Zomato Business Model: This is How Zomato is Making Millions ?

Imagine you are looking for your favorite food. But you have still no idea where to get food. Then you just go through online and bam you find a website called Zomato. You visit a website, explore restaurants, see the menu list and order your favorite food. Within no time Zomate food delivery is at your doorstep. How is that feeling?

If you are in dilemma about going to a restaurant, feel skeptics about their food and services then you can check the rating on Zomato to be sure. In this article, we try to give you a great insight on Zomato business model & how Zomato is making millions?. Here you go.

What actually is Zomato?

Zomato is an Indian restaurant search & discovery and online food delivery services founded by Deepinder Goyal and Pankaj Chaddah in 2008. It currently operates in over 10,000 cities and across 24 countries including USA, Canada, India, Australia, and New Zealand.

Simply, Zomato is a food search engine as it works the same as a google search engine. An analogy can be a Search engine made for exploring a wide range of food and restaurants.

A Brief History of Zomato

Zomato, which started as Foodiebay, was established in July 2008 by two IIT graduate namely Deepinder Goyal, and Pankaj Chaddah. The idea struck Deepinder mind when his colleagues consistently had a demand for paper menu leaflets of different restaurants, to order food. That’s when he thought of converting these restaurant paper menus into a digital app, which is far more accessible and easier to use.

Founder of Zomato

                                       Image:  A Founder of Zomato Deepinder Goyal and Pankaj Chaddah

Zomato has grown from a home project to one of the largest food aggregators in the world. Zomato is currently presenting globally, enabling the vision of better food for more people. Even more, it not only connects people to food in every context but works closely with restaurants to enable a sustainable ecosystem.

As a restaurant discovery & online food delivery nowadays people check the rating of restaurants before going to a restaurant. It took a decade of hard work for Zomato to gain the trust of the customers. The success did not come easy for Zomato. It built a robust business model for the company which is one of the pillars behind the growth of Zomato. Zomato’s startup journey has been an exhilarating one to watch.

Zomato Business Model & How it works?

During the initial phase of the company, Zomato used to scan the menu of the restaurants, keep it on their site and the menu was reviewed by people. Zomato now also does that but it has also added other services to its operation. The business model of Zomato is quite different from that of other food delivery company such as Swiggy and Foodpanda.

Zomato was the first mover in the market- which has its own benefits and challenges. The market space was completely new thus it was a huge challenge for the company to create a sustainable business model. Let’s look at every aspect of Zomato revenue model and find out how much value they generate for Zomato.

Revenue Streams of Zomato

Zomato in itself does not offer the product to customers but the revenue is massive. We all wonder how Zomato manages to bring huge revenue from its business operation.

Zomato is not only in the food business. Let’s make it clear just like Google & Facebook they are all into the advertising business. Zomato has two parts, One delivery business and two they are in the advertising business. Let’s find out how Zomato is making millions?

How Zomato makes Money?

  1. Advertising
  2. Subscription
  3. Even Organization
  4. Zomato Whitelabel
  5. Online Food Delivery
  6. Zomato Consultancy
  7. Zomato Gold
Advertising

Zomato started as a restaurant search and rating services. Customer can search for their favorite restaurants and cuisines available in a certain location in Zomato. They can also rate their service experience of restaurants in Zomato. A good rating on Zomato has become synonym with qualitative service and food in the restaurants.

Zomato Revenue Model

Advertising is the major source of revenue for Zomato. Restaurants can promote their banner on the site. The restaurants get better visibility and appeal to a large section of the audience via Zomato.

Zomato Revenue Model

Zomato Revenue Model In return, Zomato charges a certain fee for the banner promotion of restaurants. Almost 50-70 % revenue of Zomato comes from an advertisement of restaurants on the site.

Subscription

The next major source of revenue for Zomato is a Subscription fee. Restaurants pay a certain amount of fee monthly and in return, Zomato offers them the analytical tools. Zomato possesses a huge amount of database and a great analytical tool. What a customer wants to eat, where he/she wants to eat, what the consumer is searching for and what they are not searching, Zomato knows all this information of consumer through the cookies.Zomato Order

Zomato possesses an analytical tool called Zomato order and the tool is given to the restaurants. Through this tool, restaurants can know about the consumer interest, what consumer want or what they don’t want. Restaurants with the help of this tool can manage what they want to offer to consumer and also, they can flash their discount offers on food.

