Zomato Acquires Food Startup TongueStun for $18 Mn

Gurugram-based online restaurant discovery and food delivery platform Zomato has acquired Bengaluru-based startup TongueStun Food for about $18 Mn in a cash and stock deal.

TongueStun was founded by Manjunath Ramakrishnan in 2012. The startup works as an e-marketplace and has so far raised around $5 Mn funding from Unicorn Ventures, the early stage investing arm of investment bank o3 Capital and  Haresh Chawla who is a partner at private equity fund, True North.

In an email interaction with the Inc42 team, an official spokesperson of the Zomato team confirmed the deal.

Zomato plans to incorporate the capabilities of TongueStun app within Zomato app which will provide a high-frequency use case for the users. This will allow them to order food for pickup from their cafeterias using the Zomato app.

The company has also confirmed that post-acquisition, the TongueStun team would not change and the services will continue as is, in the same shape and form for all business partners.

“We see immense growth opportunity in the food@work (food at work) space, and with the help of TongueStun, we hope we’re able to delight our users at their workplaces as well. This market is very high frequency, and customers are very sticky as they end up placing more than 20 orders a month on the TongueStun platform,” the Zomato spokesperson said.

The acquisition of Tonguestun is the 12th acquisition deal for Zomato globally. Including the acquisition of TongueStun, so far Zomato has acquired four Indian startups which include Bengaluru-based Runnr, a B2B online service provider platform for hyperlocal logistics service, Delhi-based MapleGraph, and a tech-based logistics company Sparse Labs. Other global startup acquisitions by Zomato include NexTable, Mekanist, Urbanspoon, Cibando, LunchTime, Obedovat, Menu Mania and gastronauci.pl.

According to  April 2017 report by Netscribes, the online food delivery market in India can be expected to grow by 34-36% over 2015 to 2020.

However the report also state that despite the popularity of online food ordering, market penetration at the time of publishing of the report was only around 0.7%.

In June 2018, online food delivery giants such as Swiggy, Zomato, UberEats, and FoodPanda, among other local players were in talks with government as they were facing challenges when the GST on restaurants was cut to 5% from 18% in November 2017 and the input tax credit (ITC) provision was withdrawn.