Zomato Case Study: Professional Insights & Valuable Lessons

  • Aamir Qutub
  • | CEO of Beyond Grades
  • | Updated on July 12, 2024
Zomato’s Success Story

Morning Notification:

Zomato notification

Afternoon Notification:

Zomato notification

Late Night Notification:

Zomato notification

You know who’s behind these mouth-watering notifications, tempting you one bite at a time.

That’s right—Zomato.

Today, we will dig deep into the delicious success story of Zomato—a brand that doesn’t just deliver food but has redefined the way we eat.

Let’s understand how a simple idea turned into a global food delivery giant, now operating in almost 24 countries and over 10,000 cities in India with over 50 million active monthly users.

Zomato currently delivers food in every state in India and making profits

Zomato in India

Source

How did it start?

Zomato’s journey started in 2008, not in a high tech office or a bustling startup hub, but this idea germinated in the mind of Deepinder Goyal, a young IIT Delhi graduate. who was then working in Bain & Company, juggling with one question every lunch hour like many of us: “what’s for lunch, today?”.

Deepinder and his colleague, Pankaj Chaddah, often had to wait in line at their company’s cafeteria. They noticed that every employee there was facing the same issue, and at that very moment, they had an idea: what if there was a way to view the cafeteria menu online?

And that is how Foodiebay was born.

Now you must be wondering how Zomato is related to all this?

It is because Zomato started as Foodiebay.

Brand rename

From Foodiebay to Zomato

What started as a simple solution to a common problem became popular in no time. By 2010, Foodiebay was rebranded as Zomato, a name that was new, catchy, appealing and easy to remember by customers.

The brand initially aimed to connect food lovers with their favorite restaurants, making dining choices easy and accessible.

The rebranding wasn’t just to be unique in the market but it had the broader mission: enabling users to discover new restaurants, read reviews, and eventually order food online.

Key Strategies and Growth:

Marketing and Branding

Zomato’s marketing strategy has been one of its strongest assets. Best known for its quirky and relatable social media content.

Their content often goes viral!

Zomato twitter

See how other brands are jumping to tweet in sync with zomato.

It has been noticed that they primarily focus on:

  • Content Marketing:
    Zomato’s content marketing strategy involved creating engaging and shareable content. Their blog, “Zomato Treats,” provided users with food guides, restaurant reviews, and foodie tips, establishing them as a thought leader in the food industry.
    Zomatos’s Web Traffic StatisticsZomato traffic stats
    Source
  • Social Media Marketing:
    Zomato’s social media presence is known for its witty and relatable funny posts. Zomato’s copies were a treat for their readers. They are taking the best advantage of platforms like Facebook, Twitter, and Instagram to engage with their audience through memes, food puns, and timely content related to trending events.

    Zomato uses Instagram, Facebook, and Twitter. As of June 2024, it has 977K Instagram followers, 1.9 million on Facebook, and 1.5 million on Twitter.

    Take “Zomato Premier League”, for example, the campaign, blended cricket match predictions with amazing food rewards and the love for cricket and food lead to massive engagement.

    Zomato advertisement
    Source

  • Influencer Marketing:
    Zomato collaborated with food bloggers, chefs, and social media influencers to reach a wider audience. These influencers shared their experiences with Zomato’s services, creating authentic and relatable content that encouraged their followers to try the platforms.Influencer Mithila Palkar campaigned with Zomato for their Zomato Gold Dining Carnival.
  • Email Marketing:
    Zomato utilized email marketing to keep their users engaged. Personalized emails based on user preferences, order history, and local restaurant promotions helped in retaining customers and encouraging repeat orders.
  • Event Sponsorships and Partnerships:
    At a stage when zomato became big, it sponsored food festivals and partnered with events like the Great Indian Food Festival by Zomato live, further enhancing its brand visibility and connecting with food enthusiasts.
    Zomaland festival
    Source
  • Advertising on Billboards:
    Zomato used traditional advertising strategies, such as billboards, to reach their offline audience. Their catchy and amusing billboard advertisements helped to raise brand awareness and attract potential customers, thus reinforcing their market position.Zomato advertising
    Source

Profit Revenue of Zomato

Zomato reported Rs 175 crore PAT in Q4 FY24, wherein their revenue was reported to go up 8.3%.

