their business models effectively.

The Business Model Canvas comprises nine building blocks that cover the four main areas of a business: customers, offerings, infrastructure, and financial viability. These building blocks include:

Customer Segments
Value Propositions
Customer Relationships
Revenue Streams
Key Resources
Key Activities
Key Partnerships
Cost Structure

Let’s analyze each of these building blocks in the context of Zomato’s business model.

Zomato’s primary customer segments can be divided into three categories: end consumers, restaurants, and delivery partners. Each segment has unique needs and requirements that Zomato addresses through its platform.

A. End Consumers : This segment includes individuals who use the Zomato platform to search for restaurants, read reviews, and place food orders for delivery or pickup. They are looking for a convenient, reliable, and efficient way to order food and discover new dining options.

B. Restaurants : Restaurant owners and managers use Zomato to expand their customer base, increase their online visibility, and grow their sales. The platform allows them to showcase their menu, offer deals, and accept orders for delivery or pickup.

C. Delivery Partners : Zomato collaborates with delivery partners who fulfill food orders placed through the platform. These partners include freelance delivery personnel and third-party logistics companies. They benefit from Zomato’s extensive customer base and the opportunity to earn income through the platform.

Zomato offers distinct value propositions to each of its customer segments:

A. End Consumers : For end consumers, Zomato’s value propositions include:

i. Convenience : Zomato simplifies the food ordering process by enabling customers to search for restaurants, browse menus, read reviews, and place orders, all from the comfort of their smartphones.

ii. Variety : The platform offers a wide range of restaurant options, ensuring that users can always find something to suit their tastes and preferences.

iii. Personalization : Zomato’s algorithms and user-generated content help customers discover new restaurants and dishes tailored to their preferences.

iv. Loyalty Programs : The company offers the Zomato Gold membership program, which provides subscribers with exclusive deals and discounts at participating restaurants.

B. Restaurants : For restaurants, Zomato’s value propositions include:

i. Increased Sales : By partnering with Zomato, restaurants gain access to a larger customer base, resulting in higher sales and revenue.

ii. Online Presence : Zomato helps restaurants build their online presence by showcasing their menus, deals, and customer reviews.

iii. Marketing and Promotion : The platform offers restaurants promotional opportunities, such as sponsored listings and targeted advertising.

iv. Order Management : Zomato’s platform allows restaurants to streamline their order management process and improve overall operational efficiency.

C. Delivery Partners : For delivery partners, the value propositions include:

i. Flexible Earning Opportunities : Zomato offers delivery partners the flexibility to work on their own schedules and earn income based on the number of orders they complete.

ii. Access to a Large Customer Base : By partnering with Zomato, delivery partners can tap into the platform’s extensive user base, increasing their order volume and earning potential.

iii. Technology Support : Zomato provides delivery partners with the necessary technology tools, such as route optimization and real-time tracking, to improve their efficiency and delivery experience.

Zomato leverages multiple channels to reach its customer segments and deliver its value propositions:

A. Digital Channels : The primary channel for Zomato is its mobile app and website, which enable users to search for restaurants, read reviews, and place orders. These platforms also serve as the primary touchpoint for restaurants to manage their listings and accept orders.

B. Marketing and Advertising : Zomato uses various marketing and advertising channels, such as social media, search engine marketing, and content marketing, to increase brand awareness and attract new users to its platform.

C. Partnerships : The company forms strategic partnerships with restaurants, delivery partners, and other businesses to expand its reach and improve its service offerings.

Zomato maintains strong relationships with its customer segments through various initiatives and engagement strategies:

A. Personalization : Zomato uses data analytics and algorithms to tailor its platform to individual users’ preferences, ensuring a personalized experience for each customer.

B. Customer Support : The company offers prompt and responsive customer support through various channels, such as in-app chat, email, and social media, addressing user issues and concerns.

C. Feedback and Reviews : Zomato encourages users to provide feedback and reviews on restaurants and dishes, fostering a sense of community and trust within its platform.

D. Loyalty Programs : The Zomato Gold membership program rewards loyal customers with exclusive deals and discounts, fostering long-term relationships with users.

Zomato generates revenue from multiple sources:

A. Commission on Orders : The company charges restaurants a commission on each order placed through its platform.

B. Advertising and Sponsored Listings : Restaurants can pay for advertising and sponsored listings on Zomato’s platform to increase their visibility and attract more customers.

C. Subscription Fees : Zomato generates revenue from its Gold membership program, where users pay a subscription fee to access exclusive deals and discounts.

D. Delivery Fees : For some orders, Zomato charges customers a delivery fee, which contributes to its revenue.

Zomato’s key resources include:

A. Technology Infrastructure : The company’s mobile app, website, and backend systems form the foundation of its service offerings.

B. Data and Analytics : Zomato’s data on user preferences, restaurant performance, and delivery patterns enables it to improve its platform and offer personalized experiences to users.

C. Brand and Reputation : Zomato’s strong brand and reputation in the food delivery industry help attract new customers, restaurants, and delivery partners to its platform.

D. Human Resources : The company’s skilled workforce, including developers, designers, marketers, and customer support representatives, contribute to its ongoing success.

Zomato’s key activities include:

A. Platform Development and Maintenance : The company continuously develops and maintains its technology infrastructure to ensure a seamless user experience.

B. Marketing and Promotion : Zomato invests in marketing initiatives to increase brand awareness and attract new users, restaurants, and delivery partners.

C. Data Analysis and Personalization : The company analyzes user data to refine its algorithms and offer personalized experiences to its customers.

D. Partner Acquisition and Management : Zomato continuously acquires and manages relationships with restaurants and delivery partners to expand its offerings and improve its services.

Zomato’s key partnerships include:

A. Restaurants : The company partners with a vast network of restaurants to offer a wide variety of dining options to its users.

B. Delivery Partners : Zomato collaborates with freelance delivery personnel and third-party logistics companies to fulfill orders placed through its platform.

C. Payment Providers : The company partners with various payment providers to facilitate seamless and secure transactions for users and restaurants.

D. Technology Partners : Zomato works with technology partners to enhance its platform capabilities and offer innovative features to its users.

E. Strategic Alliances : The company forms strategic alliances with other businesses, such as hotel chains and event organizers, to expand its reach and enhance its service offerings.

Zomato’s cost structure includes the following key components:

A. Technology Development and Maintenance : The company incurs costs related to the development, maintenance, and improvement of its technology infrastructure.

B. Marketing and Advertising : Zomato invests in various marketing and advertising channels to increase brand awareness and attract new users, restaurants, and delivery partners.

C. Operations : The company incurs operational costs, such as personnel salaries, office rent, and utilities, to manage its day-to-day activities.

D. Customer Support : Zomato’s customer support expenses include the cost of maintaining a dedicated team to address user issues and concerns.

E. Payment Processing : The company bears payment processing fees associated with facilitating transactions between users and restaurants.

Zomato’s innovative business model, built on the foundations of Alexander Osterwalder’s Business Model Canvas, has been instrumental in its success and growth within the food delivery industry. By understanding and addressing the unique needs of its customer segments, creating compelling value propositions, leveraging effective channels, nurturing strong customer relationships, and optimizing its resources, activities, partnerships, and costs, Zomato has managed to transform the way people discover, order, and experience food.

Through this in-depth analysis, businesses across industries can glean valuable insights from Zomato’s successful approach and apply these learnings to their own business models. In an increasingly competitive and rapidly evolving market landscape, adopting a robust and agile business model like Zomato’s can help companies thrive and stay ahead of the curve.

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Zomato Business Model: How Zomato Makes Money

While Zomato was started as a simple restaurant listing directory in 2008, the company has come a long long way since then venturing into multiple business segments, making the business more diverse than a Zomato user interacting with the business would think it to be.

In this blog, we will try to demystify Zomato’s business model. But before we do that, let’s take a look at its founding story & how the company has evolved over the years to establish better context.

Zomato Founding & Growth Story

The only person who has always been involved in the operations of Zomato is the current CEO, Deepinder Goyal. He first launched what would eventually come to be known as Zomato with a friend called Prasoon Jain under the name foodlet.in in the Delhi NCR region.

But Prasoon left soon and shifted to Mumbai, leaving the company struggling. And that’s when co-founder Pankaj Chaddah joined Deeepinder’s venture . At the time, they began afresh by changing the name of the company from Foodlet to Foodiebay.

By Dec 2008, in a matter of 9 months, the company grew to become the largest restaurant directory in the Delhi NCR region. After seeing success in the Delhi NCR region, the company soon expanded to other cities like Bengaluru, Chennai, Pune, Ahmedabad, and Hyderabad.

By 2012, Zomato had started its international expansion, extending its services to countries like the UK, South Africa, UAE, Qatar, Sri Lanka, South Africa, the UK, and the Philippines. New Zealand, Turkey, and Brazil got added to the list in 2013.

In the midst of all of this growth, the company had to go through a minor naming glitch which led to changing the name of Foodiebay to Zomato.

Since the last four letters of ‘Foodiebay’ were ‘eBay’, the company’s name was changed to Zomato in 2010 to avoid any legal issues. Ironically, the company got a legal notice from eBay 5 days before changing their name to Zomato. But since they had already initiated the name change process, they did not have to fret over it.

In its initial years, Zomato’s primary money-making source was restaurant advertising, much like any other aggregator that aggregates user attention & sells it to advertisers. In its 2019 Financial report, Zomato highlighted that up until 2016 , restaurant advertising represented their 100% revenue & focus.

However, Zomato’s focus started changing in 2015, after which it launched three new business segments in the years that followed.

In around mid-2015, the company forayed into the food delivery business.

In Nov 2017, Zomato launched Gold ( Now Zomato Pro ) in India, a subscription product, under which subscribers get additional discounts on Dining & Delivery. Discounts come out of the pocket of restaurants as they see incremental revenue from being a part of the Zomato Pro program. In 2021, Zomato also launched Zomato Pro Plus, another subscription offering with a benefit of free delivery on all order. Unlike Zomato Pro, which is funded by restaurants, the free delivery in case of Zomato Pro Plus is funded by Zomato.

In August 2018, Zomato launched a new initiative called Hyperpure , under which Zomato works directly with Farmers to improve the quality of food produced & then supplies the fresh produce to restaurateurs, thereby improving the quality of food people eat.

In its FY19 annual report, Zomato mentioned that it had stopped considering advertising as a standalone P&L. Instead, the company was viewing its business as a combination of three key large pillars — Delivery, Dining Out, and Sustainability(Hyperpure).

As it often happens in the startup world, Zomato’s strategy underwent a big change in the next two years, more so with the pandemic bringing the business of Zomato’s partners, and thereby Zomato, to an unprecedented standstill.

