Introduction
Looking at the Zomato case study you will see when it started in 2008, it focused on being the best restaurant search and discovery platform. Today, customers rely on Zomato not only to find and explore restaurants but also to engage in many activities such as reading and writing customer reviews, browsing and uploading photos, ordering food online, reserving tables, and making payments seamlessly while dining out.
With a vast database encompassing over 1.4 million listed restaurants in 24 countries, and over 10,000 cities globally, the Zomato case study has shown us, that it provides users with extensive information about various dining establishments. From restaurant names and menus to pricing details, customer reviews, and other pertinent information, Zomato empowers users to make informed dining decisions effortlessly.
The inception of Zomato Case Study & Founders
Let us investigate the Zomato case study, founded by two IIT graduates, Deepinder Goyal and Pankaj Chaddah, in Delhi. Before they started Zomato, they were colleagues at Bain & Company.
Once, they noticed their office colleagues waiting in a long queue for lunch in the cafeteria. So they wanted to do something so that no one would have to wait and their favorite food would reach their doorstep whenever needed it. So they started an online food delivery service, Foodiebay. Later it was converted to Zomato in 2010. Founders wanted to change their brand name because Foodiebay’s name is somewhat similar to eBay.com, which can be confusing. They also wanted a name related to food. So, from Tomato it becomes Zomato.
In the Zomato case study, in 2015 it acquired Uanspoonrb, a restaurant discovery service in the US, to grow its presence there. However, its venture into online event ticketing didn’t go as planned and resulted in significant losses. Today, Zomato has a team of over 6,000 people and operates in countries like the US, Canada, Australia, the UK, and the UAE.
What is the Business Model Zomato?
The key to Zomato’s success lies in its innovative business model. It revolves around facilitating online food delivery and offering a wealth of information, including user reviews and menus, from its partner restaurants.
In the Zomato case study, some important components of Zomato’s Business Plan are as follows :
- Customer Ecosystem – Zomato’s customer ecosystem consists of a trio of distinct components. Those are Local Restaurants, Reviews, and Users.
- Zomato Essentials – Zomato has developed a smart way to figure out how much its food delivery services are worth. It has worked on food delivery, hosting live events like Zomaland, offering subscription services like Zomato Gold, and partnering with cloud kitchens and restaurant owners. The introduction of Zomato Gold and Piggybank further enhanced the company’s offerings and value.
- Zomato Partnerships – Partnerships with some big names like Visa, Uber Taxi, and PayPal have strengthened Zomato’s position in the market. In an exploration of the Zomato case study you will find that, mainly to attract more customers in a competitive market, the company aims to connect customers to restaurants using smart technology which reduces delivery time and enhances service quality.
How Zomato Makes Money?
Zomato doesn’t sell products directly to consumers, but its revenue model is very diverse. Beyond food delivery, Zomato is heavily involved in advertising. It operates in two main segments, food delivery and advertising. Apart from online ordering, Zomato has several revenue streams that many customers may not be aware of.
In the Zomato case study, Some of its main sources of revenue are:
- Online Food Delivery – In its food delivery service, Zomato earns revenue by charging restaurants a commission on each order. This commission is shared between delivery partners and the company. Generally, Zomato charges 20% to 25% commission per order at a restaurant, although the rate may vary between 5% and 7% in some regions. However, Zomato’s case study reveals, that despite the competition and the need for discounts, online food delivery contributes a relatively small portion of Zomato’s overall income compared to other revenue sources.
- Restro Advertisement – Zomato earns about 75% of its revenue by showing paid ads of restaurants through its website and mobile app.
- Event Advertisement – In this revenue model, Zomato makes about 5% profit by promoting events for restaurant-based advertisers.
- Consultant Services – When restaurants seek advice on opening new outlets in specific areas, Zomato offers guidance and charges a consulting fee for its services. Apart from these Zomato case study shows, it earns revenue from previously mentioned services like Zomato Gold, Zomaland, and other services like Zomato Whitelabel (App development service), Zomato Kitchen service, etc.
