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.
Value PropositionZomato offers the following value propositions for its customers: – Food Discovery: Discovering a wide variety of restaurants and cuisines. – Convenience: Easy and convenient food ordering and delivery. – User Reviews and Ratings: Access to user-generated restaurant reviews and ratings. – Discounts and Offers: Attractive discounts and special offers. – Global Reach: Availability in multiple countries and cities. – Customization: Personalized food recommendations and search filters. – Delivery Tracking: Real-time tracking of food deliveries. – Payment Options: Multiple payment options for flexibility.
Core Products/ServicesCore products and services provided by Zomato include: – Restaurant Listings: Listings of restaurants, cafes, and eateries. – Food Delivery: Food delivery services from partnered restaurants. – Table Reservations: Table booking and reservation services. – User Reviews and Ratings: User-generated restaurant reviews and ratings. – Zomato Gold: A premium subscription program with dining and delivery benefits. – Online Ordering: Online food ordering and delivery platform. – Advertising and Promotions: Advertising opportunities for restaurants. – FoodTech and Data Services: Food technology solutions and data analytics.
Customer SegmentsZomato targets various customer segments: – Food Enthusiasts: Individuals passionate about food exploration. – Busy Professionals: Professionals seeking convenient food solutions. – Restaurants and Eateries: Businesses looking to partner with Zomato. – Food Delivery Services: Individuals and families ordering food for delivery. – Travelers: Tourists and travelers exploring local cuisines. – Event Planners: Event organizers booking restaurants for gatherings. – Food Bloggers and Critics: Individuals in the food industry. – Global Audience: Users across multiple countries and cities.
Revenue StreamsZomato generates revenue through several revenue streams: – Commission Fees: Earnings from commission fees charged to partner restaurants. – Delivery Charges: Charges for food delivery services. – Advertising and Promotions: Revenue from restaurant advertising and promotions. – Zomato Gold Subscription: Subscription fees from Zomato Gold members. – Online Payment Fees: Charges for online payment transactions. – Table Reservation Fees: Fees for table reservations. – Data Analytics Services: Earnings from food technology and data analytics services. – Premium Listings: Premium listing fees for restaurants.
Distribution StrategyThe distribution strategy for Zomato focuses on accessibility and global reach: – Mobile Apps and Website: Providing user-friendly mobile apps and a website for food discovery and ordering. – Restaurant Partnerships: Partnering with a wide network of restaurants and eateries. – Delivery Fleet: Employing a delivery fleet for efficient food delivery. – Online Payment Integration: Integrating multiple online payment options. – Global Expansion: Expanding services to multiple countries and cities. – Zomato Gold Program: Promoting the Zomato Gold premium subscription program. – User Engagement: Engaging with users through reviews, ratings, and recommendations. – Restaurant Promotions: Offering advertising and promotional opportunities to restaurants.

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

Connected Last-Mile Delivery Business Models

Deliveroo Business Model

Deliveroo is a British online food delivery company founded by Greg Orlowski and Will Shu in 2013. Shu developed the platform in response to a lack of high-quality food delivery in London. Deliveroo makes money by collecting 25-45% of every order it facilitates. It also charges delivery fees and onboarding fees for restaurants that wish to be featured on the platform. Deliveroo for Business is a service designed for corporate clients needing to order food in bulk. The company also charges a higher commission to businesses that utilize a network of digital kitchens to process orders.

DoorDash Business Model

DoorDash is a platform business model that enables restaurants to set up at-no-cost delivery operations. At the same time, customers get their food at home, and dashers (delivery people) earn some extra money. DoorDash makes money by markup prices through delivery fees, memberships, and advertising for restaurants on the marketplace.

Glovo Business Model

Glovo is a Spanish on-demand courier service that purchases and delivers products ordered through a mobile app. Founded in 2015 by Oscar Pierre and Sacha Michaud as a way to “uberize” local services. Glovo makes money via delivery fees, mini-supermarkets (fulfillment centers that Glovo operates in partnership with grocery store chains), and dark kitchens (enabling restaurants to increase their capacity).

GrubHub Business Model

Grubhub is an online and mobile platform for restaurant pick-up and delivery orders. In 2018 the company connected 95,000 takeout restaurants in over 1,700 U.S. cities and London. The Grubhub portfolio of brands like Seamless, LevelUp, Eat24, AllMenus, MenuPages, and Tapingo. The company makes money primarily by charging restaurants a pre-order commission, and it generates revenues when diners place an order on its platform. Also, it charges restaurants that use Grubhub delivery services when diners pay for them. 

Lyft Business Model

Lyft is a transportation-as-a-service marketplace allowing riders to find a driver for a ride. Lyft has also expanded with a multimodal platform that gives more options like bike-sharing or electric scooters. Lyft primarily makes money by collecting fees from drivers that complete rides on the platform.

OpenTable Business Model

OpenTable is an American online restaurant reservation system founded by Chuck Templeton. During the late 90s, it provided one of the first automated, real-time reservation systems. The company was acquired by Booking Holding back in 2014 for $2.6 billion. Today OpenTable makes money via subscription plans, referral fees, and in-dining with its first restaurant, as an experiment in Miami, Florida.

Postmates Business Model

Postmates is a food delivery service built as a last-mile delivery service platform connecting locals with shops. Postmates makes money by collecting fees (commission, delivery, service, cart, and cancellation fees). It also makes money via its subscription service (called Unlimted – $9.99/month or $99.99 annually), giving free delivery on orders of more than $12.

Uber Eats Business Model

Uber Eats is a three-sided marketplace connecting a driver, a restaurant owner, and a customer with Uber Eats platform at the center. The three-sided marketplace moves around three players: Restaurants pay commission on the orders to Uber Eats; Customers pay small delivery charges and, at times, cancellation fees; Drivers earn through making reliable deliveries on time.

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