Another tool the restaurants receives from Zomato is Zomato book. Many of the customers want to reserve the table in a restaurant in advance. Through this tool, the restaurants can manage their staff and know which table is vacant. For these analytical tools of Zomato, the restaurants have to pay a certain amount of subscription fee monthly.

Event Organization

When there are any festivals say for example EID, Zomato partners with restaurants to organize food events. People who come to these food events have to pay the price of tickets. Zomato receives a certain percentage of the ticket price from these events.

Zomato revenue model

The food organizer also looks for opportunities to promote their product and food event of Zomato is the perfect platform for them. To advertise in events, they pay advertisement fee to Zomato. Zomato receives income from the advertisement also.

Zomato Whitelabel

The next source of revenue of Zomato comes from app development. Zomato launched the service called Zomato Whitelabel under which they give offers to the restaurants to develop customize the app.

Zomato Revenue Model

With this customize app restaurants can connect to its customer and they don’ even need Zomato to attract customers to them. Isn’t that great?

Online Food Delivery

When Zomato started, it was basically a restaurants search service. The market for online food delivery was on the rapid rise in India.

Zomato busines model: Online food order

Zomato other sources of revenue come from online delivery of food. It charges a commission to the restaurants on the basis of food order. Although online food delivery contributes to a low percentage of income compared to other revenue streams.

Zomato Consultancy

As you already know that Zomato has a great analytical tool and a huge amount of database. Zomato knows the preference of food in certain areas, what they are ordering through the database. If you want to build a restaurant in that area, then you can go to Zomato for help.

Zomato helps the newcomer in the market with the data and charges a fixed amount for the consultancy services. Restaurants can go to Zomato to know the consumer’s preference, wants, desire and Zomato has the consumer data to help them. In return, Zomato charges a fee for consulting the restaurants.

 Zomato Gold

Zomato gold is a premium subscription-based service offered by Zomato. It has been started since April 2018. It is a paid service that allows customers with Gold membership gets complimentary food and drinks at the time of ordering from partner restaurants and bars.

One thing is that Gold service is limited to dine-in orders only and not available for deliveries. Make sure you can use Zomato Gold only once at each partner restaurant in a day. However, you can visit each restaurant as many times as you like during your membership duration.

How does Zomato Gold work?

Zomato Gold offers either 1+1 on food or 2+2 on drinks when you visit their partner restaurants.

Food (1+1)

For instance, when you go to a restaurant which offers 1+1 of food i.e. when you order 1 item, you get the second one at free of cost. So if you order dishes like a burger or something else from a gold partner restaurant, you will get the second dish for free (of the same value of 1st dish or lesser). It means you are able to save the cost of 1 dish.

Drinks (2+2)

In this scenario, when you dine at a partner restaurant of Zomato and order 2 drinks (only alcoholic) you get 2 drinks of the same cost or less value for free. For instance, if you buy 2 beers you get 2 beers free. So for a total 4 beers, you pay only for 2. So, here again, you are able to save the cost of 2 drinks.

Check it out for more info about Zomato Gold in the official website.

Some Key Features/Factors For Zomato Success

Zomato has become India’s favorite online restaurant discovery site and has expanded to around 22 countries. This has tremendous interest from online entrepreneurs, and also created demand of Zomato clone script.

The activity of Zomato revenue model can be classified into two major segments:

Provide listings & ratings for Restaurants

Zomato provides local hotels and restaurants search services. People can search for hotels via Zomato app or site. Zomato also provides information to the customer about the menu of the restaurants, food quality, and contact numbers. The company spends a huge amount of money and resources to collect the required data.

Zomato Restaurant rating

Zomato rating system is one of the best you can get in the market. The rating system is based on the huge amount of the data collected by the company. Customer trust in the rating of Zomato proves that Zomato is doing something right.

Online Delivery of Food

Every business head towards diversification in today’s day and age. Zomato started as a search service for the restaurant but later started online delivery of food.

Zomato realized that there was a huge market for online food delivery in India. So, it added the service of online food delivery. Online food delivery works on a dual partnership model. Zomato partnered with restaurants and delivery service provider to deliver the food online.

Zomato Online food order

The market of food startup changed in India after the arrival of Swiggy. Previously the focus of Zomato was on restaurants search service but it realized soon that online food delivery was going to be big in India. So, Zomato shifted its focus from the rating and search service to Online food delivery.

Value Proposition of Zomato

The business model of any organization looks to create value for the customer which they cannot get anywhere else. Zomato revenue model focus has been on creating something new and extra which they cannot get elsewhere. Zomato is a one-stop-shop for dinners and offers a way for restaurants to differentiate themselves. Restaurants can create differentiation by Keeping the listing updated, responding to criticism positively and being accountable to their action.

