How Zomato Works, Zomato Business and Revenue Model Explained

• By Rashi
• 02-10-2023
• Mobile Apps

A well-known Indian company called Zomato launched a food-related internet search and delivery service. The food technology firm entered a number of foreign markets, including those in the UK, Brazil, New Zealand, Australia, Singapore, the UAE, and others. As of 2019, Zomato has built several subsidiaries and offers services in 24 countries and 10,000 cities. One of the biggest food delivery applications in the world today, Zomato, links eateries with customers and healthy mobile ecosystems. With a novel commercial income model, the app has had tremendous success. Let's investigate the formula for Zomato's success. If you are also looking to get you food business online you can choose a top food delivery app development company to get you app built easily and take your food business online and scale.

Pankaj Chaddah and Deepinder Goyal established Zomato 2008 as a food delivery business. The tale began when Deepinder's coworkers requested paper flyer menus from several eateries so they could place food orders around the city. Making a digital app that connects eateries with clients online and delivers food to their homes was a brilliant concept. Fast forward to 2010, when the firm received angel funding and entered the global market in 2012 courtesy of a UAE Launch.

Why Restaurants and Customers Use Zomato

1. Restaurant search: Users may search for restaurants in their region on Zomato's main page by entering their location, cuisine preferences, or restaurant names. Users may also search through top-rated restaurants, popular restaurants in their neighborhood, or eateries currently running specials or discounts.
2. View Restaurant Details: Zomato offers consumers complete information about the establishment after a restaurant is chosen. Users may check the restaurant's menu, costs, pictures, addresses, and reviews. The portal also offers facts about the restaurant's opening and closing times, contacts, and delivery choices.
3. Place an Order: Customers may use Zomato to order food from a restaurant directly. Users may choose products from the restaurant's menu and add them to their carts using the platform. Users may tailor their orders by adding further needs, such as dietary preferences or allergy concerns.
4. Payment: Users may continue to pay after making their order. Zomato accepts several payment options, such as credit and debit cards, net banking, and electronic wallets. Users may choose cash on delivery in particular circumstances.
5. Delivery: After approval, the restaurant readies and delivers the order to the user. Zomato's delivery partners collect it and bring it to the customer, with real-time order tracking available via the app or website.
6. Review: Users may share their opinions regarding their interactions with Indian online food delivery apps. Zomato invites users to evaluate the restaurant and post thorough reviews to assist other users in making wise judgments.

Zomato gives consumers a restaurant discovery platform where they can browse and rate restaurants in their neighborhood in addition to online food ordering. Additionally, the platform gives restaurant owners options to manage their menus, client ratings, and company listings.

How Does Zomato Generate Revenue?

In essence, Zomato's business concept is an app that helps clients identify restaurants nearby and partner restaurant menus, user reviews, remote food delivery services, and more. The Zomato business model service targets nearby eateries, nearby stores, and remote destinations in the city.

The principal methods used by the creators of Zomato to profit from their business plan include:

1. Collaborates: Zomato collaborates with restaurants to market their menu items, subscription programs, and other offerings online. They are assessed commission fees for having adverts placed directly on their newsfeed. Additionally, restaurants pay Zomato to organize special occasions and advertise their businesses, which increases their exposure. Since businesses still rely on advertising, this brings them a lot of money.
2. Food Delivery: They charge eateries using their food delivery network commission fees for each delivery. The cost is split between the company and its suppliers. Whether Zomato employs its fleet of drivers to make those deliveries or the restaurant opts to use its delivery systems will affect the commission levied.
3. Kitchens on Zomato: The app helps entrepreneurs by funding them and provides restaurant owners with specialized kitchen infrastructure services. It's one of the finest ways for them to advertise their services and generate large investment returns.
4. Branded access: They offer consulting services to start-ups, small businesses, and cloud kitchens. It collaborates with chosen operators to find growth prospects with low investment costs and many user alternatives. This enables the business to earn a profit while assisting the opening and licensing of its restaurant partners.
5. Zomato Gold and Subscription Services: Through its Gold and top-tier memberships, Zomato Gold made its special reward programs and customer services available. Restaurants can access the app's special features, like live tracking, customized packaging, etc. Customers pay more for these memberships because they receive benefits like expedited deliveries, access to exclusive menus, discounts, and other advantages. With the help of these programs, the business generates a consistent stream of income and profits.
6. Cost: The price of utilizing Zomato may also include commissions or fees paid to restaurants for advertising their information on the site, as well as fees for ordering food delivery or making reservations at restaurants.

What is Zomato's Revenue?

The top search result for this query on Google would be a nine-digit figure, $280,000.000. However, the question is how a food delivery service generates such high money. Without a doubt, since the mobility issue, there has been an increase in food delivery applications and websites. And we all use it because of the ease that comes with that. However, a leading restaurant finder and online food delivery business finds the income numbers are astounding.

The Zomato Business Model

We should be familiar with the subject before moving on to the area of interest. Zomato added white-label services and event hosts after it started as a restaurant search, online ordering, and delivery business.

It wasn't easy for Zomato to see impressive profits in its nearly 14 years. With the largest restaurant directory in Delhi when it first launched as a Foodiebay in 2008, it helped India become a hub for innovative culinary technology.

However, given the Indian clients' need for discounts, improving operational efficiency proved challenging. Due to the significant losses or high burn rate in 2015, Zomato's chances of success were dim. Then it had to fire 300 workers or 10% of its workforce.