In its FY22 Q2 Report , a little later after its public listing on the Indian stock market , Zomato laid out an updated vision for its business. Under this new vision, Delivery, Dining Out & Hyperpure ( previously referred to as sustainability ) will continue to be the growth levers for Zomato. However, Zomato will also look to develop the Indian e-commerce ecosystem by investing and partnering with other companies to grow beyond its core food offerings. Now, the question is why would Zomato want to take this route. Here’s the rationale behind it, in Zomato’s own words,

“Our business today is at the confluence of food and hyperlocal e-commerce. What powers our business is the last mile hyperlocal delivery fleet, which is now 300,000+ delivery partners strong on a monthly active basis. We believe that our last mile fleet is a strong moat and it sets us up well for building one of the most meaningful hyperlocal e-commerce companies in India in the long term. We are bullish about the various use cases that we can plug our delivery fleet into, and we think we can be the primary contenders for building large businesses in hyperlocal e-commerce in India. Keeping this long term view in mind, we have started investing in hyperlocal e-commerce companies (including e-commerce enablers). Over time, the idea is to add multiple large core businesses to the existing core. Here’s how we envision this to work –

Zomato's Long Term Strategy & Business Segments

As these businesses scale, we would want to be the provider of additional capital to these businesses and consolidate our stake leading to a potential merger at some point (at least in some cases, if and when the founders of these companies want to). In the worst case, we would want these investments to generate huge learnings and great financial returns for Zomato.”

One important thing to note about Zomato is that the company shut down all of its international units (other than the dining-out business in UAE ) in a bid to minimize losses and focus primarily on the Indian market.

Zomato Business Model

Zomato currently makes money from three business segments: Food Delivery, Dining Out & Hyperpure. The Food Delivery segment earns commissions from restaurants and delivery charges from customers. Dining out generates revenue mainly from Zomato Pro & Zomato Pro Plus. Hyperpure makes money by selling ingredients to restaurants.

Let’s have a look at how each segment fares individually.

Food Delivery

Since Q2 FY21, revenue from Zomato’s food delivery segment has been trending upwards. Gross Order Value (“GOV”) grew by 19% QoQ in Q2 FY22 and 158% YoY to INR 54.1 billion ($721 million).

According to Zomato, this growth was driven by an increase in the number of transacting users, number of active food delivery restaurants and active delivery partners.

In the last few years, Zomato has ventured aggressively into the Dining Out segment. It has launched a range of initiatives like Zomato Pro & Zomato Pro Plus. As of Q2 FY22, between Zomato Pro & Zomato Pro Plus, Zomato had 1.5 million members & over 25k restaurant partners in India.

Hyperpure is Zomato’s initiative to improve the quality of ingredients used by restaurants.

On the supply side, Zomato helps farmers grow crops that are pesticide and chemical-free by providing them with surety of demand cycles, technological guidance & better prices.

Restaurants that buy ingredients from Hyperpure are recognized through a ‘Hyperpure Inside’ tag on Zomato. Not only does the ‘Hyperpure Inside’ tag help users make informed choices, but it also highlights a differentiation between Hyperpure & non-hyperpure restaurants, eventually leading more restaurants to switch to Hyperpure since Zomato users would get habituated to prefer Hyperpure restaurants over non-hyperpure restaurants.

In Q2 FY22, revenue from Hyperpure grew by 49% QoQ to INR 1.1 billion ($15 million). Hyperpure service is present in 8 cities and Zomato supplied ingredients to over 12,000 restaurants every month on an average in Q2 FY22.

Is Zomato Profitable?

Driven by the pandemic, Zomato’s revenue dropped from Rs 2742 crores in FY20 to Rs 2118 crores in FY21. In the same time frame, expenses also decreased from Rs 5006 crores to Rs 2608 crores. While Zomato managed to cut down losses in the pandemic, the company is yet to turn profitable.

Decoding the Business Model of Zomato: A 360-Degree Analysis

The food delivery industry has experienced a substantial transformation in the current fast-paced global landscape. Zomato, a leading entity in this industry, has significantly transformed how we place food orders and reimagined the entire dining experience. This article aims to thoroughly analyse the business model of Zomato, covering various aspects from multiple perspectives. By comprehensively analysing its diverse elements, we can better comprehend Zomato’s operational strategies and sustained success within the fiercely competitive food delivery industry.

1. Online Platform for Restaurants and Customers: The Core of Zomato’s Business Model

The core of Zomato’s business model is centred on offering a robust online platform that serves as an intermediary between restaurants and customers, facilitating seamless connections and transactions. Zomato is a digital marketplace enabling restaurants to present their menus, high-quality images, comprehensive descriptions, and customer reviews. The interface of this platform is designed to be user-friendly and provide a seamless connection with customers. It offers a wide range of dining choices to enhance their experience. The business model of Zomato is based on establishing relationships with restaurants to generate commissions. These commissions are calculated as a percentage of the total bill, incentivising restaurants to list their services on the platform.

2. Revenue Generation through Commissions: Zomato’s Primary Income Source

The primary source of revenue for Zomato is its commission-based business model. The commission is applied when customers place orders through Zomato. This mutually advantageous arrangement incentivises restaurants to collaborate with Zomato, allowing them to tap into a broader customer demographic and experience a boost in sales. The business model of Zomato is based on a commission-based revenue model, which has demonstrated significant success.

3. Food Delivery Services: Expanding the Revenue Horizon

The expansion of Zomato into the food delivery sector is a crucial element of its overall business strategy. Customers can now conveniently place food orders from their preferred restaurants through the Zomato platform. In addition to the earnings from commissions, Zomato levies a delivery fee for its services. Implementing Zomato Pro enhances the value proposition by providing exclusive discounts to subscribers, resulting in a mutually beneficial arrangement for both Zomato and its users.

4. Advertising and Promotions: Driving Visibility and Additional Income

Advertising and promotional services play a crucial role in increasing the visibility of Zomato and driving its revenue growth. Restaurants can choose sponsored listings, banners, and featured content to differentiate themselves in a highly competitive marketplace. Zomato generates additional revenue by providing promotional tools, increasing restaurants’ visibility to a broader customer base. This aspect of the business model of Zomato exemplifies its function as a proficient marketing platform.

5. Data Monetization: Leveraging Information for Profit

The extensive data repository of Zomato, which encompasses customer preferences, ordering habits, and restaurant performance metrics, possesses significant value. The company utilises data analytics to provide actionable insights to its restaurant partners. Zomato uses this data to support restaurants in optimising their menus, pricing, and marketing strategies, ultimately improving their overall performance. Data monetisation is a strategic component of the business model of Zomato, serving as a significant source of revenue and driving the success of its partner restaurants.

6. Diversification into Grocery Delivery: Expanding the Revenue Portfolio

Zomato expanded its range of services in response to evolving consumer preferences by venturing into the grocery delivery sector. By utilising its pre-existing logistics network and technology infrastructure, Zomato now offers customers the convenient ability to place grocery orders from nearby stores. Implementing strategic diversification not only allows Zomato to enter the expanding online grocery market but also introduces an additional source of revenue. This enhances the resilience and adaptability of the business model of Zomato.

7. Cloud Kitchen Initiatives: A Strategic Culinary Move

The business model of Zomato encompasses the operation of cloud kitchens, commonly known as dark kitchens or virtual kitchens. These specialised kitchens are dedicated solely to online food delivery and do not offer any dine-in options. Zomato strategically invests in and manages its cloud kitchens through collaborative partnerships with renowned restaurant brands. This initiative guarantees a dependable food supply and enables Zomato to explore various culinary concepts, strengthening its competitive advantage in the food delivery industry.

8. Expansion into Event and Dining Reservations

Zomato’s growth strategy encompasses expanding into event reservations and enhancing dining experiences. Customers can conveniently reserve tables at their preferred restaurants using the Zomato application, a comprehensive platform catering to all their dining requirements. Zomato implements a fee structure for restaurants utilising its reservation service, enhancing its revenue model.

9. International Expansion and Global Partnerships

The business model of Zomato extends beyond a singular market. The company has successfully expanded its operations on a global scale by establishing strategic partnerships with various international restaurants and chains. This expansion enables Zomato to access a broader range of customers and generate supplementary revenue by offering global cuisine options to its users.

This analysis comprehensively examines Zomato’s business model, delving into its fundamental elements, revenue streams, and strategic diversifications with meticulous attention to detail. The business model of Zomato is a highly efficient system that facilitates connections between restaurants and customers, all while optimising multiple revenue streams. Zomato has successfully implemented various strategies to monetise its platform, including commission-based earnings, food delivery services, advertising, data-driven insights, diversification into grocery delivery, event reservations, expansion into international markets, and establishing global partnerships.

Zomato has demonstrated remarkable adaptability and a proactive approach to diversification, which have played a pivotal role in its sustained growth amidst the ever-evolving food delivery industry. The company’s expansion into various sectors and global markets demonstrates its dedication to maintaining a leading position in the industry. In summary, Zomato’s versatile business model drives its expansion and empowers numerous restaurants and food businesses to flourish in the era of digitalisation. The adaptability, innovation, and robust business model of Zomato position the company to maintain its leading role in the food delivery industry for the foreseeable future.

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Zomato Business Model: Everything you need to know

In July’21, Zomato’s IPO raised Rs 9,375 crore . It was one of the most talked-about events as it became the first Indian startup to go public, that too after COVID when many things became uncertain. This means that Zomato was doing something right, and I decided to read more about its business model, which eventually made me write this article.

View this post on Instagram A post shared by Zomato (@zomato)

Earlier I used to think that Zomato was just about food delivery and restaurant listing. But, I forgot it’s a “FoodTech,” which means it has access to a large amount of data that it has been using in exciting ways and will continue to do so.

In this article, I will try to give a bird’ eye view of Zomato and cover a bit of everything about its business model to its future business plans, how does Zomato make money, and its mind-blowing marketing strategies.

The Growth Story of Zomato

As of 31st March 2021, Zomato is present in 24 countries outside of India. According to their RHP , the company has decided to focus only on the Indian market going forward, considering the market potential.

Zomato has over 1.4 million listed restaurants and 12,000 restaurant partners. Moreover, it has over 6500 restaurant partners for Zomato Gold. In December 2020, it had around 162,000 active delivery drivers and 3,50,000 active restaurant listings on its platform in India

To fuel its rapid expansion, Zomato acquired several startups around the world. In 2014 itself, it acquired four startups overseas . It was part of its strategy to enter markets with low competition in this space of restaurant discovery, make money here, and then tap the markets having competition.

What Strategies made people “Swiggy Karo, Fir Jo Chahe Karo”

One of its most significant acquisitions has been Uber Eats India business , which helped the company get a competitive advantage from its rival Swiggy and one rival less for the company to deal with. Its latest acquisition has been Fitso, a full-stack sports facilities provider and discovery startup, which hints at its foray into the nutrition segment.

Business Model Canvas of Zomato

Customer segments: .

Broadly, we can say that there are three customer segments in Zomato’s business model:

Local restaurants : Zomato helps restaurants enhance visibility to their target audience, provides opportunities for targeted advertisements, customer service & engagement, as well as track their performance using its analytical tools.
Users : Can be divided into two categories for Zomato – one who want food delivered to their homes quickly and others who want to go out (they can look for places according to the distance, budget, cuisines and even reserve a table).
Reviewers : Also known as content contributors of Zomato, these are the people who help others make their choice by providing ratings and reviewing restaurants basis various parameters.

