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.

Conclusion

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.