Funding and Investors Stake
Zomato is a publicly traded company, meaning its shares are available for trading on the stock market. According to Zomato’s case study report, its largest shareholder is Naukri.com’s parent company Info Edge (India) Ltd, a prominent Indian media and internet firm. Info Edge India has been a key supporter of Zomato from the start, providing significant seed funding and maintaining a substantial stake in the company.
Funding data is as follows :
- 2010-2013: Info Edge invested around $16.7 million in Zomato through 4 funding rounds.
- July 2010: Angel round, $6.4K from Bharati Balakrishnan.
- August 2010: Seed round, $1.03 million from Info Edge Ventures.
- September 2011: Series A round, $3 million from Info Edge Ventures.
- September 2012: Series B round, $2.3 million from Info Edge Ventures.
- February 2013: Series C round, $10.3 million from Info Edge Ventures.
- November 2013: Series D round, $37.5 million from Sequoia Capital India & SEA (now Peak XV Partners) and Info Edge Ventures.
- November 2014: Series E round, $60 million from Info Edge Ventures, Vy Capital and Sequoia Capital.
- February 2015: Series E round, $27.2 million from Info Edge Ventures.
- April 2015: Series F round, $50 million from Info Edge, Vy Capital and Sequoia Capital.
- September 2015: Series G round, $60 million from Temasek and Vy capital.
- February 2018: Series H round, $152 million from Alibaba Ant Group.
- October 2018: Series I round, $217 million from Ant Group.
- February 2019: Series I round, $40 million from Glade Brook Capital.
- February 2019: Series I round, $62.2 million from Delivery Hero, Naspers, Shunwei Capital, Saturn Shine Steam Detailing.
- Jan 2020: Series J round, $150 million from Ant Group, Temasek, Sequoia Capital, Info Edge Ventures.
- Mar 2020: Series J round, $5 million.
- August-October 2020: Series J round, $660 million from Mirae Asset Venture Investments, Luxor Capital Group, Steadview, Baillie Gifford, Fidelity Investments, Tiger Global Management, Kora, Temasek, Bow Wave Capital Management, DI Capital Partners.
- February 2021: Series J round, $250 million from Kora, BAce Capital, Fidelity Investments, Tiger Global Management, Bow Wave Capital Management, Dragoneer Investment Group, Variable Insurance Products Fund III, Mirae Asset, Sequoia Capital.
- Info Edge Ventures holds a substantial 13.71% stake in Zomato, making it one of the company’s major shareholders.
- Besides Info Edge, Zomato’s other key stakeholders include Sequoia Capital India (4.4%), Alibaba Group Holding Ltd.(6.317%) Ant Group Co, Ltd. (3.399%), Temasek Holdings (1.967%), Tiger Global Management (1.44%), and Fidelity Management & Research (3.085%). Deepinder Goyal, Zomato’s co-founder and CEO, holds a 4.241% ownership stake in the company.
Note:- Funding data is collected from all around the internet but mainly from this
What is the Marketing Strategies of Zomato?
Zomato’s target audience mainly includes those smartphone users who are between the ages of 18-35 and are comfortable with using apps.
So as the Zomato case study states, it caters to two types of customers: those who enjoy dining out and those who order food delivery.
Zomato Gold rewards dining out, while also catering to those who prefer food delivered. This diverse group includes office workers, students in hostels, busy individuals, and occasional diners.
So based on this target audience, Zomato’s marketing strategies are:
Digital Marketing Strategy: In the Zomato case study, it connects with customers through social media platforms like Twitter, Facebook, and Instagram, where it has a combined following of over 4 million.
Its digital marketing strategy focuses on easy-to-digest content that resonates with users, who often seek humor and entertainment on social media.
Zomato adapts its strategy to stay relevant, continuously finding new ways to engage customers. They engage their audience with posts on trending topics, encouraging shares and discussions.
In the details of the Zomato case study you will see, that during the 2016 Olympics, Zomato creatively promoted its brand on Twitter with Olympic rings made of coffee, humorously claiming they would win gold if coffee drinking were a sport. They also tapped into the hype around the “Pokemon Go” game, using Pikachu to boost their brand on Twitter further.
Their email marketing is particularly effective, using catchy subject lines and compelling calls to action to keep customers loyal.
For example, they ran a campaign themed around the popular series “Mirzapur” on Amazon Prime Video.