Key Partners:

Restaurants, delivery personnel, and food bloggers (by actively providing reviews on Zomato) are the critical partners in Zomato’s business model. It has tied up with various other companies as well that help in various aspects. A few of the notable partners are:

London & Partners (helped Zomato in finding the location for office setup, market research, advise on legal matters, assistance in staff and management recruitment, etc.),
Uber Taxi (this partnership increases convenience for customers who are eating out by enabling them to book an Uber ride to the restaurant they want to dine at from their app itself)
Electronic payment companies like Visa, PayPal , etc.

In August 2021, a year after the launch of Swiggy Money (a digital wallet that Swiggy made in association with ICICI Bank), Zomato incorporated – Zomato Payments Private Limited (ZPPL), its wholly-owned subsidiary , to provide payment aggregator services and payment gateway services for its users following the RBI guidelines.

Value Proposition

Zomato follows the QAAA model, which consists of:

Improving the quality of food: Through Hyperpure (talked about in detail later) and Food Hygiene rating, it helps its partner restaurants maintain high-quality standards.
Boosting accessibility for customers: Starting with metro cities, Zomato has expanded to tier 2 and 3 cities and continues to increase its reach.
Focusing on affordability : Zomato aims to make food affordable for its consumers without compromising on profits for partner restaurants.
Driving the force of assortment : Zomato wants to help customers make an informed choice by providing a wide array of information in a structured manner.

Revenue Model: How does Zomato make money?

1. delivery charges: .

Based on the number of orders, Zomato charges the partner restaurants a commission, which is divided between the company and the delivery partners.

In FY 2019, the company made four times more on delivery than it did the previous year. These charges formed around 75% of the total revenue for the company in that year, which makes delivery charges the largest source of income for the company.

According to the company, in India, the number of customers ordering food every month on their platform in FY 2021 touched 6.8 million customers with three times the average frequency.

Contribution per order rose from -47 Rs/order in Q1 FY20 to +27 Rs/order in Q1FY21 (as shown in the below diagram)

2. Zomato Pro:

Earlier known by the name Zomato Gold, it was based on a freemium model where customers who paid a certain fee enjoyed premium services while dining at partner restaurants like offers on food and beverages.

We have 1.8mn Zomato Pro members as of today. And one of the most requested features from our customers has been “Unlimited Free Deliveries” (something like Amazon Prime). So… in a few hours, we are launching our Limited Edition *Pro Plus* membership for select customers… pic.twitter.com/RtL4ftDBpt — Deepinder Goyal (@deepigoyal) August 2, 2021

Zomato introduced a new membership service in August, an ‘invite-only upgrade of Zomato Pro’s named Zomato Pro Plus. CEO Deepinder Goyal assured that Zomato would bear the entire cost of this service, and delivery partners won’t lose income on the same.

3. Event Organization:

Zomaland event of Zomato became quite popular before COVID hit, and it’s an excellent opportunity for partner restaurants to get visibility. Here Zomato earns from both customers (entry fee) and restaurants.

4. Restaurant Advertising:

With 90 billion monthly visits and 1.4 million restaurant listings, Zomato sure is the go-to place for people who want to find where to eat/order from next.

So, to stand out on the platform, the restaurants have to pay a certain sum of money so that their restaurant gets noticed by people visiting the platform. Zomato charges a certain amount of money from restaurants for advertising.

By charging a monthly subscription fee, it even provides restaurants with analytical tools like Zomato order (with the help of which restaurants can manage their offerings to consumers and give discounts accordingly) and Zomato book (managing table reservations more efficiently).

5. Zomato Kitchens:

Here, Zomato will connect kitchen partners (a partner who will construct the kitchen according to the design and specifications and in turn Zomato will pay money to operate this place) with restaurant partners (partners who will operate their restaurants in the space which Zomato had asked kitchen partners to construct).

The role of Zomato is to act as an aggregator bringing together both kitchen and restaurant partners. Since it has access to a large amount of data, it knows which location would be optimum for the construction of cloud kitchens .

It might start its cloud kitchens in the future and develop an in-house brand that competes with other restaurants on the platform. This could be a game-changer for Zomato and could turn out to be very profitable for them.

For more clarity on what is a cloud kitchen and its types (can use any)

6. Hyperpure by Zomato:

Launched in 2018 to provide good quality ingredients to partner restaurants, under this program, Zomato collaborates directly with farmers, producers, mills, and processors to monitor the source of each of the ingredients being sold to ensure freshness and quality of the produce. According to its RHP, in March 2021, it supplied ingredients to 9,225 restaurant partners across 6 Indian cities.

Zomato aims to bring more efficiency in the supply chain by using a technology-driven end-to-end platform so that fewer people are involved; high-quality ingredients are supplied and reducing food wastage.

During the first pandemic wave, many restaurants signed up on this platform, but these numbers didn’t grow as such during the second wave. Despite the challenges, investors are optimistic that the platform will increase by ten times in the next 2-3 years.

Cost structure:

Expenses incurred by the company can be broadly categorized into: platform development cost, branding and advertisement cost, credit card processing fees, legal and accounting fees, office maintenance cost, and employee salaries.

Fixing its Unit Economics

Unit economics is the profit made by the company per food order delivered, and positive unit economics is one of the biggest obstacles for any food delivery company in the world. According to its RHP, Zomato has been able to achieve positive unit economics.

This was possible by charging higher delivery charges from customers, decreasing discounts offered on the platform (offering high discounts initially was one of the ways it acquired customers on their platform and made them habituated to use it), decreasing the advertising expenses, and increased commission from restaurants, utilizing its logistics fleet more efficiently and adding new sources of revenue using subscriptions like Zomato Pro.

Content is the king for Zomato:

Zomato’s focus on content (content related to restaurants on its application and website) helps them to attract a large number of customers to their platform organically, and even numbers support this: in FY2021, 68% of new customers were acquired organically without any paid advertisements (source: Zomato RHP).

Customers coming to the platform further enhance the richness of this content by adding their ratings, reviews, and photographs of the restaurants and food served there. This creates a virtuous cycle that further feeds into the transaction funnel and creates a strong flywheel effect.

Marketing Strategy of Zomato

When it comes to its social media presence, Zomato has been very clear about its motive to make such content for its customers, which educates them about the brand and is also very refreshing and fun to watch. This is even evident from the bio company has written for itself on its social media handles, and the company does stand up to its promise of delivering entertainment. It focuses on the emotional benefit part rather than the functional benefits.

Zomato’s social media handles (YouTube, Instagram, Twitter, LinkedIn) are full of exciting campaigns that would be challenging to cover all (honestly, one can even write one complete article on that and we will be writing very soon). Here are some of the campaigns/posts/tweet threads that I enjoyed from Zomato in recent times:

Turning crisis into opportunity: #zomatoloot campaign

Almost a year back, when users criticized Zomato’s butter chicken ad on YouTube, the brand’s marketing team announced the #zomatoloot campaign where users were given a chance to create ads for the brand, and the winner got a sum of 25 lacs. This gave the brand a lot of free publicity and, of course, ads that it could use for the coming weeks. 4113 entries were received as a part of this contest, and the winning ad was:

Winning consumer’s trust during COVID times:

Last year, when the COVID wave hit and people were skeptical about ordering from outside, Zomato ensured that the safety of consumers is their priority, and they are taking steps for the same.

‘On-Time or Free’ (OTOF) campaign:

Taking inspiration from Dominoes, Zomato launched this campaign in December 2019 to guarantee on-time delivery to its customers on its entire menu and not just one food item (as used to happen traditionally).

Never late to the party:

Zomato seldomly misses an opportunity whenever a significant event occurs, be it related to sports, politics, or business.

iPhone 12 vs iPhone 13 pic.twitter.com/V3hzWb0eSQ — zomato (@zomato) September 14, 2021

Platform-specific content:

Zomato adapts its content according to the platform. For example, one can find memes related to office and colleagues on LinkedIn, reels made on ongoing trends on Instagram, replying to other brands on a constant thread in their context on Twitter, Food challenges, and Celebrity Brunches on YouTube, etc.

Zomato’s Twitter account regularly engages with the audience and keeps posting excellent content, which made Twitter award Zomato for the Best brand voice in 2020 . Deepinder Goyal, its founder, makes sure that he makes important announcements related to its activities on Twitter.

Over the last few days, one of the most requested features on @zomato has been – a selection of home style food for people battling poor health. We just launched home style mini-menus along with thousands of restaurants across the country. #RestaurantsAgainstCOVID (1/3) pic.twitter.com/2JDqqtic5Y — Deepinder Goyal (@deepigoyal) April 27, 2021

OOH campaigns:

Before social media became so popular, brands used to spend heavily on billboard advertisements, and so did Zomato. Minimalistic, mostly text, but always grabs attention and brings a smile to your face.

Hey guys, we at @Zomato (me mostly, I'm a great team player) have been working on some outdoor ads. If you spot one in your city, please share a picture with us (me). Thanks! 😇 ☺️ pic.twitter.com/sxl5qYpAuk — Akshar (@AksharPathak) November 29, 2017

Zomato also uses push notifications in mobile apps, email marketing, SEO, and paid advertisements to gain top-of-the-mind recall for consumers.

Future of Zomato:

In India, with the coming of COVID, the food delivery market saw a growth in the number of orders as people who used to go out to eat preferred to eat at their homes safely. This trend will most probably continue in the future as well.

One of the biggest challenges for any food delivery company is making unit economics per order favorable, which Zomato has achieved recently. Increased demand for food delivery and positive unit economics per order means that Zomato’s profitability is likely to grow.

Apart from food delivery, Hyperpure has been one of the focus areas for the company. Whether Zomato will be able to scale this up and reap profits out of it, is something to watch out for. Recently, cloud kitchens have been gaining traction .

How Rebel Foods business model is taking Kitchen to the clouds

After REBEL foods recently became a unicorn , it will be interesting to see how Zomato scales up its cloud kitchen venture: Zomato kitchens, in its multidimensional business model. Given the enormous access to data that Zomato has, it should try to compete in this segment.

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Explaining Zomato Business Model: How Does Zomato Make Money?

In most countries, people have moved to online ordering rather than visiting restaurants physically. Online food delivery apps are quick and easy to do from anywhere, and this is the reason why millennials prefer them. In this growing world of online ordering, one Indian platform that has arisen and has grown since its launch is Zomato. Some entrepreneurs, investors and researchers want to know everything about the business model of Zomato and what secret recipe has made them so successful in this saturated market.

Zomato is one of the best food delivery apps in India which allows customers to order food online from their favorite restaurants. Small cafes to big restaurants are leveraging this platform to earn more revenue and to make their customer base strong. Indeed, Zomato is beneficial for both customers and restaurants, but did you know Zomato can make giant revenue too?

Yes, there are multiple revenue sources for Zomato and the company has now become mainstream in the Indian food delivery market. Want to know how Zomato works? What business model does it follow? About its revenue sources? To get the answers to all these, read this blog throughout. Let’s get started.

What is Zomato?

Zomato is an online platform that serves the rising needs of customers, restaurant partners, and delivery providers by connecting them to one platform. From browsing the nearest restaurant to checking reviews of previous customers to making online payments and tracking the order in real-time, Zomato makes it extremely easy for customers to get food delivered to their homes.

