Zomato Claims To Be Profitable, Introduces Zero Commission For Partner Restaurants

The day has not been over yet and Zomato is back with hitting news headlines once again. In a recent blog post, the foodtech Unicorn announced to introduce zero commission model for the partner restaurants. Also, the company claimed to be profitable throughout the 24 countries where it operates, and across all its businesses.

“Zomato is now a profitable company. Yes, throughout the 24 countries where we operate, and across all our businesses, we are starting to make money,” said Deepinder Goyal in a blogpost.

As the blog post further read,

“Our core advertising business in India, Southeast Asia, and the Middle East – the three key regions for us, is generating enough cash to cover for the millions of dollars of investments we are making into the rest of the regions, and our new businesses (like online food ordering, table reservations, Zomato Gold, Zomato Base, etc.). To mark this momentous occasion for us (and Indian tech startups in general), we want to give back to the community which has played a significant role in our journey – restaurant owners.”

The zero commission model has been rolled out as a token of appreciation for all restaurant owners and small business owners on its food ordering network in India.

Earlier today, the Indian arm of Japan-based financial holding company Nomura has marked up the valuation of foodtech unicorn Zomato to $1.4 Bn till March 2019. This comes just a few days after the company acquired Bengaluru-based B2B online service provider platform Runnr, as part of a move aimed at bolstering its hyperlocal logistics services.

Zero Commission Model: What Restaurants Need To Pull In The Doors

As mentioned in the blog post, only those partner restaurants who will fulfill certain criteria will be eligible to pay zero commission.

“Some of these criteria include the number of orders you process with us on a weekly basis, and whether your customers are happy with your food and service. If you are in the business of providing great food and service to our customers, we want you to make more money so that you can continue to do more of the same. As per our current data, 70% of our restaurant partner base qualifies for what we are now calling “#MissionGiveBack”.

The eligible partner restaurants will be notified via email within 72 hours.

Zomato: Engulfing The Largest Bite Of $300 Mn Indian Online Food Delivery Space

In last two years, Zomato has left no stone unturned to bring back it’s good old golden days. By adopting a strategy focused on diversification, and redesigning its ad serving product, the foodtech unicorn managed to cut losses by 34% in 2016-2017.

A big push came in March 2017, when the company set up its first Cloud Kitchen in a suburb of Delhi, Dwarka, as part of the pilot phase of its new project – Zomato Infrastructure Services. The rest is history now.

In the annual report for FY17, Zomato reported an 80% surge in revenue to around $60 Mn. The restaurant discovery and food delivery platform witnessed an 81% drop in the annual operating burn for FY17 at $12 Mn compared to the $64 Mn in FY16.

The company’s food delivery service made headlines for raking in over 3 Mn monthly orders for the first time in July 2017. As per a recent blogpost by the company, Zomato’s food business has high customer retention. The company claims that about 65% of its newly signed up users for the food ordering business order again from Zomato in the next 12 months.

In August 2017, the foodtech unicorn said that it on-boarded 21,500 subscribers for its paid Zomato Treats service. The company also claims that its cost of acquisition is negligible. The company claims to get over 120 Mn visitors a month across all platforms – consuming restaurant information, referencing content generated and shared by other users, placing orders for food delivery, or making reservations at restaurants.

The year 2017 has gone exceptionally well for Zomato. In hindsight, it seems that with its new initiative of zero commission model, Zomato is further eyeing to enroll more partner restaurants. And with Alibaba said to stand on the door with $200 Mn in hand, the foodtech unicorn could not ask for more.