Additionally, Zomato had curtailed some of its operations in foreign areas. However, it could conduct business in over 10,000 cities across 24 nations. Zomato's main objective is to provide local restaurant search services, collect information on food menu contacts, and provide users with pertinent data. Though it has become a major player in advertising, its business strategy goes beyond simple restaurant search and online ordering.

Before 2013, Zomato could only be accessed largely through a web app. However, this may be true for any digital platform. It released its mobile app in response to the explosion of mobile devices. (Learn how to create a Zomato-like app)

Users may now visit restaurants that wish to reach a larger market and find local eateries serving a variety of cuisines thanks to the development of mobile applications. Notably, they make up Zomato's target market, which includes all of us.

Customers may find restaurants, post comments, and verify listings and availability depending on their favorite cuisine, thanks to Zomato's required rating system. As a result, users of Zomato are not making assumptions. It has changed how the food sector operates.

Zomato's Business Model

Zomato makes a ton of money while not selling anything to huge clients.

Revenue from Zomato's food delivery business has been rising since the first half of FY21. In H1FY22, the Gross Order Value (GOV), which is equivalent to $721 million, increased by 19% QoQ and 158% YoY.

The delivery firm and the advertising business make up its two main lines of operation. Most clients are used to purchasing food online, but Zomato also receives income from other methods. These are its sources of revenue:

1. Advertising and restaurant listings: Goyal and Chaddah desired the Internet restaurant directory to take the role of printed menu pamphlets. However, the chance arose because restaurant owners demanded a more prominent or priority ranking. As a result, Zomato, which started as a search and rating tool for restaurants, could make money through advertising. Those who want to be included in the feed must pay Zomato for the food delivery and restaurant reservations added to this service. However, advertising is Zomato's main revenue stream. To attract more customers and increase visibility, restaurants may utilize Zomato to display their banners on the website.
2. Food Shipping: Based on the volume of orders made through its food delivery service, Zomato charges restaurants a fee. Each restaurant delivery fee is divided equally between the corporation and the delivery partners.
3. Discounts: Zomato has extremely low profit margins due to the fierce competition in the food industry and the need to offer substantial discounts. Therefore, online food delivery accounts for a tiny portion of total revenue compared to other revenue streams.
4. Subscription services: Zomato is a repository of data. Zomato offers a huge database that uses cookies to track everything, including who wants to eat what, where they want to eat, what they are looking for, heatmaps, and more. Zomato charges restaurants a monthly subscription fee in return for giving them access to analytical tools and client information. Given that Zomato has 1.4 million partners, membership fees are their main source of income. It provides restaurants with 'Zomato orders' through subscription programs, allowing them to learn about their consumers' preferences. The restaurants then use this platform to promote their food promotions.
5. Living Events: With the help of its affiliated eateries, Zomato has entered the live event market. Zomato debuted Zomaland in 2019, marking the company's entry into the live events market. Users must pay an entrance fee to enter Zomaland, which offers limitless food and other activities like live musical performances. Over 100,000 people attended a Zomato entertainment festival organized in Delhi, Pune, and Bengaluru in 2018. Zomato makes money from the admission fees for carnivals and events.
6. Unbranded Access: Zomato has also entered the app development sector and is expected to generate $366.34 billion in revenue by 2027. In this silo, Zomato operates as Zomato Whitelabel. It suggests that companies create and build tailored delivery applications or update digital systems. Additionally, it offers restaurant and cloud kitchen consulting services. To find prospective expansion sites with a low fixed cost but more options for the customer, Zomato even works with a select group of restaurant owners. It provides the required permits and operating frameworks to these restaurant partners.
7. Kitchens on Zomato: Additionally, Zomato works with business owners to establish and manage Zomato kitchens under many other names, and it offers kitchen infrastructure services to selected restaurant owners. Entrepreneurs may fund restaurants in the right location with an investment of Rs. 35 lakh. Additionally, it guarantees investors monthly income ranging from Rs. 2 lakh to Rs. 4 lakh and asserts that it has already completed more than 180 linked kitchens.
8. Zuppa Gold: The previously mentioned feature, Zomato Gold, is a premium service accessible through membership. Gold members are eligible for free food and drinks when ordering at an affiliated pub or restaurant. The Gold service may only be utilized once daily at each partner restaurant and is only available for dine-in orders. Zomato Gold gives either 1+1 on food or 2+2 on beverages when consumers dine at one of their partner restaurants.

Value Proposition for Zomato

The name Zomato is well-known. Now and then, food delivery puts a stop to a celebration. A company that is purposefully established to deliver value.

Zomato has offered clients something exceptional and one-of-a-kind that they cannot get anywhere else. Zomato is a one-stop shop for food, a tool to help restaurants stand out, and a creator of the ecosystem supporting food delivery. By updating their listings, reacting to criticism positively, and taking responsibility for their actions, restaurants may set themselves apart from the competition.

Zomato wasn't always successful but constantly changed to reduce costs and increase profits. It has fluctuated on and off in certain markets, trembling repeatedly but always returning. Zomato is a genuine unicorn and a renowned company. For entrepreneurs and businesses, on-demand mobile applications and business apps are powered by Codeflash, a mobile app development firm.

Conclusion

Zomato is a cutting-edge food delivery service that has overtaken the globe. It has become one of India's most successful software firms by utilizing its in-depth understanding of clients and developing an effective online platform. The straightforward but efficient business and revenue model of Zomato has allowed it to become the biggest food-ordering network in the nation. Zomato will continue to rule this market for many years because of its growing reach.