Launched by two IIT graduates, Deepinder Goyal and Pankaj Chaddah, in 2008, Zomato introduced its business as Foodiebay. This was the online restaurant directory that allowed users to check out restaurant menus with certain features. The idea was converted into reality and now we can see how these small ideas have changed people’s lives and made Zomato a unicorn in no time.

Over the years, Zomato has expanded its services and started operations across various countries with around 32.1 million monthly active users and a presence across 24 countries. Let’s have a look at some interesting facts and figures about Zomato before discussing its business model in detail.

Lesser Known Facts About Zomato

Company Name: Zomato
Formerly Known: FoodieBay (2008-2010)
Company type: Public
Industry: Online food ordering
Founded in: 2008
Founders: IIT Graduates (Deepinder Goyal & Pankaj Chaddah)
Headquarters: Gurugram, Haryana
Operates in: India and the United Arab Emirates
Number of employees: 3800
Website: https://www.zomato.com/

How Does Zomato Work?

Zomato follows a straightforward workflow and as said earlier, makes it easy for customers to get things done within an app in a couple of minutes. Let’s see how Zomato works for customers in detail.

Customers search, find, and explore various restaurants using the website or app to place an order or reserve a table for takeout.
After preparing the food, restaurant owners dispatch it after receiving the order request.
The platform’s algorithm, which looks for the closest and most qualified delivery workers for the delivery, chooses a delivery partner to pick up the order.
Delivery staff members have the freedom to accept or decline a delivery assignment; they are partners with the organization, not employees.
The delivery companies then deliver it to the specified place after the job is accepted. Payments can be made by clients throughout the ordering process or upon delivery.
After that, they leave reviews, which aid Zomato in enhancing its offerings and assisting other users in making wise ordering decisions.

Zomato’s delivery operating model may be summed up in three simple steps:

Customers place orders from established restaurants and food establishments that have collaborated with Zomato using the Zomato app.
Zomato uses its closest and most suitable delivery partner to deliver the customer’s order.
The delivery partner and Zomato get paid commissions after delivering the order.

Zomato Business Model Explained

The “QAAA” model—which stands for “quality, affordability, accessibility, and awareness “—is the foundation of the Zomato business strategy.

The company’s main goals are to make its cuisine accessible, offer premium food at reasonable costs, and increase consumer knowledge of its name and offerings.

Zomato’s business model is built on a straightforward yet powerful idea: it serves as a middleman, facilitating communication and commercial dealings between customers and restaurants. For the business, this intermediary position has a few very important advantages.

Customer Segments

Zomato’s business model consists of three stakeholders, customers, restaurants and delivery providers. The entire business model’s customer segments can be divided into three categories. Each segment has unique needs and requirements that Zomato overcomes through its platform.

People who download the app can browse restaurants, read reviews, place an order and get them delivered to their doorsteps. People who are searching for a quick, dependable, and effective way to place food orders and find new restaurants.

Restaurants

Zomato helps restaurant managers and owners grow their internet presence, attract more customers, and boost revenue. They can display their menu, provide specials, and take orders for pickup or delivery on the platform.

Delivery Providers

Zomato works with delivery partners to complete meal orders that users place on the website. These associates consist of independent couriers and outside logistical providers. They profit from Zomato’s enormous user base as well as the chance to make money on the platform.

Zomato’s success and expansion in the meal delivery sector can be attributed to its creative business strategy, which is based on Alexander Osterwalder’s Business Model Canvas.

Zomato has revolutionized the way people find, order, and enjoy food by comprehending and catering to the specific needs of its various customer segments, developing compelling value propositions, utilizing efficient channels, cultivating strong customer relationships, and optimizing its resources, activities, partnerships, and expenses.

How Does Zomato Make Money? Zomato Revenue Model

Since its establishment, Zomato has grown to be a major force in the food sector. Its revenue in 2020 was an astounding $394 million, while that of Hyperpure increased from $1.8 million to $14.7 million in 2021. Its revenue is primarily generated by a diverse range of operations, which include:

Commission on Food Delivery

Zomato charges restaurants a commission based on orders through its food delivery service. Restaurants pay a commission to the company for each delivery, and that commission is divided between the delivery partners and the company. However, due to intense competition, the requirement to offer steep discounts, etc., and other factors, online meal delivery only makes up a small portion of revenue when compared to other revenue streams.

Zomato collaborates with restaurants and cafes to advertise their goods, services, and membership packages online. They are charged commissions by it for having advertising placed immediately in their feed. Additionally, Zomato charges restaurants to hold events and promote their businesses, increasing their visibility. Because brands continue to rely on the platform’s services as they grow, this brings in a significant amount of money from advertising.

White Label Access

The technology infrastructure utilized by the company to power the websites and applications of its partner restaurants is known as “white-label access.” These establishments pay a monthly subscription fee to Zomato to use its site. Table bookings, in-app purchases, and online ordering are all available on this platform.

Cloud Kitchen

Zomato provides a kitchen infrastructure solution to eateries looking to grow as cheaply as possible into new locations. This increases its revenue and attracts new restaurant partners.

Subscription Programmes

Zomato created a consistent revenue stream by offering membership options for restaurants and Zomato Gold for users and consumers.

Restaurants pay a monthly charge to be included in Zomato’s assortment of deals, in addition to users who pay a subscription fee to enter the Zomato Gold loyalty programme, which includes unique discounts. Additionally, Zomato charges restaurants a monthly fee for ancillary services like live tracking and tamper-proof packaging bearing the Zomato logo.

Launch the Zomato Like App with Applion Soft

Online food delivery apps are booming, making the overall industry promising. To launch an app like Zomato, we have presented the entire business model in a better way that enables entrepreneurs to enter the market with robust solutions. All you need to do is find a trusted technology partner who will handle all the processes and build an app like Zomato as per your business requirements.

When launching a food delivery business, a fully-featured, beautifully designed app is the most important part. The most effective way to develop a solution is to hire an experienced on-demand app development company such as Applion Soft. By working with us, you can expect a well-versed final product, as well as guidance that can help you hit the market early.

Shareholders

Info Edge India owns the largest share in Zomato. This company is a media and internet firm and owns a 23.9% stake in the company.

Some of the major shareholders in Zomato include:

Did you know?

Deepinder Goyal, the co-founder and CEO of Zomato, owns a 4.3% stake in the company.

Business Model

Zomato provides a treasure trove of information, including restaurant names, addresses, contact details, and user-generated reviews and ratings. This helps the audience discover new and unique restaurants.

Zomato utilises the power of the restaurant depository and delivers food orders from these restaurants. Since almost every major restaurant is listed on Zomato, the users’ ability to switch to different apps is drastically reduced. They deliver food quickly to the address of the customer and charge a small fee in exchange for this service.

Zomato is earning money from a total of 5 segments, they are:

Food Delivery
Hyperpure (B2B Supplies)
Quick Commerce (Blinkit)
Going-out (Events platform)

Major Competitors

Swiggy is a powerful rival of Zomato, forcing the company to innovate regularly due to the extremely low customer switching cost. As one of Zomato’s primary rivals, Swiggy has cemented its position in the Indian market, posing a strong threat to Zomato’s market share.

Uber Eats is a company that falls under Uber Technologies and serves 60 countries; it is one of the leading food delivery platforms in the world. Zomato has acquired Uber Eats’ India operations, but Uber Eats still stands as a formidable competitor to Zomato in foreign markets.

DoorDash mainly serves in the United States and Canada. The company has built a reputation for its extensive restaurant partnerships and robust delivery network.

EatClub operates in 5 metro cities and has eight brands, such as Box8 and Mojo Pizza. They come across as a very strong contender for Zomato.

Here is some important market data of Zomato.

Financial Highlights

Income statement, profitability ratios, shareholding pattern.

SWOT Analysis

Globally available: Zomato expanded its services to various countries and made a global footprint, encouraging international reach and providing access to diverse markets.
Leading food delivering services : Zomato has become a leader in the food delivery industry. Its food ordering and delivery services cover more than 1,000 cities and have 14.7 million monthly average transacting customers.
High Competition – Zomato operates in a highly competitive market, with various food delivery giants like Swiggy, Uber Eats, and EatClub competing for the same customer base.
Operational challenges – The company faces several operational challenges as a food delivery company, such as delivery delays, food quality issues, and logistical problems. These issues can result in negative customer feedback and reduced customer loyalty, ultimately hurting the company’s profitability.

Opportunities

Expansion through sustainable practices : The company is capitalizing on the growing demand for sustainable practices by expanding its eco-friendly initiatives.
Revenue streams: The company diversifies revenue streams and enhances user engagement. Zomato must expand faster than others to stay ahead of the curve.
New Users: Nowadays, smartphones and internet users have increased tremendously. This will help Zomato gain new users and audiences.
Fragile Business model: Economic factors can affect consumer dining and food delivery spending, potentially impacting revenue.
Loss turning segments: The company loses a significant chunk of money in the Quick Commerce segment and thus has to return lower profits at a consolidated level.

Zomato is building brand recognition, global reach, and user-generated content to contribute to its success in the food delivery industry. Zomato faces lots of challenges, constantly innovating and improving its services to stay ahead of the competition. They must maintain their position and take more initiatives to grow and expand their business.

Frequently Asked Questions (FAQs)

Who is the CEO of Zomato?

Ans. Deepinder Goyal heads the company as the CEO.

Is Zomato profitable?

Ans. Zomato turned profitable for the first time in the quarter ending June 23. The company produced a profit of INR 2 Crores

What is the former name of Zomato?

Ans. Zomato was founded as FoodieBay in 2008 by Deepinder Goyal and Pankaj Chaddah.

How many segments does Zomato report?

Ans. Zomato has 5 segments, namely – Food Delivery, Hyperpure, Quick Commerce, Going-out, and Others

Is Zomato used outside India?

Ans. The company is operational in Indonesia, Sri Lanka, and UAE.

Disclaimer: The securities, funds, and strategies mentioned in this blog are purely for informational purposes and are not recommendations.

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Zomato Business Model Explained [Case Study]

Supti Nandi

Updated on: April 6, 2024

Hungry? Grab your favorite meal through Zomato!

Well, the above line is not just a statement but an emotion of today’s generation. With the evolution of the digital world, having a meal delivered from the restaurant of your choice is a like a cakewalk. Now, you do not need to travel to the restaurant or stand in a long queue anymore to eat delicious food. All thanks to the food delivery apps for making this process super easy for you. One of the popular on-demand food delivery companies is “Zomato.” Do you know that Zomato has expanded a lot within 14 years of its existence?

The Zomato app will not only deliver your favorite food to your doorstep but will also help you to explore the food of new restaurants with honest customer reviews and by offering appealing discounts on various dishes. Have you ever wondered how it earns huge profits despite offering exclusive discounts and food at affordable prices? The secret lies in its business model . This article explains the “ Business Model of Zomato. ”

Zomato’s business model comprises of three essential components, namely-

Working Strategy

Marketing strategy, revenue sources.