They even created a “CV for Biryani,” showcasing food-related humor and clever CTAs like “hire immediately.”
Zomato’s email marketing stands out for its creativity and effectiveness.
In the Zomato case study, their strategy also involves optimizing pages for top keywords, signaling search engines that their content matches users’ queries, and securing numerous high-quality backlinks. With a strong social media presence, Zomato boasts 925K followers on Instagram and 1.5 million on Twitter, ensuring continuous engagement with its audience
Influencer Marketing Strategy: Zomato has advanced the idea of ‘hyper-local marketing’ by using regional languages and collaborating with micro-influencers, boosting credibility and connecting with diverse communities.
Zomato’s case study shows, that their focus on influencer marketing is to work with both micro and macro influencers, showcasing their willingness to innovate and grow their user base.
Known for their witty tweets, Zomato’s humorous content resonates with customers, offering a refreshing break from daily life.
Their mastery of ‘meme marketing’ further boosts engagement, attracting organic traffic and driving revenue growth.
With the help of the Zomato case study, you will know, that Zomato believed in both acquiring companies and innovating internally. Its strategic acquisitions helped propel its brand forward, garnering global recognition and momentum.
What are Zomato's Acquisitions?
• In July 2014, In its inaugural acquisition, Zomato acquired MenuMania for an undisclosed amount.
• The company expanded through acquisitions, including lunchtime.cz and obedovat.sk for a combined $3.25 million.
• In September 2014, the company acquired Poland-based restaurant search service Gastronauci for an undisclosed amount.
• In December 2014, Zomato made another global acquisition by acquiring Italian restaurant search service Cibando.
• In 2015, The Seattle-based food portal, Urbanspoon was acquired for an estimated $60 million.
• In 2015, Zomato made several acquisitions, including Mekanist, the Delhi-based startup MapleGraph that built MaplePOS (Renamed Zomato Base), and NexTable, a US-based table reservation and restaurant management.
• In 2016, the company acquired Gurgaon-based logistics technology startup Sparse Labs (Renamed Zomato Trace).
• In 2017, it made another acquisition by acquiring the food delivery startup Runnr.
• In September 2018, Zomato acquired Bengaluru-based food e-marketplace, TongueStun Food for approximately $18 million, a mix of cash and stock.
• In December 2018, it acquired Lucknow-based startup, TechEagle Innovations, which works exclusively on drones, for an undisclosed sum.
• In January 2020, the company acquired Uber Eats for an all-stock deal and granted Uber Eats a 10% stake in the merged entity.
• In June 2021, The firm invested around $120 million to acquire a 9.3% stake in Grofers.
• In June 2022, Zomato acquired Blinkit (formerly Grofers) for an all-stock deal and invested around $568 million.
What Challenges faced by Zomato?
Through the descriptive stats of the Zomato case study you perceive its rapid growth brings its fair share of challenges in this competitive market.
• Competitors: Zomato faces tough competition from top players like Swiggy, Uber Eats, and Foodpanda in the food delivery market. This can mean price wars, lower profits, and difficulty keeping customers.
• Regulatory Challenges: Zomato must follow various regulations like food safety and labor laws, which can impact the price structure. These changes might slow down operations and affect customer service. Non-compliance can harm Zomato’s reputation.
• Consumer Preferences: Consumer tastes change, and Zomato must stay relevant. Trends like more home-cooked meals during COVID-19 and focusing on healthier options affect the demand.
• Geopolitical Issues: Zomato operates globally, facing risks like political instability and trade policy changes. This can affect operations and finances. Political tensions or economic downturns in certain regions may impact Zomato’s expansion plans.
• Cyber Threats: Zomato faces cybersecurity threats due to the vast amount of customer data it collects, making it a target for cyber-attacks. Breaches could harm its reputation and lead to legal issues. With cyberattacks becoming more sophisticated, Zomato’s defenses are under constant risk.
• Technological Revolution: In this new era of technological revolution, the food ordering and restaurant discovery industry is changing rapidly due to new technologies like artificial intelligence and blockchain. By the inspection of the Zomato case study, you can assume that they might find it challenging to stay competitive in this evolving landscape.
