Business Model of Zomato

CONTENTS

Introduction
Business Model
Major Sources of revenues
Funding Journey
Current status

About Zomato

Founded in 2008, Zomato has raised over $613 million to date, most recently a $50 million
round from Info Edge, Sequoia Capital and Vy Capital in April, which valued the company at $1
billion.
Th company is expecting revenues to triple this fiscal year, with the various income streams that
it has introduced over the past few months.
"We see a lot of opportunity in terms of product evolution on both the consumer as well as the
merchant end. We have been ahead of the curve building mobile-first products in the restaurant
search space for a while now and are extensively focusing on mobile as a company. Cashless and
online ordering are great examples of our mobile-first products," said Goyal.
"With the growth of mobile-first and mobile-only users in India especially, we see a lot of
potential for our product. In the long term, we want to own the communication platform between
restaurants and customers and want our users to have access to all kinds of restaurant
information around them so they can make an informed decision before a meal."

Hyperlocal Advertising
Zomato's primary business model has been based on hyperlocal advertising on its website and
mobile apps.
"Over 1 Million users across 22 countries visit the website and mobile apps to go out for a meal,
get home delivery, catch up at a cafe or enjoy the local nightlife this makes for a highly
targeted platform for restaurant owners to market their product to customers," Deepinder Goyal,
Founder & CEO of Zomato, told me.
"The advertising rates vary as per the area/zone and category the banner is placed in. Currently,
we have over 5000 advertisers across the world."

Zomato For Business

The company recently introduced a subscription based app for merchants called Zomato for
Business. The app suite allows merchants access to their listings on Zomato and allows them to
share daily deals, daily/ special menus, event updates and promos as well real time interaction
with their customer base.
Restaurant businesses pay Zomato a flat subscription fee to get access to this Business app.
It varies from market to market; for example it is $100 per month in the United States and
Canada.

Cashless payments
Zomato launched the cashless payments feature in Dubai in February 2015.
"Diners can now settle their bill, at participating restaurants, using the Zomato app on their
smartphone rather than paying with cash or physically swiping their cards at the
restaurants," Goyal explained. "Every time a consumer pays via Zomato, the merchant
pays Zomato a percentage cut on the overall transaction amount. We'll soon be rolling out
cashless in other cities as well. "
It charges restaurants commissions which range from 7.5% to 15%, based upon the rating of the
eatery.

Online Ordering

Zomato is also starting to enter a whole new category, going beyond just listing restaurants, but
also letting its users order from them.
"We have currently rolled out the online ordering feature in Delhi NCR with around 1000
restaurant partners and will soon go live with the feature in Bangalore and Mumbai with more
cities to follow. Over the next few months, we are aiming to offer this feature with over 10,000
restaurant partners in India," saidGoyal.
Zomato will not be handling the actual delivery of food but will, instead, be facilitators between
the consumer and the restaurant. The restaurant will also have to manually accept each order
from a user before it is processed as compared to passing orders from users to restaurants as
other services do
To make money, Zomato will charge restaurants a commission, which will be based on consumer
based delivery ratings.
"For us, online ordering is a key business focus and the lower commission rate is not a reflection
of how we are prioritizing the business. In fact, our approach to the commission structure is
unique where we are placing Zomato consumers first and giving incentives to our partner
restaurants to service them better," Goyal said.
"We charge a lower commission from our partner restaurants if the delivery experience for the
consumer is amazing, as measured by the new system of "delivery rating". We believe that happy
consumers will drive more volumes and consequently more business. Our revenues are likely to
double in the next fiscal with this new stream of revenue generation."
Zomato hopes to start processing around 40,000 orders a day very soon.
"Given that 3 million people across 22 countries visit Zomato daily it shouldn't be so hard to
achieve," Goyal said.

Business Model

Funding Journey

Zomato (then known as Foodiebay) raised its first round of funding of US$1 million ( 4.7 crores)
from Info Edge (India) in August 2010. Zomato raised its second round of funding of US$3.5million
(13.5 crores) from the same investor in September 2011. The following year, Zomato raised its third
round, of another $2.3 million followed by its fourth round worth US$10 million from Info Edge in
early 2013, giving them a 57.9% stake in Zomato.
In November 2013, Zomato raised US$37 million (227.6 crores) from Sequoia Capital and Info
Edge (India).Info Edge now owns 50.1% of Zomato on an investment of 143 crores. The total
amount of funding raised by Zomato stood at $53.5 million as of November 2013.
In November 2014, Zomato closed a fresh round of funding of US$60 million at a post-money
valuation of ~US$660 million. This round of funding was being led jointly by Info Edge (India) Limited

and Vy Capital, with participation from Sequoia Capital. This took Zomatos total funding to over
US$113 million.

Zomatos major sources of revenue

1. Advertising: The ads which are placed on their website generate the majority
of the revenue for the company
2. Ticket Sales: Zomato also sells tickets for various events and earns a
commission through these sales
3. Consulting: Owing to the huge database of restaurants, users and their
preferences, Zomato also provides business consulting and data analytics
services to their clients,

Key Current Financials

Zomato has reported an EBIDTA loss of Rs 136 crore for the 12 month period
ended 31st March 2015 (FY15), up 228.6% year on year from Rs 41.39 crore loss
reported in FY14. The online restaurant guide, and now food ordering service,
generated total operating revenue of Rs 96.7 crore in FY15, more than three times
the Rs 30.6 crore operating revenue generated in FY14.

Info Edge has so far invested Rs 483.3 crore in Zomato and holds a 50%
stake in the Gurgaon headquartered company. This includes:
$24.8 million (Rs 155 crore) out of $50 million in April 2015.
Rs 185 crore out of $60 million (around Rs 370 crore), co-led by new
investor Vy Capital and with participation from Sequoia Capital in
November 2014.
Rs 57 crore out of Rs 227.6 crore, along with Sequoia Capital, in
November 2013.
Rs 55 crore in February 2013.
Rs 12.86 crore in September 2012.
Rs 13.5 crore in September 2011.
Rs 4.7 crore in 2010.

Zomato has charted an aggressive international expansion: The company

acquired US-based restaurant reservations and table-management platform
NexTable in April, had acquired IACs Urbanspoon in an all-cash transaction
for $52 million to enter the crucial US market in January, and acquired the
Turkish restaurant search service Mekanist, also in January. In 2014, Zomato
had acquired Italian restaurant discovery service Cibando in December,
Polish restaurant search service Gastronauci in September, Czech Republics
restaurant guide Lunchtime.cz and Slovakias restaurant guide Obedovat.sk
for a combined amount of $3.25 million in August, and New Zealand-based
restaurant search service MenuMania in July.
The company has also been quite aggressive with its International rollout,
launching its operations in several new markets, with the recent ones being
Irelands Dublin and Lebanons Beirut in November and Canada in October.
Zomato is now present in 22 countries, including India.
Given that earlier this year, Zomato CEO Deepinder Goyal had said that
they wont be looking to launch in any new market for the next 6-9 months
and instead focus on ensuring that they consolidate in the markets theyre
present in, one can expected EBIDTA to improve in the current fiscal year.
He had also mentioned that every city/market Zomato is operational in
should be able to get to a profitable state in two to four years time (from
the time of launch) given the level of competition in that particular market.

Sources
http://yourstory.com/2013/11/zomato-funding/
https://www.youtube.com/watch?v=84-y1nhYEio
https://www.quora.com/What-is-Zomatos-revenue-model
http://www.medianama.com/2013/06/223-chart-zomato-revenue-split-fy13/
http://vator.tv/news/2015-05-09-how-does-zomato-make-money