The way how the business works determine the success rate of the company. You are already aware of the fact that the major function of Zomato is to recommend and take orders from the neighboring eateries and to deliver them to your doorstep. Before jumping into the core of the working strategy of Zomato, let us quickly sum up the steps involved in this food delivery app-

Step 1 : Open the Zomato app and browse the meals to order them from whichever restaurant you like. Also, you need to give the location of receiving the food.
Step 2 : The owner of the restaurant will receive an order request upon which they initiate the preparation of the dish.
Step 3 : After the dish is prepared, the restaurant owners hand over the food to the deliveryman.
Step 4 : The deliveryman delivers the meal to your location. In the meantime, you can also track the location of your order (food) on the Zomato app.
Step 5 : You can make the payment for the food either with COD (Cash-on-delivery) or digital payment channels.
Step 6 : After having the dish, you can site the ratings and reviews regarding it based on your experience. It will help other customers to decide whether to buy that meal or not.

The working strategy of Zomato involves the partnership with restaurants and retailers, hiring delivery providers, and collecting the data of users (like food choices, restaurant preferences, geographical location, and mode of payment) for smooth delivery of food. The three key players involved in the working model of Zomato-

Users : The users are the customers like you who purchase meals from restaurants via Zomato and the food is delivered to your preferred location.
Restaurants : Zomato offers a reliable and effective platform to local restaurants and their owners to attract the target audience (foodies) and market their business.
Delivery Providers : They provide part-time or full-time delivery services on a contractual basis. This helps them to establish a rational revenue stream.

Zomato launched multiple features and services like Zomato Gold, Dining, Advertising, Hyperpure (Supply fresh ingredients to restaurants), Blinkit (Acquired grocery delivery service) etc.

Do you remember the day when you heard the name or saw the logo of “Zomato” for the first time? Never mind if you don’t! Probably you might have seen the advertisement of Zomato in the banner, youtube ad, or any meme on social media. Well, these are nothing but the marketing strategy. The marketing strategy of Zomato involves a combination of online and offline marketing. These are described in the following points-

Online Marketing – Online marketing also called “Digital Marketing” involves SEO strategy, social media marketing, email marketing, etc. It effectively hits the target audience and increases conversion rates.
SEO Strategy – This is the backbone of digital marketing. Here, Zomato creates relevant content that is heavily focused on its users and keenly optimized for search engines like google, bing, etc. They effectively use keywords with high search volumes and relevant URLs. All these things enhance the relevancy of their pages due to which you can access their products easily.
Social Media Marketing – Zomato has successfully mastered the technique of “ Meme Marketing .” which helps to create a good amount of organic traffic. Zomato also uses paid ads campaigns to reach new users by using taglines related to restaurants and the delivery of food. They run various types of campaigns on social media platforms like Facebook, Instagram, and Twitter that help in the creation of a good amount of organic traffic.
Email Marketing – It is one of the most effective digital marketing techniques that directly influence the target audience. It helps to create awareness regarding the products to its customers by directly sending emails to their inboxes.
Offline Marketing – Offline marketing is effective to target a broad range of audiences. It involves television commercials featuring various celebrities, advertisements in print media, and outdoor advertisements by installing billboards, banners, and hoarding to grab the attention of the public. It also supplements online marketing.

Zomato has produced a considerable number of revenue sources that effectively aided to strengthen its presence in the food delivery market worldwide. The major revenue sources of Zomato are-

Advertisements : As you know, advertisement plays a significant role in increasing the revenue of a company. Zomato effectively utilizes this strategy. Do you know that Zomato earns more than 70% of its revenue through advertisements? It offers a reliable advertising policy to restaurants in the form of banner ads and small pop-ups. The restaurant owners showcase their banners on Zomato to increase the visibility to the audience.
Delivery Charges : Zomato charges a commission of 20-35% from the restaurant based on the placement of each order. It earns through the restaurants that pay commissions for each delivery. Then, it splits the earned money among the personnel and delivery partners of the company.
Subscription Fees : It is the major revenue source of Zomato. Have you ever wondered how you get so many discounts on your favorite food whenever you search for it? The reason behind this is the huge database of Zomato that knows various details of the customer like food preferences, location, and the food you are searching for, etc. It offers analytical tools and consumer data to restaurants by charging a certain amount of fee on monthly basis. This tool is also called “Zomato Order.” Thus, restaurants use this tool to flash their appealing discount offers on your feed.

Latest News: Empowering Zomato’s Delivery Partners with Vital Lifesaving Abilities

Zomato introduced a first-responder training program for its delivery partners in India. The initiative aims to teach delivery partners medical first-aid & CPR through certified training programs under the ‘Serving India’ initiative. Over 5,000 delivery partners across Delhi-NCR, Mumbai, Bangalore, Hyderabad, and Pune have been trained as first-response emergency heroes.

Zomato founder Deepinder Goyal shared a video on the X platform highlighting the initiative, calling Zomato delivery partners ‘India’s Emergency Heroes.’ Rakesh Ranjan, CEO of Food Delivery at Zomato, stated that over the past three months, more than 5,000 delivery partners have received professional first-responder training, including first-aid, BLS, and CPR.

Each trained delivery partner will receive a comprehensive first-aid kit to provide immediate medical support to peers and customers.

After this news, Zomato’s shares increased by 2.25% to ₹122.55 at 1:45 pm on Thursday (4th April, 2024). SoftBank Group divested a 1.1% stake in Zomato for ₹1,128 crore through an open market transaction earlier this month.

After the transaction, Softbank’s shareholding in Zomato decreased to 1.09% from a 2.17% stake.

The business model of Zomato has been proven to be highly effective to reach heights in the food delivery market in a short period. Its key activities include the management of various networks of restaurants and customers, advertisements, and customer care service to increase the brand image by providing the best quality meals at your doorstep within a short time.

Contact Info: Axponent Media Pvt Ltd, 706-707 , 7th Floor Tower A , Iris Tech Park, Sector 48, Sohna Road, Gurugram, India, Pin - 122018

Table of content

Introduction

Zomato's origins, working of zomato explained, zomato business model, zomato's value propositions, zomato's revenue sources, what does the future hold for the food industry and zomato, frequently asked questions (faqs), business model of zomato | complete guide.

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We've all probably seen people standing in lines and perusing restaurant menus to order lunch at least once in our lives.

Who would have guessed that the concept would spawn Foodie bay, a forerunner to Zomato, one of the world's largest food aggregators?

Assume a person becomes suddenly hungry but has no idea what to order or where to order from. Bam! Then there's Zomato.

They can visit the website, look at different restaurants, read their reviews, and then order what they like best. They'd probably find the delivery at the door any minute now.

The journey with Zomato appears to cover it all, from exploring restaurants to reading reviews to food delivery or dining out.

But what exactly is Zomato, and what is the Zomato business model? How does it work in practice? How does it generate revenue?

Let's take a closer look at this food tech unicorn's business model.

Zomato's seed was planted about 15 years ago. The idea was born in 2008 in the minds of three passionate foodies tired of standing in long lines.

The desire to have digital access to all restaurant menus in one place and make them available to all gave birth to Zomato.

That idea was their baby, and it has now grown into a vision that motivates a team of over 5000 people every day.

Zomato did not start as Zomato. It began as 'Foodie bay,' an online restaurant directory.

Deepender Goyal, the CEO, felt the need to change the name because it sounded too similar to 'eBay,' and he envisioned creating his own distinct identity.

As a result, the christening ceremonies took place, and it has been known as Zomato ever since.

Customers use the website or app to search, discover, and explore various restaurants to order meals or reserve a table for dining out.

Restaurant owners receive the order request and then dispatch the order after it is prepared.

The order is picked up by a delivery partner chosen by the proprietary platform's algorithm, which searches for the closest and most suitable delivery personnel.

Delivery personnel are not employees but rather partners in the company, and they can accept or decline a delivery job.

It is another aspect of the Zomato business model, where the company has more partners for different jobs.

When the job is accepted, the delivery service providers will deliver it to the specified location.

Customers can pay when they order or when they receive their order. They then leave reviews, which help Zomato improve its services and other customers make informed decisions when placing orders.

Zomato delivery operating model can be broken down into three steps:

Customers use Zomato's app to place orders from existing restaurants and food establishments partnered with Zomato.
Zomato contacts the nearest and most suitable delivery partner to fulfill the customer's order.
The delivery partner delivers the order. Zomato and its delivery partner receive commissions on the order.

Zomato's success is based on the Zomato Business Model.

Zomato's business model revolves around providing food delivery services, information, user reviews, and menus of partner restaurants.

Zomato has paved the way for other online food delivery apps.

The following are the key components of the Zomato business model:

Customer Segments: Zomato's customer segment is divided into three parts:

Local restaurants: Zomato allows restaurants to be visible to their target audience.
Users: Zomato caters to users who want to find restaurants or specific cuisines in their area. Zomato is a one-stop shop for users who enjoy home delivery.
Reviewers: Reviewers are Zomato's content contributors. They actively review food and places and provide users with relevant information in textual and graphical form.

Zomato Provisions: Zomato serves as a link between customers and partner restaurants. They have created a well-thought-out pricing model for their delivery service.

Zomato Gold is a membership club that allows customers to get exclusive discounts at Gold-tagged restaurants, pubs, and lounges across the country.

This feature of the Zomato Business Model has made it more customer-oriented.

As a result of the benefits it has for consumers, over 1.4 million users have subscribed to it, according to Zomato's datasheet.

Alliances of Zomato: Collaborations with major brands such as Uber Taxi, Visa, and PayPal have bolstered Zomato's business model.

The partners have helped Zomato in various ways, including finding a location to set up a shop, hiring and other procedures, job placements, market research, dealing with operational, accounting, political, and legal issues, and so on.

Zomato is well-liked for the way it works. Zomato is built on the QAAV model, which means it promises and delivers Quality, Accessibility, Affordability, and Variety to its customers and partners.

The following are Zomato's value propositions, which make it unique and admirable:

Improving food quality:

Zomato is completely committed to maintaining a neutral platform. Hyper pure consistently assists food establishments in maintaining high standards.

Zomato's Hyper pure initiative is an innovative way for the company to bring fresh, squeaky clean, high-quality ingredients and kitchen supplies to its partner restaurants. The Food Hygiene rating is the most coveted and well-known quality symbol among its partner restaurants.

Increasing customer accessibility:

Since its inception, Zomato delivery has been growing and expanding its reach to more and more cities.

They are aggressively expanding their services. They now take table reservations, provide corporate catering, and feed India.

Ensuring affordability:

The success of Zomato gold demonstrates Zomato's efficiency in providing a diverse range of exciting options.

Zomato constantly strives to be the best and leaves no stone unturned. They ensure affordability without sacrificing profits.

Assist in the selection:

Zomato believes in assisting its customers in discovering new tastes and experiences that transcend geographical boundaries.

They present the best information to their customers in the most readable format and assist them in making informed decisions.

Commission on delivery services:

These commissions accounted for approximately 75% of Zomato's total revenue in the fiscal year 2019. It amounted to $155 million, four times their previous earnings.

It is the primary aspect of revenue generation in the Zomato business model.

Zomato Gold:

Zomato Gold is based on a freemium model. The concept aims to provide subscribers with premium services.

This system allows customers with gold memberships to enjoy complimentary food and beverage services. This service generates hefty amounts of revenue and is one of the highlights of the Zomato business model.