• Investors Leaving Zomato: Some major investors have left Zomato over the years.
Uber, which owned 7.8% of Zomato shares after Zomato acquired its Indian subsidiary, left Zomato on August 3, 2022.
As reported on August 4, 2022, Tiger Global sold half of its Zomato stake.
Softbank’s venture capital fund, SVF Growth (Singapore) Ltd, exited Zomato in an open market transaction on December 8, 2023.
Another foreign investor, Ant Group’s Alipay Singapore Holding Limited also exited Zomato on November 29, 2023
Future Plans of Zomato
Food delivery platforms like Zomato saw record-high sales in 2021, with more people ordering food online due to Covid-19.
Zomato’s case study shows, that in the July-September quarter of 2023, Zomato saw a gross order value (GOV) of Rs 7,980 crore for food delivery, marking a 20% increase compared to the previous year.
The company’s revenue from operations surged to Rs 2,416 crore from Rs 1,414 crore in the same quarter of the previous year.
Analysts predict significant growth for the food delivery industry, estimating a turnover of $110 billion by 2025.
The brand focused on online food ordering, Hyperpure, and Quick commerce to drive growth.
While online food delivery is growing, its penetration in India remains low compared to global competitors.
Conclusion
In the conclusion of the Zomato case study, despite the challenges, Zomato continues to innovate and improve its offerings. It makes a mark on customers through its innovation, global reach, and focus on user satisfaction.
The Zomato case study tells us that after China’s Meituan, Zomato became the second online food delivery company globally to report profits. Its profitability soared to rupees 36 crore for the quarter ending September 2023. Revenue from operations surged 71% year-on-year to Rs 2,848 crore, surpassing street expectations of Rs 2,607 crore. It’s market capitalization of ₹ 1,34,237 Crore as of 14-Feb-2024
Questions? Answers
Deepinder Goyal, an IIT Delhi graduate, is the Co-founder and CEO of Zomato, the popular food delivery platform.
Zomato takes a commission of 24-28% from restaurants for each order, and it’s common for restaurants to pass on this cost to customers.
Zomato shines with its tech-forward approach to food delivery. Using data analysis and AI algorithms, Zomato provides various services like online ordering, table reservations, and restaurant reviews. These services help customers easily explore and order from their favorite restaurants hassle-free.
In April 2020, the company changed its name to Zomato Private Limited. Then, in April 2021, after becoming a Public Limited Company, it changed its name again to Zomato Limited.
Zomato is a brand of every household if one thinks of ordering food online. It’s your ultimate guide to finding the best restaurants, bars, pubs, clubs, and perfect places for dining out
One97 Communications owns 49% of the paid-up share capital, both directly and through its subsidiary of Paytm Payments Bank Limited (PPBL). Paytm CEO Vijay Shekhar Sharma holds a 51% stake in PPBL. Although, he has currently stepped down as the non-executive chairman and board member.
With a 5.5 percent stake in Zomato, Goyal earned over Rs 3 crore in salary in 2020. However, he decided to forego salary for the next three years, leading to a significant drop to Rs 1.96 crore in 2021.
Zomato CEO Deepinder Goyal stepped in to help by making deliveries himself. He tweeted that his first delivery brought him back to the Zomato office
According to reports, Ant Financial Group is considering selling a 2% stake in Zomato Ltd, an online food delivery platform, through a block deal. They aim to sell 176.4 million shares, potentially earning around Rs 2,810 crore.
The Zomato logo uses two key colors: deep red and white. The deep red symbolizes passion and energy, reflecting the lively food delivery scene. Meanwhile, white stands for purity and simplicity, highlighting the importance of clean and straightforward food experiences.
Zomato, a leading player in the food tech sector, achieved a major milestone by becoming profitable for the first time in a quarter. In the second quarter of the current fiscal year, its profit after tax soared to Rs 36 crore, marking an impressive 18-fold increase. This marks a significant improvement from the Rs 251 crore loss reported in the same quarter last year.
Zomato, originally called FoodieBay, was started in 2008 by Deepinder Goyal and Pankaj Chaddah, who used to work at Bain & Company. Now, it’s a popular restaurant search and discovery service operating in 24 countries.
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