Zomato Business Model – How Zomato Works & Makes Money
Zomato Business Model – How Zomato Works & Makes Money
Last Updated on May 18, 2022
Zomato is a search, discovery, and online food delivery service for Indian restaurants. Deepinder Goyal and Pankaj Chaddah created the food tech unicorn in 2008. Zomato is well-known across the country, and it has successfully expanded into a number of overseas markets over the years. It currently serves 10,000 cities in 25 countries, including the United States, India, Australia, Brazil, New Zealand, Singapore, and Qatar in the Middle East.
Zomato now focuses on online meal ordering, restaurant reservations and loyalty programmes, as well as consulting services. Zomato is also a food-search engine that operates in a wide variety of food and restaurants, like the Google search engine. The company has become one of the world’s largest food aggregators from a household project. In addition to connecting people in every context to food, Zomato works in close collaboration with restaurants to make a sustainable ecosystem possible.
The company has succeeded in remaining a top player in the market with its unique and sustainable business and revenue model. Zomato has been able to build confidence among people from years of service because of factors such as affordability, easy accessibility and range. Zomato works to find innovative ways of serving its clients.
How Did Zomato Start?
In July of 2008, two IIT graduates, Deepinder Goyal and Pankaj Chaddah formed Zomato, formerly known as Foodiebay. Deepinder first came up with the idea that his colleagues were always asked to order food from paper menus of various restaurants. This is when he was thinking of transforming the restaurant menus into a more accessible, much easier-to-use digital app.
In the course of nine months, the company became Delhi’s largest directory for dining and then, due to its success, expanded to other cities. By 2012, Zomato began its international expansion to countries such as the United Kingdom, South Africa, Sri Lanka, South Africa, New Zealand, Brazil and more. In that course, because its last four letters from ‘Foodiebay’ coincided with ‘eBay,’ the company was named Zomato in 2010 to avoid legal problems. In 2010, the company’s name was changed to Zomato.
In 2015 the company delved into the food supply business and launched Gold in India, a subscription product that allows subscribers to access free food and drinks. Zomato has also started HyperPure, which works with farmers directly to improve the quality of food products and supply restaurants with fresh products.
The total number of what Zomato’s come up with by all its various investors is 909.6 million. Recently, private equity funding was available in 2020. Info Edge is Zomato’s leading investor. Besides that, Zomato’s investors are Ant Financial, Delivery Hero, Shunwei Capital, Vy Capital and a lot more, who have helped make Zomato popular worldwide. Let’s now look at some interesting figures on the financing history of Zomato.
- Raised $ 37 million from Sequoia Capital and Info Edge India in November 2013.
- Raised $ 600 million from Vy Capital, Info Edge, and Sequoia Capital November 2014.
- Raised $60 million from Temasek and Vy Capital In September 2015.
- Raised $ 250 million from Chinese Company Alibaba In October 2018.
- Additional funds around $150 million raised from Ant Financial in 2018. Ant Financial raised additional funds of about $150 million Explore the operations of Zomato More than five thousand employees with different scales of pay Users: 80 million users per month Disposable in Spanish, Czech, Turkish, Italian, Vietnamese, Spanish, Slovak. Country served: 24 countries Every 30 seconds, Zomato adds a restaurant.
So, How Does Zomato Work?
Zomato has grown quickly since 2008 and is one of India’s most successful start-ups. According to Statista reports, Zomato had over 110,000 active restaurants on an average monthly basis during the first half of the financial year 2020, Even well-known business owners and entrepreneurs want to know how it works and how it makes enormous profits even after attractive discounts. Zomato’s main task is to suggest and receive orders from local and nearby restaurants.
Based on ratings and reviews shared by previous customers, users can place orders from their favourite restaurant. Maybe this is why startup owners are increasingly interested in developing an app like Zomato. It offers users comfort and helps businessmen to reach new levels in their local food company.
It’s simple how Zomato works — let’s see how consumers can enjoy delicious dishes within a few minutes?
- Users can visit different restaurants and order meals from the designated app solution or website.
- Some restaurant owners receive a request and begin to prepare a meal.
- The food will be delivered to suppliers once it is ready for shipment.
- Suppliers will send the meal to the favourite location of the customer.
- Customers can make payments and share reviews on the basis of their experience with the given payment options. This simplicity promotes the online order of food for food lovers.
Zomato Business Model
Zomato’s success lies in its strong business model. Zomato is essentially an app whose business model covers food delivery services, information provision, user reviews and Partner restaurant menus. For other online food applications, Zomato is a pioneer.
Below are the key elements of its business model of Zomato:
- Customer Segment
Zomato’s customer segment consists of three parts:
- Restaurants in the neighbourhood: Zomato allows restaurants to be visible to their target group.
- Users: Zomato is intended for users seeking restaurants or specific cuisine in the immediate vicinity. Zomato is a panacea for home delivery enthusiasts
- Content contributors: they are Zomato content contributors. They review food and places actively and provide users with information in text and graphic form.
- Zomato Provisions
Zomato is the link between the clients and the partner restaurants. For its only delivery services, Zomato has created a well-designed pricing model. Zomato Gold & Piggybank has improved the quality of Zomato’s services
- Zomato’s Alliances:
PayPal has enhanced Zomato’s business models in recent partnerships with several leading names, such as Uber Taxi, Visa. In a number of aspects, partners helped Zomato to establish, hire and other procedures, place work placements, market research, operational handling, accounting, political and legal matters, etc.