The organization must create value for its customer to sustain its business operations. Zomato business model has offered a variety of value to the customers. Zomato bridges the gap between the customers and restaurants through efficient technology application. The efficiency in technology has helped Zomato to reduce its delivery time. Customer can get their food delivered at their doorstep in quick time.

Zomato Delivery

Zomato business model is quite unique in itself. It offers the dual service of restaurants search and rating system and online food delivery services. The customer gets numerous benefits if they ordered the food from Zomato. One such benefit is the price of food differs as per the rating in Zomato.

Zomato value Proposition

Zomato is available in 24 countries across 10,000 cities. People can order food online via Zomato in new markets such as London and African countries.

Channels

Since a number of mobile users are growing rapidly. A majority of users tends to use mobile phones which allow them to connect with business easily. Businesses are using apps to improve the processes and increase the level of accessibility their customers have. No doubt, mobile apps are the most valuable tools for today’s competitive business world.

Zomato Mobile App

Zomato mobile app is available on both the androids and ios. Customers can also order food by browsing on their websites and they also can check the ratings of the restaurants in Zomato. However, it actually helps their business engage with and build their customer base, drive sales, and improve their reputation in the market.

Customer Relationship

Zomato thrives on the rating system by the customers who visit the restaurants listed on the site. Service-based industries like Zomato rely on the customer for referrals and repeat purchase.

Zomato Customer Care

Zomato customer service is based on Online customer support with a mandatory rating mechanism. Customer support chat is available 24/7. The customer can also call a customer service center to inquire about the problems.

Customer Segments

Customers are the main source of revenue for service providers companies like Zomato. Zomato also relies on its customers for revenue.

The customer segment for Zomato includes people to find local restaurants of various cuisines. People can search for restaurants in various area and the menu of the restaurants in Zomato.

Not only the people but the restaurants are also the customers for Zomato. Restaurants which look to reach a large target audience partner with Zomato to increase their visibility. In return of visibility, the restaurants have to pay a certain amount to Zomato.

Bigger the size of your customer segments, better the chances of earning high revenue. Zomato customer segments also include people who want the food to be delivered at their doorstep. People who prefer to stay at home and order food from restaurants using apps are the potential customer of Zomato.

Zomato works with a huge amount of customer data. The data is collected from the customers who give a review of the restaurants and thus provide a rating system to restaurants. Database companies and Market Research companies which are in need of the customer data are also the customers of Zomato.

Key Resources

An organization needs a sufficient amount of resources to run its business operation. The key resource Zomato need for business operation is a large database of restaurants across cities.

The rating system of restaurants is based on the large database collected from the restaurants. Other resources of Zomato are restaurants listed on the site and delivery personnel. These resources are key to Zomato success over the years.

Zomato Marketing Strategy

On 21st March 2016, Zomato ranks as the top 2 startups for India in the StartupRanking. Zomato generated over 95% of revenues from ads in FY13. Looking towards their recipe why they are making tons of money and able to stand out in a competitive market. Here is the summarized list:

  • Technology:  User-friendly Website, great UI design, cross-platform app. Zomato has leveraged each one effectively and everyone knows what power the internet has.
  • Social networks: They are a means of communication and not an advertising platform. Communicating with fans and followers makes a brand personal and human, and one can’t really put a price on that.
  • Audience Segmentation: Zomato knows its audience, and how! There are posts for everyone, or to say it precisely, for every foodie.
  • Compelling content: Each post of Zomato marks excellence and a higher degree of creativity.
  • Loyalty Program: They never fail to cash the latest happenings. Zomato always creates something for ongoing events such as Coupons and price-offs.
  • Tracking: Monitoring user actions on the website helps in improving the product to better cater to the audience.

Crucial Collaborator:

  •  Paytm
  •  Uber
  •  Food Bloggers
  •  Restaurants

Final Thought

Zomato is one of a pioneer of food startups in India. With its unique and sustainable business model, it had managed to remain a top player in the market. Affordability, easy accessibility & assortment which has built trust among people from the years of service. Zomato continuously works on innovation and finding out more ways serving its customers. Its revenue model is unique and innovative- which every organization dream to create.

Tell us What You Think

You can tell us what you think about our article. If you think we missed something on Zomato business model tell us on the comment section. We are looking forward to your feedback.

Happy Reading 🙂

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