Supplier Of Delicious Food Happiness Zomato Success Story

Introduction

Whether you are stuck in a new place, searching for restaurants which serve food of your taste; or are simply searching for new places to eat around you, Zomato is what you need! Gone are the days when you had to get out of the house first and then search for restaurants. Now, with webites like zomato.com, you can easily look for places to eat around you. It is an online restaurant search and discovery service providing information on home delivery, dining-out, cafés and nightlife in cities of India and 21 other countries.

How it all began

Co-founded by Deepinder Goyal and Pankaj Chaddah, Zomato was earlier known as Foodiebay. When they started Foodiebay, a word document like page on the internet, little did they know that their brainchild would go on to make a mark in around 106 cities across 21 countries. Foodiebay was in fact, a small gesture by the duo for friends. It was a restaurant or menu search of 1200 places to eat in and around Delhi NCR. Back then, it had an inconspicuous user base of a few friends and colleagues; but now, zomato.com has a user base of 62.5 million with information of over a million restaurants globally.

Entrepreneurship

Rise

When foodiebay was launched in July 2008, the co-founders had no intention of generating revenue or commercializing their website. But their friends and colleagues were very receptive to the idea behind this website. Soon the user base increased owing to its great popularity in the state. By the end of 2008, they added some more restaurants to their database making the total reach around 2000.

• Further expansion

Because of the popularity of foodiebay in Delhi NCR, the co-founders decided to expand their business. They expanded their website’s reach to cities like Kolkata and Mumbai by 2009; followed by Bangalore and Pune in 2010.

• Initial funding

The business was running smoothly for the initial 2 years without any investment or a professional team. But further expansion was not possible without any outside help. Thus, they reached out to potential investors to fulfill their need for funds and expertise. This is when they got in touch with ‘Info Edge’, which was a turning point in their business.

In August 2010, Zomato received a funding of USD 1 million from Info Edge (India), the parent company of the Naukri.com group. This was the first investment from Info Edge and they have been on Zomato’s side ever since. This gave a major boost to the company. Since they were expanding more than ever now, they changed their name from ‘Foodiebay’ to ‘Zomato’ in order to avoid any possible conflict with eBay in the future as Foodi’ebay’ name had “eBay” in it.

With increasing success, came increasing demand from everywhere. Zomato now needed to increase its reach and resources. Hence, they also had to generate more income. With this in mind, they came up with a revenue model that is followed by them to date. It has the following modules:

• Restaurant advertising

This accounts for approximately 75% of the revenue wherein they place ads for customer restaurants.

• Event advertising

Here, they earn revenue by promoting events on Zomato for restaurants based on advertisers accounting for 5% of the revenue.

• Event ticket sales.

This accounts for 15% of Zomato’s revenue. Here they take a commission on tickets sold through Zomato.

• Consulting services

Many restaurants take consulting services to know which area is the best to open an outlet. Zomato experts research for the same and charge fees for it.

Fall:

While raising more funds, Zomato was also facing a huge crunch when it came to generating profits. Zomato Media Pvt. Ltd. is the actual owner of the website.

• FY 2011 – 12

Total loss: INR 7.22 crores

Total revenue: INR 2.04 crores

• FY 2012 – 13

Total loss: INR 10.03 crores

Total revenue: INR 11.38 crores

• FY 2013 – 14

Total loss: INR 41.28 crores

Total revenue: INR 30.06 crores

This gave rise to a need of raising funds. Once again Info Edge, along with Sequoia Capital raised a whopping USD 37 million. Following the allotment of these funds, Info Edge now holds a 50.1% stake in the company. Due to this huge investment in the company, they expanded their business to Chile and most parts of Europe in the year 2014.

Joint venture and other investments:

Investments:

• Zomato successfully managed to get an investment of USD 3.5 million. But the noteworthy part is that they were able to do so within a year of the first investment. They used this money for resource expansion and investment in refining technology.
• Also, they created applications for Android, Blackberry, Windows, and iOS. Apart from that, they used it to reach out to cities such as Chennai, Hyderabad, and Ahmedabad.
• In the years 2012 – 13, they raised more funds from Info Edge (India) worth USD $2.5 million & USD $10 million This investment gave them a huge boost and they spread their wings overseas too

Joint venture:

After the investment in the years 2012 -13, Zomato collaborated with Citibank and for the first time, launched a magazine named ‘Citibank Zomato Restaurant Guide’.

Achievements:

Currently hailed as Asia’s largest restaurant guide, Zomato has following praiseworthy achievements to its credit:

• In 2010, Zomato.com was named among the top 25 most promising internet companies in India by SmartTechie Magazine.
• In March 2012, Zomato reported a total of 2.5 million visitors on its website.
• When it started off in 2008, the company had an annual income of INR 0.06 crores which have now increased to INR 30.06 crores.
• It also holds three international acquisitions; New Zealand’s Menu-Mania, Czech Republic’s Lunchtime.cz, and Slovakia’s Obedovat.sk, giving them a huge platform and recognition internationally.
• Sequoia Capital picked around 17.2 percent stake as part of the latest investment and zomato now holds a post-money valuation of around INR 1,000 crore.
• Alexa ranking (traffic ranking of a website) of zomato.com is currently 973.