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Zomato shuts operations in 4 cities

Exits Lucknow, Kochi, Indore and Coimbatore markets

BS Reporter  |  New Delhi 

Zomato invests in Pickingo and Grab; partners with Delhivery

Barely a week after hyperlocal grocery delivery app Grofers had shut operations in nine cities, Gurgaon-based restaurant discovery and food ordering app Zomato said on Monday it was closing down its online ordering service in Lucknow, Kochi, Indore, and Coimbatore.

Coimbatore and Kochi are common cities where operations have been shut by both Zomato and Grofers. In September last year, LocalBanya had “temporarily seized operations” owing to a fund crunch. The company has not resumed operations yet.

Pankaj Chaddah, co-founder of Zomato, who is leading the online ordering business for Zomato, said: “The size of the market in these cities is small right now and is growing with time. We will re-launch when the time is right.’’

Last year, Zomato was in the news for reportedly dismissing 250-300 employees. Subsequently, co-founder and chief executive Deepinder Goyal had sent out an e-mail to the company's sales team on the “hard reality of the company's growth”. The mail had said Zomato was far behind the numbers it promised to its investors for the year ending March 2016.

Zomato, valued at around $1 billion, is funded by prominent investors including Info Edge, Sequoia India, Vy Capital, and Temasek. Goyal warned the sales team to “shape up or ship out”. Zomato launched its online food ordering business in April 2015 and had this service in 14 cities. With four less now, the number is down to 10.

The company said the combined order volume in these four cities accounted for two per cent of Zomato's total order volumes. It, though, said the firm’s online order volume was growing at 40 per cent month-on-month. “Less than five per cent of Zomato's orders are discounted, making Zomato one of the few tech start-ups not using negative gross margins to grow business.’’ The firm, founded in 2008, has secured $225 mn in funding so far.

  • In September, SpoonJoy shut business in Delhi, Bengaluru
  • Langhar shut operations in February, just two years after it started
  • Dazo shut shop in October due to lack of fund
  • Foodpanda India laid off close to 300 staff in December
  • TinyOwl laid off 112 staff at its four centres in November

First Published: Tue, January 12 2016. 00:49 IST