The functioning of Zomato is tremendously loved. Zomato is based on the QAAA model, i.e. it promises and offers its customers and partners quality, accessibility, affordability and range. The values of Zomato are given below, making Zomato unique and admirable:
- Improving The Quality Of Food:
Zomato is fully involved in maintaining a neutral platform. It always helps food facilities to maintain high levels via Hyper pure. Zomato’s Hyperpure initiative provides its partner restaurants with fresh, squeaky clean, high-quality ingredients and food. A quality sign which is well known amongst its partner restaurants is the most desired food hygiene rating.
- Improving Customer Accessibility:
Since its inception, Zomato supplies have increased and expanded its reach to more and more cities. They grow their services vigorously. They now offer table reservations, catering to businesses and feed India.
- Ensure Affordability:
Zomato Gold’s success speaks to the efficiency of Zomato in making a range of exciting choices. Zomato constantly strives to deliver the best and leaves no stone unturned. Without compromising their profit, they guarantee affordability.
- Support In The Range:
Zomato believes in making new tastes and experiences transcending geographical borders available to its customers in uncovering bands. They provide their customers with the best information and help them to make an informed choice in the most readable way.
There are many business models for food delivery apps. Check out the top food delivery business models in our article.
Launch Your Food Delivery App in 2 weeks
Key Activities Of Zomato
- Network Effects Management:
Zomato is the link between restaurants and customers.
- Advertising Management:
Zomato contains a user database reservoir that it uses for advertising. The company publishes advertising for several restaurants generating good income.
- Customer Experience Improvement:
Zomato carries out a variety of activities in order to further improve customer experience. It maintains its features in line with emerging trends.
- Keeping The Brand Image:
Zomato seeks to ensure the authentic flow of information to help its customers address two key issues, which are what they can eat and where to eat, as a provider of information for the food community.
- Online Food Delivery & Subscription:
Initiated for food discovery solutions, Zomato also entered the food supply segment and introduced a subscription feature later.
- Partner Consultant:
Zomato has a massive user database repository and uses different analysis tools to discover key information. This is the food for customer services to partner restaurants.
- Zomato Whitelabel:
Zomato is also helping restaurants with a platform known as plug and play to develop their own robust app.
So, How Does Zomato Make Money?
Zomato was initially only a listing and a directory of restaurants. Now, however, Zomato partners with restaurants to promote their products and services. Zomato charges restaurant commissions which are prominently placed on the feed.
Restaurants also pay Zomato to promote their events or to promote their general banner which gives Zomato users better visibility. This generates revenues from advertising from the platform’s retailers.
- Food Delivery
Zomato first charges a commission to restaurants based on orders through its food supply company. While users pay a delivery fee, Zomato earns a commission for every delivery from restaurants which is subsequently divided between the supplier and the business.
Restaurant commissions differ depending on whether Zomato delivers or if the restaurant uses its own drivers. This contributes to the company’s overall revenues in a small way because of large competition and the need for profound discounts, etc.
- Zomato Gold & Subscription Services
Zomato Gold opened up a steady stream of revenue from consumers and users and subscriptions for restaurants. While users pay subscription fees for access to the Zomato Gold exclusive loyalty programme, restaurants also pay a monthly fee for the bouquet of Zomato bids.
Restaurants also pay a monthly fee for various services like live tracking, tamper-resistant Zomato branded packaging and more.
- Booking & Ticketing
Zomato entered last year’s branded market for live events with Zomaland. Zomato charges users with an entrance fee to Zomaland, where they can witness live concerts and other acts, in addition to food. In 2018, the event was held in Delhi, Pune and Bengaluru, with over 100,000 participants by Zomato.
- White Label Access
Zomato also offers restaurants to create a custom food delivery application for services such as Zomato Whitelabel. It also works for consultancy services with cloud kitchens and restaurants. Zomato is working with selected restaurant operators to identify expansion sites at minimum fixed costs, but with increased user options. It gives these restaurant partners the necessary licences and operational allowance.
- Zomato Kitchens
Zomato works with businesses to build and operate Zomato Kitchens under different labels in order to offer kitchen infrastructure services for selected restaurant operators. It supports entrepreneurs by financing INR 35 Lakh and more for restaurants in the right location.
Zomato claims that it provides investors with rates of INR 2 Lakh to INR 4 Lakh per month, with more than 180 kitchens already in operation.
Zomato is only one of the successful food delivery apps. There are many types of food delivery apps having their own unique USP for success. It is important to find your own unique USP to stand out from your competition and create a whole different brand.
What Does The Future Hold For Zomato?
Mid-COVID Report for India has been published by Zomato. In their report, it was reported that the food supply industry recovered with certain regional flavours and actually grew in myriad by big hundreds of pockets across the country beyond pre-COVID levels, with certain affluent residential areas being the precursors for this recovery. Because of the lockdown and everything is reversed to the home trend, many premium restaurants are open to the concept of online delivery, which attracts a lot of wealthy customers. In fact, customers have started relying on online deliveries during the lockdown.
As people spend more time with their families and loved ones, the organisation of a group becomes a frequent reality. The growth of the food supply has been supported by ongoing holidays and celebrations.
Therefore, Zomato’s good times are ahead.
Every entrepreneur new to the food supply industry will learn from the success story of Zomato. Zomato’s workflow and Zomato’s revenue model are ideal for people who are looking for early access to the industry. It saves time for consumers and makes shopping online to door delivery comfortable at all stages. The cost of developing a food delivery app like Zomato would vary depending on various factors like the features, complexity of the app, the platform you choose, region of your app development company to name a few.
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