Zomato’s earnings from operations increased by 8.3% to Rs 3,562 crore in Q4 FY24, compared to Rs 3,288 crore in Q3 FY24, according to the company’s consolidated financial reports from the National Stock Exchange.

Food and delivery income contributed for 48.8% of total revenue in Q4 FY24, increasing 2.1% to Rs 1,739 crore from Rs 1,704 crore in Q3 FY24. The total sales from Hyperpure Supplies (B2B) and the Quick Commerce vertical (Blinkit) increased by 10.7% and 19.4%, respectively, to Rs 951 crore and Rs 769 crore.

Zomato revenue breakdown Q4 FY24

Source

Funding and Financial Strategy

Zomato’s growth was backed by substantial funding from notable investors.

Zomato raising fund

Source

Here’s a detailed look at their funding journey:

Seed Funding and Initial Rounds (2010-2013)

2010 to 2013

Zomato raised approximately $ 16.7 million from Info Edge, the parent company of Naukri.com across four rounds. By February 2013, Info Edge held a 57.9% stake in Zomato.

Series C Funding Round (2013)

November 2013

Zomato raised $37 million from Sequoia Capital and Info Edge. This funding helped Zomato expand its operations and scale its platform.

Series D Funding Round (2014)

November 2014

Zomato completed another round of funding of $60 million at a post-money valuation of approximately $ 660 million. This round was led jointly by Info Edge and Vy Capital, with participation from Sequoia Capital.

Series E Funding Round (2015)

April 2015

Info Edge, Vy Capital, and sequoia Capital led another round of funding for $50 million. This round supported Zomato’s further expansion and technological development.

September 2015

This was followed by another $60 million funding led by Temasek, a Singapore government owned investment company, along with VyCapital.

Unicorn Status and Subsequent Funding (2018)

February 2018

Zomato became a unicorn startup after raising $200 million from Ant Financial at a valuation of $1.1 billion.

October 2018

Later that year, zomato raised an additional $210 million from Ant Financial at a valuation of around $2 billion.

Further Funding Rounds (2020-2021)

September 2020

Zomato raised $62 million from Temasek after a previously committed investment from Ant Financial did not come through.

October 2020

As part of a Series J round of funding, Zomato raised $52 million from Kora, a US-based investment firm.

February 2021

Zomato raised $250 million from five investors, including Tiger Global Management, at a valuation of $5.4billion.

Types on investors:

  • Venture Capital Firms: Sequoia Capital, Vy Capital, Kora.
  • Private Equity Firms: Info Edge.
  • Strategic Investors: Ant Financial (a subsidiary of Alibaba Group). Temasek Holdings.

These investors provided not only capital but also strategic guidance to help Zomato scale its operations and expand globally.

Financial Impact

The funds raised enabled Zomato to:

  • Expand into new markets, both in India and Internationally.
  • Invest in technology to improve user experience and operational efficiency.
  • Enhance marketing efforts to build brand recognition and custom loyalty.
  • Develop new services and diversify offerings, such as cloud kitchens and grocery delivery.

Zomato’s strategic funding approach, combined with diverse investor support, has been crucial in transforming it from a startup into a global food delivery powerhouse.

Technological Innovation

From the beginning, Zomato has been taking advantage of the technology to enhance the user experience.