Ticket sales:

In the form of commissions, ticket sales for various events held in restaurants in collaboration with Zomato generate colossal revenue for Zomato.

Zomato also charges for the consultation services that they offer to its partners. It is yet another part of the Zomato business model for revenue generation.

Promotions:

Not just the Zomato business model, but every business model has space for tie-ups and promotions. Zomato is constantly promoting different restaurants.

Zomato charges partners for increased exposure and visibility through banner advertisements.

Zomato, in 2022, published the Mid-COVID Report for India.

Their report shared the finding that the food delivery sector has recovered with some regional flavors and, in fact, grown beyond pre-COVID levels in a slew of large pockets across the country, with some affluent residential areas leading the way.

Because of the lockdown and everything returning to the home trend, many premium restaurants were becoming receptive to the idea of online delivery, attracting many affluent customers.

In fact, during the lockdown, customers began to rely more heavily on online deliveries. People spent more quality time with their families and loved ones, so group ordering became more common.

Zomato has transformed the food industry by making the concept of universal access a reality. We have discussed the Zomato business model in-depth and analyzed every aspect.

If you want to build an online marketplace like Zomato, you can connect to AppsRhino for the same.

AppsRhino is a mobile app development company that powers on-demand mobile and business apps for entrepreneurs and enterprises.

What is Zomato and what services does it offer?

Zomato is an online food delivery platform that also provides restaurant discovery, table reservations, and management services.

It connects customers with a wide range of restaurants and allows them to browse menus, read reviews, and order food delivery directly through the app or website. Additionally, Zomato offers a membership program with benefits such as discounts and offers.

How does Zomato generate revenue?

Zomato's revenue model is multifaceted. It primarily generates income through advertising and associate programs where restaurants pay for promotions and better visibility on the platform.

Additionally, Zomato earns revenue from delivery fees, commissions on orders, event tickets sales, and the Zomato Gold subscription service offering discounts and perks to users.

What makes Zomato different from other food delivery services?

Zomato stands out due to its comprehensive ecosystem for foodies that includes not only delivery but also restaurant reviews, ratings by users, table reservation services, and a user community.

This integrated approach provides a one-stop-shop experience to users for all things related to dining out or ordering in.

How does Zomato ensure the quality of food and service provided through its platform?

Zomato has a feedback and rating system that incentivizes restaurants to maintain high standards. Customers can rate their experience and leave reviews for each restaurant, helping others make informed decisions.

The company also monitors fulfillment and customer satisfaction metrics to improve their platform.

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Please note you do not have access to teaching notes, zomato’s race to capture the foodtech market.

Publication date: 28 April 2022

Teaching notes

Learning outcomes.

This case allows students to critically analyse the business model of Zomato which is a multi-sided platform/in the foodtech industry. It helps students to critically analyse how firms enter into the global market to create value and maintain dominance over the local market (especially in a large market such as India). The case can also be used to introduce students to the business canvas model by analysing foodtech start-ups. The outcomes are as follows: to understand the Business Model Canvas as a tool to describe and analyse the foodtech business such as Zomato’s, based on its value proposition and the way it sells its services; to conduct a value chain analysis and analyse the business models adopted by foodtech companies; to understand how Zomato can aim at global value creation; and to design a clear growth strategy and evaluate Zomato’s options to internationalize or expand locally.

Case overview/synopsis

The year 2018 was an important year for Zomato as it geared up to chart new heights amidst the changing dynamics of the industry on one hand and a co-founder exiting the company on the other hand. Zomato was incepted in 2008 as a restaurant discovery platform offering users the ability to access restaurant menus and post online reviews. It provided a range of value-added services for both its restaurant partners and end customers. Its vertical integration enabled it to grow its revenues across its three lines of business, namely, dining out, delivery and sustainability. Zomato was an early internet start-up that expanded rapidly in the international markets. In the past ten years, the company both scaled and rolled back its operations with unique lessons learned in each market that paved its path for success both locally and globally. The domestic market was being dominated by a few large players sharing the market. Reports by market intelligence firms showed that Swiggy, the closest competitor was starting to dominate Zomato in India [1]. Deepinder, CEO, Zomato’s dilemma for adding value and increasing revenues by weighing options of whether the company should strengthen its presence in the domestic market, or, venture into foreign markets or serve both local and foreign markets.

Complexity academic level

This case is appropriate for postgraduate courses in Strategic Management or International Business.

Supplementary materials

Teaching notes are available for educators only.

Subject code

CSS 5: International Business.

Internationalization
Value chain
Competitive strategy

Acknowledgements

The authors wish to thank their students Mr Parag Pathak and Mr Yash Gujrati for helping the authors in creating Exhibit 1 of the Teaching Note. The authors also thank Mr. Sree Ram Murkuri for helping us prepare the final manuscript

Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision-making. The authors may have disguised names; financial and other recognizable information to protect confidentiality.

Paluri, R.A. , Jain, R.U. and Sankara Narayanan, R. (2022), "Zomato’s race to capture the foodtech market", , Vol. 12 No. 2. https://doi.org/10.1108/EEMCS-04-2020-0103

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How Does Zomato Work, Zomato Business Model, and Revenue Insights

Keeping in mind the current scenario, the bubble of the on-demand business model will not burst soon. Today, there is hardly anyone in the world who does not know about Uber’s prevalent business model and its success story. Similarly, Zomato is a successful on-demand food delivery platform that helps users discover food places and get it delivered to their doorstep.

Now you must be wondering why Zomato earns huge profits only by delivering food. Let’s dig into the details of how Zomato works and the Zomato business model, due to which it has gained huge momentum in recent years.

More and more business owners are jumping into the online food delivery system bandwagon as it saves the user’s time and effort. You must be shocked to know that the online food delivery market is growing at an annual growth rate of 15.4 % by the year-end 2025.

Furthermore, attractive cashback offers, multiple payment options, fast and smooth doorstep delivery, etc., are the key drivers that make an app for business more successful in the competitive market. Now you must be curious to know how it earns huge revenue and grows by leaps and bounds each day.

What is Zomato?

Zomato is one of the most comprehensive and user-friendly apps where people can search for nearby restaurants and cafés, order food online, and get it delivered to their doorstep in no time. Moreover, you can also get accurate information about restaurants as it provides menus, reviews, and ratings. Based on that, users can place orders and enjoy lip-smacking food at their homes.

Zomato Foundation: Success Story Behind The Idea

Zomato was founded by Deepinder Goyal and Pankaj Chaddah, two Delhi IITs, in 2008. Till November 2010, Zomato was known as “Foodiebay.” Once, they saw their colleagues who were seeking menus of different restaurants to order food. That’s when the idea took birth, and they thought of converting these manual menus into a digital format.

In the year 2012, Zomato spread its wings across the globe and started to list out the number of restaurants in the market. Zomato kept on racing one after other milestones time on time. Gross order value (GOV) — the total value of all orders, a percentage Zomato gets as revenue — rose 13.9% in its food delivery business, as counted on August 2023.

Zomato also has an enthusiastic team of food soldiers who visit each restaurant and assure them that their data is secured. Users can share reviews, give their opinions, and enable users to create stories based on their food experience. This initiative makes Zomato more social.

Zomato’s user-friendly app is one of the reasons why people prefer to order food online. Now using their mobile device to order food, Zomato enables them to get a meal at their location without any trouble.

Interesting Facts About Zomato’s Funding History

Zomato received a total number of 909.6 million from different investors. Their recent funding was from Private Equity in 2020. Info Edge is one of the leading investors of Zomato. Other than that, Ant Financial, Delivery Hero, Shunwei Capital, Vy Capital, and many others are the investors of Zomato who have contributed their major stack to make Zomato popular worldwide.

Now let’s have a look at some interesting financial figures about Zomato’s funding history.

Zomato has raised $2.7B in funding over 23 rounds. Their latest funding was raised on August 30, 2023, from a post-IPO secondary round. It’s funded by 35 investors. Invesco Mutual Fund and Societe Generale are the most recent investors.

Zomato has made 14 investments. Their most recent investment was on April 17, 2022, when UrbanPiper raised $24M. Zomato has had 2 exits. Zomato’s most notable exits include Blinkit and Grab. Zomato has acquired 15 organizations. Their most recent acquisition was BlinkIt on March 16, 2022. They acquired Blinkit for $725M.

Their stock opened with ₹116.00 in its Jul 23, 2021 IPO.

Zomato’s active monthly users increased between 2019 and 2020. There is a surge of 177% in restaurant listings. Active delivery providers are the backbone of their smooth operations, and 200K+ delivery partners feel proud to work with Zomato.

How Does Zomato Work?

Zomato has been rapidly growing since 2008 and is one of the most successful startups in India. Even well-established business owners and entrepreneurs are excited to know how it works and how it generates huge profits even after offering attractive discounts.

The main work of Zomato is to suggest local and nearby restaurants to users and receive orders from them. Users can place orders from their favorite restaurant based on ratings and reviews shared by previous customers. Perhaps this is why more and more startup owners are interested in developing an app similar to Zomato.

It offers comfort to the users and helps business owners reach their local food business to new heights. Zomato’s workflow is simple; let’s see how, within a few minutes, consumers can enjoy a delicious meal.

Step 1: Users can explore various restaurants and order meals from the desiccated app solution or website. Step 2: Particular restaurant owners receive an order request and start preparing a meal. Step 3: Once the food is ready to dispatch, it will be handed over to delivery providers. Step 4: Delivery providers deliver the meal to the customer’s preferred location. Step 5: Customers can make payments and share reviews based on their experience with the given payment options.

This simplicity encourages food lovers to order food online. If you are already engaged in the food business and want to expand its reach, investing in Zomato like an app will give you a promising return in the long run.

Zomato Business Model Canvas - Explained In Depth

Zomato ensures prompt doorstep delivery that makes food lovers delight. Now, customers no longer need to wait for hours at restaurants. Right now, Zomato is one of the leading online food delivery platforms used in almost 22 countries across the globe. On the other hand, restaurant owners also increase their online visibility by listing themselves on the Zomato app.

Let’s discuss in detail how the Zomato works.

Customer Segments

Basically, Zomato has three customer segments that contain:

Users: An online platform designed for users to find nearby restaurants and perfect for those people who prefer doorstep delivery. Local Restaurants: The Zomato platform is significant for restaurant owners who want to promote their business in order to grab the target user’s attention. Delivery Providers: By offering part-time/full-time services, they can generate a decent revenue source income.

Further diving into our major concern – the Zomato business model and understanding its business strategies

Value Proposition

Zomato is an ultimate online platform that enables users to order food online from an extensive range of options near their vicinity. Moreover, if you are new to the food market and want to make an online presence strong, Zomato allows you to promote your food business. Hence, we can say that Zomato fills the gap between restaurant owners and consumers.

Once the order gets placed, users can track their orders in real time with an estimated arrival time. With advanced search and filter options, customers can place orders without any hassle.

Zomato also provides Gold Membership to build a strong customer base and foster loyalty. Zomato’s Gold service comes with additional perks where customers can enjoy heavy discounts on food and beverage orders.

Key Partners

Zomato has tied up with an Uber taxi if any customer wants to book a ride to the restaurant to dine out.
It means users no longer need to access two apps; they can book a cab and find nearby restaurants together.

