Zomato story – the facts and the future !

In the Indian startup industry which is still largely in the nascent phase, Zomato is one story that every Indian entrepreneur wants to emulate. Investors too who are otherwise mesmerized by the ecommerce startups look at Zomato as a company that has the ability to scale globally and create a world class product. Recently, Zomato was in the news for its acquisition of two more restaurant guides, Lunchtime and Obedovat, in the Czech Republic and Slovakia, respectively in August 2014.Zomato acquired these two companies for a total of $3.25 million as a part of its global expansion plans.

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Started in 2008 by Deepinder Goyal and Pankaj Chaddah, the company today is valued at $161 million (about 1000 cr). In this article we take a  look at some of the facts in the Zomato journey so far and try to look at what the future might look like for this company.

Facts and Figures

  1. The company has shown a very strong revenue growth over the years 2.5 CR(FY11-12), 11.38 CR(FY12-13), 30.6CR(FY13-14).
  2. The company is still in the investment phase and not been able to make any profits as yet. Operating profits recorded are -7.22 CR(FY11-12), -10.03 CR(FY12-13), -41.28 CR(FY13-14).The company is currently running on the money it has raised from investors.
  3. Zomatos five rounds of fundings have been as follows :- $ 1 million (August 2010), $3 million (Sep 2011), $2.3 million (Sep 2012), $ 10 million (Feb 2013), $37 million (Nov 2013)
  4. Info Edge has invested in Zomato in all the five stages, with Sequoia Capital joining in the last round.Info Edge now holds a stake of 50.1% in the company.
  5. After their latest acquisition in eastern Europe, Zomato now has a presence in 15 countries:the UK, the Czech Republic, Slovakia, UAE, South Africa, New Zealand, the Philippines, Portugal, Brazil, Chile, Turkey, Indonesia, Sri Lanka, and Qatar, and over 100 cities across India.
  6. It claims to provide information on 250,000 restaurants, and currently sees over 23 million monthly visits globally, across its web and mobile platforms.
  7. The company earns about 95% of its revenues from advertising by listed restaurants. Ad rates vary between Rs 5,000 and Rs 3 lakh a month, depending upon location, cuisine and other factors. Other revenue streams include revenues from ticketing and restaurant booking.

Why we believe the company is poised for strong growth

  1. A very clear focus -Zomato has targeted a niche market and has been able to successfully capture this market.Zomato has focused on building a simple to use yet effective product making its users come back again and again.With every acquisition Zomato is building a comprehensive product portfolio in its niche market. Even their latest acquisitions- Lunchtime and Obedovat – have strong business models that cater to the local market needs of discovery of lunch menus.
  2. Monetization of the mobile app- We know that we are very much in the mobile era today. Zomato receives a large part of traffic from its mobile app.Zomato’s mobile app has not been monetized as yet leaving a huge potential revenue stream unexplored. Zomato also plans to start charging its customers for table bookings from this year.
  3. New product line – In an attempt to give their customers a cash free experience, Zomato is coming up with a product which will allow users to pay restaurant bills through mobile application. They plan to launch the product within 3 months starting with India and UAE. Zomato recently added a social layer to restaurent discovery allowing its users to build networks of foodies they trust, provide and seek recommendations and chronicle their food-related experiences.
  4. Global expansion plans -Zomato is also looking to enter the Canadian market, after which it plans to focus on the holy grail of businesses – the North America market. They further plan to expand to Vietnam, Jordan, Kuwait, Saudi Arabia and Ireland.
  5. A very strong team -Zomato has a very  interesting way of hiring employees to capture newer geographies. It invites ex-entrepreneurs to build business from scratch. These candidates are then allowed to spend an all expense paid week at Zomato’s Delhi office and work with the company’s team on real, live projects . If things work out well, they are hired. This has allowed Zomato to build a very strong team with an entrepreneurial mindset.

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