Here are some key technological advancements:

  • Mobile App Development
    The development of a user-friendly mobile app was crucial for Zomato. The app allowed users to discover restaurants, read reviews, and order food seamlessly. It also included features like real time order tracking and personalized recommendations based on user preferences and order history.
  • AI and Data Analytics
    Zomato leveraged AI and data analytics to enhance the user experience. Their recommendation engine used machine learning algorithms to suggest restaurants and dishes based on user-behavior and preferences. This personalized experience helped in retaining customers and increasing order frequency.
  • Hyperlocal Delivery System
    Zomato developed a robust hyperlocal delivery system to ensure timely food delivery, they used GPS tracking and route optimization algorithms to minimize delivery time and improve efficiency.
  • Cloud Kitchens
    To expand their delivery network without the overhead of traditional restaurants, Zomato invested in cloud kitchens. These kitchens operate solely for delivery orders, allowing Zomato to offer a wider range of cuisines and reduce delivery times.
  • Global Expansion
    Zomato’s vision wasn’t restricted to India, with each success and progress their vision extended far beyond the Indian market.
    By acquiring local food delivery startups and integrating their operations, Zomato expanded their wings into 24 countries, including the USA, the UAE and Australia.
    Their intensive and vigorous expansion strategy involved customizing their offerings to suit local tastes and preferences.

Acquisitions

Zomato acquired several local food delivery startups to enter new markets and gain local expertise.

Key actions include:

  • MenuMania (New Zealand)
  • Lunch time (Czech Republic)
  • Obedovat (Slovakia)
  • Gastronauci (Poland)
  • Cibando (Italy)
  • Urbanspoon (USA)

These acquisitions helped Zomato establish a presence in new regions and leverage the existing user base of the acquired companies.

Zomato Acquired Blinkit

Zomato expanded into online grocery delivery by acquiring Blinkit for Rs. 4447 Cr in 2022, further strengthening its market position. As it grows, Zomato remains a shining example of success in the competitive food tech industry.

Zomato playing its role in giving it back to the society

Zomato’s Feed India initiative focuses on fighting hunger and reducing food waste.

Here’s how they do it:

NGO Partnerships: Zomato acquired Feeding India, a non for profit organization in July 2019. Zomato served free meals to underprivileged communities.

Food Distribution: Collects excess food from restaurants and events, delivering it to those in need.

Volunteer Engagement: Encourages employees and users to help with food collection and distribution.

COVID-19 Response: Provided meals to daily wage workers and migrant laborers during pandemic.

Sustainability: Reduces food waste by redistributing surplus food, promoting environmental sustainability.

Fund Collection: Using millions of users on zomato apps, it adds just Rs:3/- to their bill which can be selected voluntarily by its user. However, since it’s a tiny addition, and is selected as a default, most people add this amount to their bill.

Relief Campaigns

Zomato has been actively involved in various relief campaigns to support communities in dire need.

Challenges and Resilience

Like any startup, Zomato faced its fair share of challenges:

Competition: Competing with local players like Swiggy in India and Uber Eats globally required constant innovation and customer retention strategies.

Logistics: Managing logistics for food delivery in diverse and geographically challenging markets required a robust supply chain and reliable delivery partners.

Regulatory Hurdles: Navigating the regulatory landscape in different countries, including licensing, and compliance, posed significant challenges.

SWOT analysis of Zomato

Conclusion

Zomato’s rise from a simple idea to a global food delivery business proves the power of innovation, strategic planning, and a strong focus on customer satisfaction.

Their journey teaches startups the importance of adaptability, leveraging technology, and effective marketing.

As Zomato continues to grow and evolve, it stands as a shining example of success in the competitive food tech industry.

Do you have a startup idea but don’t know how to start working on it?

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Aamir Qutub Aamir Qutub, the founder and CEO of Beyond Grades, has a sincere passion for innovation and startups. With over a decade of experience in entrepreneurship, he has successfully co-founded 4 technology startups and invested in dozens of other startups, focusing on real-world problems and their solutions. When not juggling with his reports and presentations, he loves to create unconventional recipes and cherish moments with his family.

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