Other Business Partners: Built an alliance with electronic payment companies like Visa and PayPal.

Key Activities

Zomato’s business model is incomplete without having a look at its core activities. Although its primary goal is to make restaurant searching easy, it has various key activities such as:

Managing multiple networks
Manage advertising and sponsored content
Enhance customer service
Increase brand image

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How Does Zomato Make Money? Take A Look At Its Revenue Streams

Zomato has strengthened its presence in the food market at a global level since its inception. Zomato has generated lots of income sources, and certain are listed below, which helps you understand in detail how Zomato earns huge profits through its business model and diversification.

Zomato Advertisements

Advertisements are one of the trusted and main sources of income for Zomato as it offers advertising policies to restaurants that want to maximize their profits and customer base. It generates more than 70% of its revenue through this channel. It allows restaurant owners to put their banners on their sites to increase visibility.

Zomato Subscription

With the help of advanced tools and software, Zomato can predict users’ behavior, like what they are searching for, what they are not searching for, which dish is trending, which food is in more demand, etc. Restaurant owners need to pay a certain amount to Zomato in exchange for this information. Based on that, they can improve their services and meet customers’ expectations.

Zomato Food Delivery Services

Zomato charges a 20-25% commission from the particular restaurant for each order placed. In some regions, the commission rate may vary from 5-7%.

Zomato Event Organization

In collaboration with certain restaurants, Zomato hosts multiple events such as Christmas Eve, New Year’s Eve, or any other event to boost sales. People have to purchase tickets for those who want to attend these events.

Zomato Kitchens

This is a kitchen infrastructure service offered by Zomato, where they will work with certain restaurant owners who want to expand their business to more locations at minimum cost. It means entrepreneurs can easily establish their restaurant at the right location with minimum fixed and operating costs.

Wrapping It Up

Zomato’s success story is inspiring to every other entrepreneur who is still new to the food delivery market. The workflow of Zomato and its business model is perfect for those who want to capture the market in its early stages.

It saves the user’s time and offers comfort at each level-from online ordering to payment to doorstep delivery. For your business idea, our on-demand mobile app development services are in addition to that to leverage the best results by integrating all your requirements.

Nirav Parmar

Having More than three years of experience, Nirav is an outreach expert at Elluminati. Having a keen interest in communication, content, and digital marketing, he has worked with many brands and helped entrepreneurs to establish an online presence that drives their business forward.

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Business Model of Zomato

Craving for your favourite cuisine and looking to get the food delivered at your doorstep too? One of the best options that come to our mind is “Zomato”. By browsing the website or online app of food search engine Zomato, we can easily place our food order by exploring various restaurants and their menu. Moreover, it also offers attractive deals and discounts to make our overall food experience more satisfying. Zomato is a well-known name in India in offering services of restaurant-cafe search and online food delivery. Currently, this online platform serves in more than 10,000 cities and 24 countries across the world including Canada, Australia, USA, New Zealand, and India. Using this foodie platform, we can conveniently review restaurants and feedbacks on their food quality. It is meant for both restaurant owners and food lovers. Using insightful analytics of Zomato, restaurants can route their business to rapid growth. Users are also able to access menu and images of those restaurants that do not possess their own website as Zomato extends its facility to restaurant owners to list their menu, to increase their business and promote any special menu through listing advertisements, etc. without having an online presence. The search engine of Zomato is designed so well that it displays only relevant restaurants according to the keyword in search criteria. It connects more and more people to food and also facilitates restaurants in enabling a viable ecosystem.

A Brief Background of Zomato

Two IIT Delhi graduate Deepinder Goyal and Pankaj Chaddah laid the foundation of Zomato in July 2008 which was initially launched as “Foodiebay”. While working with Brain & Company in Delhi, they observed a lot of people kept on waiting for a long duration just to have a menu card to order food. While watching the constant demand of menu leaflets from colleagues and of different restaurants, Deepinder came upon with an idea of digitalization of paper menu in a single digital app which is more convenient to use and easily accessible without waiting for a longer time. This idea emerged as Foodiebay in which the website was uploaded with soft copies of menu cards of different restaurants. Sooner their office colleagues started using the same which conserved a lot of their time as it became easier for them to choose a restaurant and order food using a single app platform. This gradually brought more traffic to the website and subsequently, it was expanded for everyone.

From Foodiebay to Zomato

During the initial phase, Foodiebay was started in Delhi and later on it started operating in other major cities of India such as Kolkata and Mumbai. The popularity of the brand became huge as it received an enormous response from customers. This encouraged its founders to enlarge the services of Foodiebay in international locations. To make the brand more captivating among its customers, Foodiebay was transformed in “Zomato”. This new name was easy to remember and also it abolished name confusion with the eBay website. Founders officially relabeled Foodiebay as Zomato in the year 2010. Headquarter of Zomato is in Gurugram. As per the statistics of last year (2019) , the total number of employees of Zomato is recorded more than 5000 and monthly active users are listed as 70 million.

The Business Model of Zomato

The vigorous business model of Zomato played a crucial role in its growth and success. Before discussing the Business Model of Zomato, let us first have a look at what exactly the term Business Model is and what are its basic elements. A Business Model in an organization is considered a structure that is based on concepts that support the feasibility of a product or organization and demonstrates how an organization works, generates income, and how it moves forward to achieve its objectives. So, a Business Model comprises all the processes and policies that an organization adopts and pursues. Peter Druker , the management guru has defined a Business Model as a model that is expected to explain your customer, a value that you can add-on or create for your customers and strategies you can adopt to do that at reasonable prices.

Zomato’s Business Model is aimed at providing quality food services, information related to restaurants, their menus and user reviews. The Business Model of Zomato consists of providing food delivery services, information, user reviews and menus of partner restaurants. It has created a revolution in industries doing food business by including different restaurants and facilitating people to look for restaurants more conveniently. The key components or elements of the Zomato Business Model are disentangled below to understand the management of its operations and revenue generation. Let us discuss each element of the Business model from Zomato’s outlook.

1. The Value Proposition of Zomato

The business model of business is aimed at creating unique value for its customers. The business model of Zomato is focused on inventing new and add-on services that customers cannot receive anywhere else. It offers a lot of value to its customers like:

The brand offers a one-stop-shop for foodies and facilitates restaurants to be different.
The technology efficiency of Zomato has supported the brand by reducing food delivery time. Using the app, customers are able to receive their ordered food next to their door in lesser time.
Offers dual services i.e., searching for restaurants and rating system, online services for food delivery.
Various beneficial services are offered to customers while ordering food using the Zomato app like the price of food is based upon rating and differs according to the rating.
Zomato’s value proposition also reflects in its review system using which diners can review various restaurants in their area. Apart from this, it facilitates restaurant owners to create a difference in their market place, even if these owners have ownership of more restaurants too.
The pricing model of Zomato for food delivery-oriented services is quite comprehensive that carries useful information about the order to be delivered such as total cost, duration, etc.
Zomato’s loyalty and membership service are beneficial for restaurant owners to make a loyal customer base. Like its membership program “Zomato Gold” and loyalty program “Piggybank” give advantage to customers by providing add-on value for their money.
For restaurant owners, Zomato provides various valuable services like event management, targeted advertising, online presence management, performance tracker, customer service, improved visibility.

2. Customer Segments

Being a service provider company, the major source of revenue is consumers. Both consumers and restaurants are the main customers of Zomato. There are 3 types of customer segments of Zomato.

2.1) Consumers

People who look for various restaurants for different cuisines according to their budget, locality, and preferred taste can find different restaurants in their areas and also a menu of different restaurants. Zomato also has those customers in their kitty who want home delivery for their food in a quick time. For this, Zomato has provided app facilities to them.

2.2) Local Business

Zomato’s platform is also beneficial for local restaurants that are looking for promotional tools or mediums to target a large pool of audiences. Different restaurants align with Zomato to enhance their visibility.

2.3) Database Companies and Market-Research Organizations

Zomato has huge customer data, which is collected through customers that review the restaurants and give ratings to them. So the brand’s database of customers is beneficial for database companies and market-research companies which require extensive customer data. So, these are also Zomato’s customers.

2.4) Reviewers

Reviewers, also termed as content contributors are those people who give ratings and provide their comments related to food quality and other services offered by the restaurants. These active reviewers also display photos of local restaurants using the Zomato platform.

3. Key Partners

Zomato has tied-up with different brands like Uber Taxi, London & Partners. It has partnered with e-payment organizations like Visa, PayPal. Furthermore, it has also expanded its digital food ordering landscape in India by announcing a tie-up with Paytm. This partnership deal has enabled its services of ordering and delivering food on the mobile app of Paytm. Due to these additional services, customers are able to search their desired restaurants which are listed on the online platform of Zomato and the Paytm App. This facilitates customers to order their food quickly. These partnership deeds have also contributed to the enhancement of Zomato’s business model. London & Partners have aided Zomato in lots of ways, out of which few are mentioned as under:

Location finding for office set-up
Providing assistance in the recruitment of staff and management recruitment process
Facilitating in market research and work placements
Advising on different policies and procedures, legal matters and accounts handling, etc.

Zomato has made an announcement of acquiring “Uber Eats India” recently i.e., on 21 st Jan’2020 and hereafter, it has become the undisputed market leader in the category of food delivery in India. By this deal, the users and delivery partners of Uber Eats India now become users and delivery partners of Zomato.

4. Key Resources

Any business requires an adequate number of resources to operate its business activities. The key resource of Zomato includes its large amount of databases of different restaurants in different cities. A huge amount of database which is gathered from various restaurants is the base of the rating system of these restaurants. Different delivery personnel and Zomato’s presence in different countries are also key resources. These resources have played an important role in Zomato’s success over the years.

5. Key Activities

The key activities of Zomato can be presented in two main segments.

5.1) Rating and Listing for Restaurants

One of the major segments of Zomato is to provide search facilities for local restaurants and hotels. Customers can look for the same through the Zomato app or their website. Apart from this, Zomato facilitates its customers by providing information related to the menu, food quality, and contact details of restaurants. The rating system of Zomato is considered as one of the best systems that one can look in the market and based on the huge database collection by Zomato.

5.2) Online Food Delivery

Initially, Zomato launched as a restaurant search service platform but later on, it diversified its business in online food delivery as well. This key function of Zomato is based on a dual partnership. Zomato came into partnership with restaurants and delivery service people to deliver online food.

6. Channels

With the rapid increase of mobile users, different businesses including Zomato are focusing more on mobile apps so that the accessibility of their services can be increased in customers and also processes can be improved. The mobile app of Zomato is a key channel that is compatible with both android and ios platforms. Customers can use Zomato’s website to order their favourite food and also they can look for ratings of different restaurants listed in Zomato.

7. Customer Relationship

The ratings given by the customers who visit the listed restaurants on Zomato’s site plays a crucial role in its growth. Being a service industry, it depends on its customers for references and re-purchase as loyal customers. Zomato has a system of mandatory rating from customers through online customer support as a part of its customer service. The availability of support chat system is 24/7 for customers. Also, a customer service centre is available for customers to have any inquiries from representatives of Zomato for their problems.

