zomato-business-model

How Does Zomato Make Money? The Zomato Business Model In A Nutshell

Zomato is a multinational restaurant aggregator and food delivery company headquartered in Gurugram, India, founded in 2008 by Deepinder Goyal, Gaurav Gupta, and Pankaj Chaddah as Foodiebay. The trio were passionate foodies and had an idea to provide digital access to thousands of restaurant menus across India. Depending on the country where it operates Zomato makes money in various ways: via restaurant listings and advertising, delivery fees, loyalty programs, special event ticket sales, and consulting services.

Origin Story

Zomato is a multinational restaurant aggregator and food delivery company headquartered in Gurugram, India.

It was founded in 2008 by Deepinder Goyal, Gaurav Gupta, and Pankaj Chaddah as Foodiebay. The trio were passionate foodies and had an idea to provide digital access to thousands of restaurant menus across India. In the early days of the company, the founders would drive around Delhi to visit each restaurant, scan the menu, and put it online. After a name change in 2010, the service quickly spread to major Indian cities including Chennai, Pune, Kolkata, Mumbai, and Bangalore.

In 2014, international expansion began with a presence established in Qatar, Sri Lanka, South Africa, and the UK to name a few. Five years later, Zomato acquired Seattle-based Urbanspoon – giving it first access to the United States and Australian markets.

The platform now offers restaurant menus and user review information for selected partners in 10,000 cities across 24 countries. Aside from delivery services, Zomato also offers live events, loyalty programs, and restaurant reservations.

Zomato revenue generation

Zomato has multiple, established revenue channels. The exact revenue is dependent on country-specific fees and its unique arrangements between restaurants and delivery partners.

Let’s take a look at each below.

Restaurant listings and advertising

Advertising was one of the first sources of revenue for Zomato and remains to be a significant contributor today. The company charges for sponsored listings, allowing restaurants to increase their visibility. Zomato also offers local advertising for restaurants in much the same way as Yelp and Google do.

Restaurants can also pay to have their special events or offers promoted on the platform.

Delivery fees

Zomato also offers food delivery. It collects a delivery fee from the user and also earns a commission from the restaurant processing the order. This commission is then split between the company and the courier.

Ultimately, delivery commissions vary according to whether Zomato is fulfilling the order itself or using a partner.

Loyalty programs

Zomato Pro is an all-encompassing membership program for users. The program gives restaurant lovers access to exclusive discounts at a variety of establishments, from fast food to fine dining.

Zomato Pro members also can jump the delivery queue at selected restaurants, reducing delivery wait times by 15-20%.

Access to Zomato Pro is maintained by a monthly subscription fee, again dependent on geographic location. In most cases, users can pay for 6 months or a full year in advance.

Special event ticket sales

Zomato also sells tickets to festivals and one-off events such as Valentine’s Day and New Year’s Eve.

These tickets are a cleverly disguised commission that Zomato collects from restaurant owners for sending patrons their way.

Each event is promoted on the Zomato platform, earning the company another source of advertising revenue.

Consulting services

With access to extensive amounts of restaurant and consumer behavior data, Zomato also offers a consulting service.

This includes advice regarding the demand level for new eateries in a specific area and pre-existing competition levels.

Key takeaways

  • Zomato is a multinational restaurant aggregator and food delivery service headquartered in India. It was created by three founders who had a passionate desire to provide better access to thousands of restaurant menus.
  • Zomato makes the majority of revenue through advertising – one of the original revenue streams on the platform. To some extent, it has been supplemented by a delivery service where Zomato collects a fee and a commission.
  • Zomato also charges for a loyalty program called Zomato Pro. Members can gain access to exclusive discounts and receive their food more quickly from participating restaurants. The company also offers a consultation service, helping new restaurants choose a suitable area to establish themselves.

Read Next: Uber Eats Business Model, McDonald’s Business Model, OpenTable Business Model, Amazon Business Model, TripAdvisor Business Model.

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