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A first among the food tech players in India, which till last year was struggling for survival, online restaurant discovery and ordering app Zomato on Monday claimed it has achieved profitability.
In a blog post, Deepinder Goyal, founder and chief executive officer of Zomato, announced that the money has become profitable in all markets. “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. Our core advertising business in India, South East 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),” he said in his post.
The company in the last few weeks has had a number of wins, according to sources in the know. It has been offered $200 million at a valuation of around $900 million.
In the last year-and-a-half, the online restaurant discovery and delivery portal has held several rounds of talks with major fence hitters, including Baidu, Tiger Global and now Alibaba’s fintech arm Alipay in hopes of securing the funds it needs for expansion for its operations in India and abroad. The company, however, denied the news as rumours.
Recently, Nomura Financial Advisory and Securities (India) valued Zomato Media at $1.4 billion. It also last week acquired hyperlocal logistics start-up Runnr in an all-stock deal for an estimated $40 million.
Zomato, started in 2008, has been able to cut its losses by as much as 34 per cent in its total loss for 2016-17 to Rs 389 crore from Rs 590 crore in the previous year, according to the annual report of its largest shareholder Info Edge. Its revenue also saw a spike of 81 per cent year-on-year to Rs 333 crore from Rs 184 crore, the company said.
The company, after this achievement, has decided to mark this momentous occasion. Goyal in his blog post announced it will stop charging commission from restaurants for all food orders placed via its portal.
“To all our valuable restaurant partners, you are going to pay zero commission to Zomato if you qualify based on a set of predefined criteria. 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,” he said.
He added that over 70 per cent of its restaurant partner base would qualify for this. The company was charging around 20 per cent commission per order based on a rating system, where a higher rated restaurant is charged. It has earlier also decided to do away with commissions but did not go ahead with the plan.
