The food delivery industry has witnessed unprecedented growth, with numerous players competing for a slice of the pie.
Among these, Zomato is one the players in the market, offering a platform that connects hungry customers with a variety of nearby restaurants.
But have you ever wondered how Zomato benefits from this, I mean restaurants for sure get orders and Zomato has their own logistics to help them deliver the food the delivery boys make money. But how does Zomato earns money?
In this blog post, we’ll dive deep into the revenue sources of Zomato. We look into 8 unique ways How Zomato Earns Money ?
Brief History of Zomato
Zomato was founded in 2008 as FoodieBay by Deepinder Goyal and Pankaj Chaddah who both worked together in Bain & Company.
Initially the company started out as a restaurant discovery platform, where restaurants were listed based on their locations and recommendation(rating) about those restaurants were given but it soon expanded into food delivery. Zomato is now one of the most popular food delivery apps in India, with more than 30 million users per month.
In the year 2011 Zomato decided to expand to major Indian cities including Delhi-NCR, Mumbai, Pune, Hyderabad and Bengalauru. The following year i.e. in 2012 Zomato decided to expand its operations internationally.
So I think this much brief history is enough about Zomato if You want to read more about Zomato history the best place is obviously wikipedia. Lets now focus on how Zomato earns money.
How Zomato Makes Money
Here are the all possible ways that I could find via which Zomato earns money.
1. Commission on Orders
One of the primary ways b ywhich Zomato generates revenue is by charging restaurants a commission on each order placed through its platform. The commission charges typically ranges from 10% to 25% of the total order value.
It’s a win-win situation: Zomato provides a platform for restaurants to reach a broader audience, and in return, it takes a cut of the revenue generated.
But another thing to notice here is that Since the commissions are quite high thus restarunts have to increase their prices and I have personally found out that many restraunts have slightly higher prices on zomato while if you visit them the prices are much cheaper.
If you have the same observations as ours please share it with us in the comment section.
2. Online Advertising
Restaurants can pay for advertising and promotional services on the Zomato platform to increase their visibility and reach a wider audience.
Now there are large number of restaurants listed on Zomato competing against each other.
Now to stay on the top of the search results page when a customer searches for a particular dish/cuisine.
Restaurants run ads on Zomato’s application to drive traffic to their page.
Zomato via their website claims that for every $1 spent on ads Zomato returns over 8x the investment
Zomato offers various advertising options, such as sponsored listings and banner ads.
3. Subscription Services:
Zomato introduced subscription-based services like Zomato Gold (formerly Zomato Pro) and Zomato Pro Plus, where customers pay a monthly or yearly fee or quarterly fees to get benefits like discounts, special offers, and priority access at partner restaurants.
With Zomato Gold, members get preferential access amid high demand and during rush hours. They also gets special discount on both online ordering or even when Gold members want to dine out.
Now of course there’s a specific list of restaurants on which Gold Members get special discounts.
Zomato has collaborated with more than 10,000 restaurants (in India) to offer special offers on dining out for Gold and Pro Plus members.
4. Data Insights and Analytics:
Zomato is present in almost every corner of the country and over the past few years of its operations it has gathered a lot of data about users – like what kind of food users like in a particular area ? What is the average price a particular dish in that location ? How many people order food online from a particular pin-code? and much more valuable information can be drawn out from the data Zomato has gathered.
Zomato uses this data to offer data insights and analytics services to restaurants to help them understand customer trends, preferences, and market dynamics. Restaurants may pay for access to these services.
5. Zomato Hyperpure
Hyperpure is an initiative by Zomato to provide fresh, hygienic, high quality ingredients and supplies to restaurants. So Zomato Hyperpure is basically a B2B space in which restaurants can order the groceries directly from Zomato instead of going to whole sale markets.
6. Events and Online Food Festivals:
If you are a foodie then I’m sure you must have heard about Zomaland. Zomaland by Zomato is a food and entertainment carnival to enjoy a wide range of culinary delights, a fantastic artist line-up and an assortment of fun games to ensure your weekend is truly filled with food, fun and frolic!
Zomato earns from Zomaland by selling tickets (including VIP Tickets), not only that Zomato ofcourse earns form the wide variety of food sold at Zomaland.
Next the big piece of revenue comes various sponsorship done by other brands to promote themselves.
7. Grocery Delivery - BlinkIt:
Well the 10 min delivery services which started in the COVID pandemic became one of the most growing business after a lot big VC firms invested hundreds of millions of dollar in it. Zomato aquired BlinkIt (formerly Grofers) for Rs 4,447 in August 2022.
It is quite interesting to note that Quick Commerce Platforms like BlinkIt, Zepto, Big Basket Now, are still in losses and the path of profitability is still a doubt according to many experts. But companies are working out hard to achieve profitability.
8. Zomato Infrastructure Services
Zomato Infrastructure Services is a kitchen infrastructure service where Zomato works with current restaurant business owners to expand their business to more locations without incurring any fixed cost.
- You can Think of these infrastructure services as delivery only food courts in locations slightly off the premium locations (think much lower rentals, but accessible), we will not have take-out or dine-in at these locations.
- Each location that we Zomato creates have 4 or more restaurant brands co-located with each other, leading to shared (and thus lower) costs; each restaurant brand will have its own space of roughly 300 sq ft.
Zomato's Future Plans
Zomato is constantly expanding its business. The company has recently launched its food delivery service in the United Arab Emirates, the United Kingdom, and the United States. Zomato is also planning to expand into other countries in the near future.