8. Revenue Generation

Zomato had recorded USD 205 million revenue last year i.e., from Apr-Sep’19 as compared to USD 63 million in the same period in 2018. This is a huge hike in its revenue. Let’s understand how Zomato is making revenue by looking at each factor contributing in its revenue generation.

8.1) Advertisement

Advertising is considered as the major contributor to Zomato’s revenue. Different restaurants use Zomato’s site as a promotional tool and by doing so they are able to enhance visibility and pass on the information related to their offerings to a large pool of audience.

Zomato’s Advertising Strategy

Zomato allows access to different restaurants to customers and also, people can rate the service quality of these restaurants. Most of the time, these ratings are beneficial and reliable. Different restaurants can advertise their services by displaying pictures and banners on Zomato. Zomato takes a certain amount for these services.

8.2) Subscription

Another source of revenue is a subscription fee. For providing analytical tools to restaurants, Zomato charges a monthly fee. The analytical tool, Zomato order is served to restaurants. Using this tool, the restaurant can get information on the interest of its customer pertaining to food. Also, restaurants can manage their offerings to customers as per their preferences and can highlight their food discount offers. One more tool, “Zomato Book” is specifically designed for restaurants. Most of the consumers prefer to book their food table in advance in a restaurant. This tool facilitates restaurants to know the vacant table and manage staff.

8.3) Ticket Sales by Organizing Events

In collaboration and partnering with various restaurants, Zomato organizes different events and festivals based on food items. The audience that attends these events is required to buy tickets at a certain price. Zomato receives a commission on ticket prices. The events of Zomato are the right platform for food organizers to advertise and promote their food products. The advertisement fee is paid by these food organizers to Zomato to advertise in these events.

8.4) Food Delivery Services

Zomato also makes money by providing online food delivery as the brand charges a certain commission from food organizers for these services. Last year i.e., in 2019, Zomato earned a commission of 75% of its total revenue from food delivery transactions only. As compared to 2018, Zomato’s food delivery services achieved a 4 times hike in growth in 2019 and generated revenue of $155 million as compared to $38 million in 2018.

8.5) Zomato White Label

App development also contributes to the revenue generation of Zomato. It introduced the “Zomato White label” service to provide offers to food organizers so that they can develop a customized food delivery app.

8.6) Dining Out

In recent years, Zomato has introduced various new services in its dine-out segment. This business segment includes reviews, listing, membership services, and also Zomato Gold; generated revenue of $49 million in 2019 as compared to $30 million in 2018. Other dining out services like Food@work, Online table booking, and Zomaland (a food carnival event) also contribute a decent share in the revenue of Zomato .

Zomato Gold

Zomato Gold is a premium service launched by Zomato in Apr’18 to provide membership-based premium services. Customers having gold membership are eligible for complimentary food and drinks while ordering from restaurants that are partnered with Zomato. This is a paid service to customers.

8.7) Zomato Consultancy

One of the competencies of Zomato is its large amount of database of restaurants, customers and its analytical tool. The brand is aware of food preferences of specific areas, their ordering pattern or behaviour through its database. So, startups who are looking to enter in those market areas seek consultancy services of Zomato for database and Zomato charges a fixed price for the same. The consultancy services include customer data related to the preference of customers, their desires and needs, etc.

8.8) Sustainable Business Segment

Zomato has launched an initiative “Hyperpure” in its Sustainability business segment in which emphasis is given on quality improvement of ingredients that are being used by restaurants by offering clean and fresh ingredients to its partner restaurants. In the first half (H1) of FY2020 i.e., Apr-Sep’19, Zomato has successfully served 2200 restaurants in Delhi and Bengaluru and disbursed 65000+ orders of these ingredients. Average 5-7 orders are placed on a monthly basis and it cost average USD 100 for an order. The revenue from Hyperpure is $6.5 million for H1 FY2020.

9) Competitor Review

Among 10 competitors, the top 3 competitors of Zomato are Swiggy, Just Eat, and InnerChef. Rest competitors include 48 East, Foodpanda, TinMen, Faasos, BOX8, Foodora, and Chefie. Among all these main 10 competitors, Zomato secured 2nd position in terms of revenue generation last year .

The functioning of the food and restaurant industry has changed as Zomato brought an idea of providing universal visibility of different restaurants. The availability of Zomato is based on the client’s budget, cuisine choice, and location. It makes the food ordering process effective and smooth by providing online delivery of food services. Zomato also extended its support in enhancing the business models of different cafes, restaurants, etc. through providing consultancy services and an opportunity to advertise and promote their products and services using Zomato’s feature of sharing videos and pictures on its app. Moreover, it helps partnered restaurants and cafes in their revenue generation by organizing different events and festivals. The well-organized Zomato’s business model focuses on its various elements that are considered as its revenue sources. Zomato has organized all its revenue generation strategies like event organization and advertisement, restaurant advertisement, sales of tickets in events, other specific services like Zomato Gold, etc. in such a way that all these contribute significantly to its revenue generation. It gives equal weightage to all its sources that resulted in a five times increase in revenue in FY 2020 as compared to FY 2019. Zomato’s tie-ups with different companies like PayPal, Paytm, Uber Eats, etc. are steps towards its revenue enhancement. These can be seen as beneficial alliances for the company.

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Zomato Business Model
The Zomato business model represents innovation and transformation in the food technology industry. The company is an Indian multinational restaurant aggregator and food delivery company. As a pioneering force in the food delivery and restaurant discovery industries, Zomato has revolutionized how people interact with dining options and culinary experiences.
Understanding the Zomato Business Model: A Complete Guide
Zomato Business Model Canvas Zomato's Revenue Streams: How Does the Food Delivery Giant Make Money? Zomato's revenue model is based on multiple streams, including: Commission on Online Orders: Zomato earns commissions on every order placed through its platform. This commission is typically around 10-15% of the total order value.
Zomato Business Model
The following is a compilation of Zomato Business Model Canvas. Business Model Canvas: Zomato. 1. Customer Segments. Zomato has three customer segments: Users - Zomato platform is explicitly designed for users to find and locate restaurants in a range of various cuisines.
Business Model and Revenue Insights of Zomato
The total revenue generated by Zomato in FY 22 was INR 4192 crore whereas its turnover in FY 2023 was INR 7079 crore. The business model of Zomato offers a variety of value to its customers, while Zomato's revenue model focus has been on creating something new and extra that the customers cannot get anywhere else.Zomato is a one-stop shop for dinners and offers a way for restaurants to ...
In-Depth Business Model of Zomato
Zomato's business strategy is a well-orchestrated plan that includes several factors for the seamless operation of the application. Below are some of Zomato's important elements. 1. Zomato Value Proposition. The company model Zomato offers its clients a selection of values. The aim of Zomato Zomato's work is appreciated.
Zomato Business Model: How Does Zomato Make Money?
The Zomato business model can be analyzed through a business model canvas, which provides a holistic view of the company's key components. Here's a breakdown of the elements: Key Partnerships : Zomato collaborates with restaurants to offer a wide variety of food options and with delivery partners to ensure efficient order fulfillment.
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Let's embark on a culinary journey through the intricate layers of Zomato's business model to uncover the secret ingredients of its success. The Appetizer: Understanding Zomato's Genesis Zomato's journey began in 2008, in the bustling lanes of New Delhi, India, when Deepinder Goyal and Pankaj Chaddah embarked on a mission to solve the ...
Decoding the Zomato Business Model. How does Zomato make money?
The Business Model Canvas comprises nine building blocks that cover the four main areas of a business: customers, offerings, infrastructure, and financial viability. These building blocks include: Let's analyze each of these building blocks in the context of Zomato's business model. Zomato's primary customer segments can be divided into ...
How Does Zomato Make Money? The Zomato Business Model In A Nutshell
It also makes money via its subscription service (called Unlimted - $9.99/month or $99.99 annually), giving free delivery on orders of more than $12. Uber Eats Business Model. Uber Eats is a three-sided marketplace connecting a driver, a restaurant owner, and a customer with Uber Eats platform at the center.
Zomato Business Model: How Zomato Makes Money
While Zomato was started as a simple restaurant listing directory in 2008, the company has come a long long way since then venturing into multiple business segments, making the business more diverse than a Zomato user interacting with the business would think it to be. In this blog, we will try to demystify Zomato's business model.
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The business model of Zomato is based on establishing relationships with restaurants to generate commissions. These commissions are calculated as a percentage of the total bill, incentivising restaurants to list their services on the platform. 2. Revenue Generation through Commissions: Zomato's Primary Income Source.
How does Zomato make money
Broadly, we can say that there are three customer segments in Zomato's business model: Local restaurants: Zomato helps restaurants enhance visibility to their target audience, provides opportunities for targeted advertisements, customer service & engagement, as well as track their performance using its analytical tools.
Explaining Zomato Business Model: How Does Zomato Make Money?
Zomato's success and expansion in the meal delivery sector can be attributed to its creative business strategy, which is based on Alexander Osterwalder's Business Model Canvas. Zomato has revolutionized the way people find, order, and enjoy food by comprehending and catering to the specific needs of its various customer segments, developing ...
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Deepinder Goyal, the co-founder and CEO of Zomato, owns a 4.3% stake in the company. Business Model. Zomato provides a treasure trove of information, including restaurant names, addresses, contact details, and user-generated reviews and ratings. This helps the audience discover new and unique restaurants.
Zomato Business Model Explained [Case Study]
The business model of Zomato has been proven to be highly effective to reach heights in the food delivery market in a short period. Its key activities include the management of various networks of restaurants and customers, advertisements, and customer care service to increase the brand image by providing the best quality meals at your doorstep ...
Zomato business model explained
Written by Zomato business model 0 Followers Zomato, a well-known venture which focuses on online food ordering, restaurant reservations and loyalty programs, consulting services, and a lot more.
Business Model of Zomato
Zomato has paved the way for other online food delivery apps. The following are the key components of the Zomato business model: Customer Segments: Zomato's customer segment is divided into three parts: Local restaurants: Zomato allows restaurants to be visible to their target audience. Users: Zomato caters to users who want to find restaurants ...
Zomato Business Model
The revenue of the company is ₹2,486 crore as of 2020. Zomato's IPO success is promising for other startups in India. The company's stock market debit day ended at 66% at a value of $13.3B. The concept of Zomato is similar to US-based DASH that lets companies book restaurant tables and order food from restaurants.
Zomato's race to capture the foodtech market
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Zomato Business Model Canvas - Explained In Depth. Zomato ensures prompt doorstep delivery that makes food lovers delight. Now, customers no longer need to wait for hours at restaurants. Right now, Zomato is one of the leading online food delivery platforms used in almost 22 countries across the globe. On the other hand, restaurant owners also ...
Business Model of Zomato
The Business Model of Zomato consists of providing food delivery services, information, user reviews and menus of partner restaurants. It has created a revolution in industries doing food business by including different restaurants and facilitating people to look for restaurants more conveniently. The key components or elements of the Zomato ...

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Introduction to Zomato

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2. Value Propositions

3. Key Partners

4. Key Activities

5. Key Resources

6. Channels

7. Customer Relations

8. Zomato’s Cost

9. Zomato’s Revenue

How does Zomato make money?

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