2. ZOMATO, initially started as βFoodiebayβ in July 2008 with a list of more
than 1000 restaurants in the NCR region. The name continued on till
November 2010 and was then changed to ZOMATO after they broke even
(in terms of their initial investment) in June 2010.
Between 2010-13, Zomato raised approximately US$16.7 million
from Info Edge (India) giving them a 57.9% stake in Zomato.
By 2011, Zomato launched in Bengaluru, Pune, Chennai, Hyderabad
and Ahmedabad and introduced smartphone applications.
4. Below are the major sources of revenue:
1. Advertising:
Placing ads for restaurants on ZOMATO website and app constitutes a major part of
strategies and the key motto of the business model. These advertisements can be seen
under the title βTrending restaurants this weekβ. In addition, complementary
advertisements regarding events in restaurants in the locality accounts for another 5% of
the total revenue of ZOMATO.
2. Event Ticket Sales
The tickets for various events are made available through the site, thus working as an
interface cum e-ticketing partner (somewhat similar to bookmyshow.com). The revenue
generated is certain percentage of the ticket amount or according to the advertising
contract with the restaurant.
3. Consulting (Solutions Supplier) And Advisory Roles
Data analysis and business intelligence tools are widely used by ZOMATO content expert
to advice clients on number of issues. ZOMATO maintains a huge database (terabytes)
and analyzes them to understand demand and crowd patterns, customer tastes and
preferences, competitions, etc. Thus, indirectly, ZOMATO acts as a consultant
(information supplier) to the restaurants, providing them specialist solutions to improve
the visibility of the restaurant on the online space.
7. β’ In 2015, while the food-tech sector was reeling, Zomato faced
trying times, when it laid off 300 employees.
β’ Amidst rising losses, it rolled back operations from nine
countries out of 23 overseas markets, in May 2016 .
β’ In the same month, Investor HSBC Securities and Capital
Markets (India) Pvt. Ltd also slashed its valuation by about half
to $500 Mn, leading to an erosion in valuation.
β’ In 2015 its advertising and promotional expenses amounted to
$3.54 Mn(INR 23 Cr), rising to $6.78 Mn (INR 44.15) Cr in 2016.
β’ Meanwhile, salaries rose from $15.39 Mn( INR 100 Cr) to
$55.11Mn (INR 358 Cr) in 2016.
βBut, with a calculated strategy comprising Zomato Infrastructure Services (cloud kitchen
as well as improving delivery efficiencies and more), Zomato Base, a concerted push
on simplified targeted advertising (which provided a 58% jump to $38 Mn in
revenues)towards merchants and users have all driven the company progressively up.β
8.
9. β’ Turnaround is the financial recovery of a company that has been
performing poorly for an extended time.
β’ Why Turnaround Strategy?
ο Declining in Market Share
ο Falling Gross and Net Margins
ο Increasing Cost and / or Loss Falling Revenue and / or Profits
Declining Performance
ο Measures Changing Structure (Industry, Competition)
ο Falling ROCE
10.
11. β’ REDESIGNING THE AD MODELS
- The new product provided smarter
targeting, simpler interface and greater
visibility to our well rated advertisers.
- They rolled this out globally by
September 2016 and helped our
merchants realize a ~3x increase in
value from advertising on Zomato.
- Their ad sales revenue grew to ~$38m
in FY17, a significant 58% jump
β’ ZOMATO BASE
- Another product Zomato is banking on is the Point of Sale (PoS) product Zomato Base, which
is undergoing paid beta trials at over 200 restaurants.
- Zomato Base is an Android-based POS system that helps a restaurateur manage day-to-day
operations from a single platform. It offers a variety of features for including menu, recipe, and
inventory management, a built-in payment solution that accepts debit and credit card payments,
CRM, and real-time analytics.
12. β’ ZOMATO GOLD
- In March 2017, it also launched a premium membership program, Zomato Gold,
in Lisbon and Dubai. The program will be rolled out in India around June with
Delhi, Mumbai and Bangalore being the initial stops.
β’ LAUNCHING ZOMATO
INFRASTRUCTURE SERVICES
- Food ordering team worked
simultaneously on multiple fronts
β user on-boarding, experience,
and retention along with
restaurateur experience and real
time payment settlements.
- All these initiatives helped in
further enhancing our efficiency
and helped in hitting 2.1 million
monthly order volume in March,
while keeping our unit
economics positive.
13.
14. As per the firm, what has helped is the focus on reducing burn, ramping up revenue,
and not compromising or cutting down on any growth engine.
Zomato charges 2.99 % of commission from those restaurants that clock less than 50
orders each week along with a platform fee of Rs.99.
For restaurants that cross the weekly 50 order mark, Zomato charges 7% commission
along with platform fees which is inversely proportional to the number of orders ranging
from Rs.799 all the way down to Rs. 199 for restaurants crossing the 500 order mark,
weekly.
Where as its competitors charge 15-30 % commission giving them a edge over its
competitors like Swiggy and UberEats. Zomato has 25,000-restaurant partner network in
the country with average order value of Rs.430.
More than 50 percentage of access to ZOMATO has been through mobile platform and
seems to be a perfect strategy in a country with increasing GPS enabled-smartphones
like India.
Sustainable product pricing, offering products that imply longevity, expanding
operations in a calibrated but determined manner are the ways in which Zomato
continue conveying their commitment to building a long-term presence
15. β’ The restaurant discovery and food ordering
platform witnessed a 81% drop in the annual
operating burn for FY17 at $12 Mn compared
to the $64 Mn in FY16.
β’ Revenues for the companyβs Indian
operations surged to $49 Mnβ an 80% rise over
FY16.
β’ March 2017 revenues alone have touched the
$5 Mn mark paving the way for an annual
revenue run rate of $60 Mn in FY17.
β’ The average monthly cash burn for the period
of December 2016 β March 2017 is a little less
than $250K globally, down from $4.2 Mn last
March.
β’ The company crossed 2 Mn orders in March
2017 β a move that gave it a 23% month-on-
month growth.
β’ Food ordering revenue grew to $9 Mn in
FYβ17, 8x of FY16.
β’ Ad sales revenue grew to $38 Mn in FY17, an
increase of 58% over 2015-2016.
