Can you imagine life back in 2008, when people used to stand in long queues, waiting for menus to make an order for food in a restaurant via phone calls? Our life would have been tiring if we had similar situations even now.

Driven by the mission of “Better food for more people”, two young minds established a start-up, an online food delivery company in Delhi, “Foodiebay” later known as “Zomato”. The founders, Deepinder Goyal and Pankaj Chaddah wouldn’t have predicted that they would be getting 12.5 lakh orders on an average per day.

Today Zomato has been one of the leading food delivery platforms in India and 24 other countries. Eager to know how an Indian company succeeded big? Let’s dig deeper into the success story of this B2B food supplier company.

What is Zomato?

Zomato is an online food delivery company that was started in 2008 by two IIT graduates. The initial idea of this company started with posting restaurant menus online on a simple HTML web page along with some information about the nearby restaurants and their reviews.

Later on, they started providing services such as online food delivery, restaurant discovery, booking tables, and restaurant-specific marketing. They made a revenue of Rs.2,848 crore which is 72% more than the previous years. Pankaj Chaddah, the co-founder of Zomato mentioned that they want to be the Google of food and their vision is to be the platform that helps the people who are searching for food in nearby restaurants.

Zomato Business Model and It’s Working

Let us explore Zomato’s working and business model in 3 sections which involve the workflow, customer segmentation, and value propositions for customers and restaurants.

Workflow

If you want to order food via Zomato, open the Zomato app on your mobile phone and search for your favourite restaurant in your locality.
It provides you a facility to surf menu items of various restaurants and helps you to book tables online apart from food delivery.

Once the order is placed it will be directed to the restaurant and the food will be delivered to the customer’s address by the delivery persons. The customers can track their order and its time of delivery. The Zomato app allows the user to pay for the order via online transaction options.

CUSTOMER SEGMENTATION

Zomato categorizes its customers into three sections: Users, Local Restaurants, and Delivery providers.
Users have a dedicated app in which they search for local restaurants and order food or make a reservation.
Local restaurants who want to reach a wider audience join the app and promote their food and services via advertisements to attract users.
Delivery providers who work as part-timers or full-timers deliver the food to the customers and get a reasonable amount of revenue out of it.

VALUE PROPOSITIONS FOR CUSTOMERS

Convenience: Zomato makes it easier for the user to search restaurants, check out reviews, and place orders. They provide facilities to find local restaurants based on cuisine, location, and other criteria.
Personalized recommendations: Zomato offers recommendations that are very similar to user’s past searches and interests. These recommendations help the user to explore more restaurants that provide quality food.
Discounts and payment options: Zomato provides various discounts and offers which attract large no of customers. Customers can make payments via cash, card, and UPI.
Variety: Zomato helps customers to order from a variety of restaurants ranging from street stalls to fine dining hotels.

VALUE PROPOSITIONS FOR RESTAURANTS

Marketing: Zomato serves as a prominent marketing platform for most of the small restaurants which helps them reach to wider audience.
Advertisements: It also allows restaurants to promote themselves by advertising about them in Zomato.
Analytics: Zomato provides analytics on the restaurant’s performance, total orders placed, and revenue generated which helps the restaurants to analyze their business.

Zomato Revenue Modal

Commission: Zomato charges a Commission amount ranging from 20%-25% on each order and commission rates up to 5% to 7%.

Analytical tool: Zomato offers an analytical tool called Zomato Order which helps them to know about customers’ favourite foods and combos with which the restaurants can plan their future discounts and orders to attract customers. The restaurant has to pay some money to buy this tool from Zomato, this amount adds up a huge amount to the total revenue of the company.

Zomaland: Zomato organizes live events such as Zomaland which is like a food carnival along with live musical performances and other entertainment. It collects a fair amount from customers attending the event as an entry fee.

App development: Zomato collects quite an amount of revenue by developing personalized food delivery apps for restaurants.

Zomato Kitchens: Zomato Kitchen is an infrastructural service that provides space and equipment for restaurants to expand their business to new locations.

Subscription fee: Zomato Gold is the premium subscription offer provided by Zomato which provides some privileges like complimentary dishes and drinks at restaurants. User pays to get Zomato gold which increases the revenue of the company.

Hyperpure: Zomato collects food grains, spices, and other ingredients directly from farmers and supplies them to restaurant partners. Revenue from this service was Rs 200 crore in financial year 2021, with 9,225 restaurant partners.

Related: Zepto Business Model

TimeLine of Growth

2008:
Zomato was started in 2008 in the name of “Foodiebay” which served as a platform for uploading restaurant menus.

2010-2012:
The company was renamed “Zomato” and raised Rs. 4.7 crore from InfoEdge.
Zomato’s international expansion with Dubai in 2012.

2013:
It raised $37M led by Sequoia Capital at a valuation of $150M. It spread its operation across Australia, Indonesia, Portugal, Chile, Ireland, New Zealand, and Vietnam in the next few years.

2016-2017:
Zomato started services like table reservations for restaurants and a customer membership program called Zomato Gold which was later referred to as Zomato Pro and Zomato Pro Plus.

2018:
Zomato acquires Runnr – a hyperlocal delivery platform.
Zomato added Ant Financial to its capitalization table and became a unicorn company (i.e., a company valued over $1 billion and not listed in the stock market).

2019-2020:
Zomato launched Hyperpure in 2019.
It acquired Uber Eats India in January 2020.
Its delivery business crashed in March during the pandemic and faces a downfall.

2021:
Zomato Kicked off its IPO (Initial Public Offering) process.
It raised Rs 9,373 crore from public markets and Rs 64,000 crore valuation.

2022:
Zomato Launched a 10-minute food delivery called Zomato Instant in Gurgaon.
It acquired Blinkit for US$568 million and earned a revenue of Rs 55 billion in the financial
year 2022.

2023:
Zomato started its hyperlocal package delivery service app called Xtreme and earned a total revenue of Rs 2,416.00 crore, 70.87% greater than the previous year.

Conclusion

“Never have a Bad meal- Zomato”, as the tagline refers, Zomato strived to provide good food for the people. Even though they started with just posting delivery menus on websites, they hit the headlines in a very short time with their consistent work and utilization of technologies. If you wish to develop an application for your business like Zomato, visit us!!!

Smarter is one of the leading mobile app development companies in Chennai. We have developed various well-performing and user-friendly online food delivery applications.