Zomato is an on-demand food delivery platform that focuses on helping people discover restaurants and deliver the food to their doorstep. From finding a restaurant to delivering food, Zomato has captured the complete food industry with its solid Zomato business model.
Zomato’s business model is highly successful because it offers attractive cash-backs, loyalty programs, multi-payment options, and quick delivery of food to its customers. You can also check the ratings and genuine reviews of the restaurants on their app.
“Did you know that Info Edge is a leading investor of Zomato?”
In this article, we will try to explain the business model of Zomato, how Zomato earns, Zomato business plan, marketing strategies and many more.
So, let’s see how Zomato has established a sustainable business in the Food industry.
- Zomato Founder: Deepinder Goyal and Pankaj Chaddah
- Founded: In 2008
- Industry: Food delivery
- Website: https://www.zomato.com/
- Zomato Business model: Customer-centric.
How did Zomato start?
Earlier, i.e., till November 2012, Zomato was known as “Foodiebay.”
Zomato Founder Deepinder Goyal started “foodiebey”, an online restaurant directory. Once Deepinder saw that their colleagues were asking for the paper menus of different food places and comparing them for prices.
So, he got the idea and created an app where he scanned and uploaded all the menus from different restaurants. Then, he shares this information with his colleagues so that they can compare and choose the cheapest food to order in different varieties. Further, he used to take customers’ reviews and feedback on the app.
In this way, he transformed the restaurant’s paper menu into an easy-to-access digital mode. And that’s how Foodiebay converted into Zomato, and the business model of Zomato came into existence.
Later, the founders started adding more services, such as online food ordering, restaurant reservations, consultancy services to open their restaurants, and many more.
Today, Zomato’s business plan has made it the top player in the market due to affordability and accessibility. Let’s move ahead to explore the Zomato business model.
Zomato Business Model
Initially, Zomato business plan was limited to just scanning the menu and making it accessible to the people. But now, the Zomato working model is to suggest local and nearby restaurants to users and receive orders from them.
Further, the major change that the Zomato model brought is that users can share the reviews and ratings that help customers to place orders from the best restaurants.
Besides that, the company has also launched Hyperpure, which provides restaurants with fresh and high-quality ingredients. They get direct supply from the farmers that maintain the fresh quality.
If we talk about the Business model of Zomato, it is a food-search engine that creates a connection between customers and restaurants.
The company has three main stakeholders in the Zomato business model, i.e., customers, restaurants, and delivery partners. Here is the simple business model of Zomato:
Step 1: Users can explore various food places, cafés and restaurants from the Zomato website or app.
Step 2: The selected restaurant receives the notification of the order and accepts the order.
Step 3: The nearest delivery partner gets the notification once the food is ready.
Step 4: The delivery partner collects the order from the restaurant and delivers it to your doorstep. Meanwhile, users can track their orders from the app.
Step 5: Customers make payments and post their reviews, feedback, and experience on the Zomato app.
So, this was the Zomato business model canvas revolving around food delivery.
Besides that, Zomato also offers other services, including:
- You can make reservations in restaurants from the Zomato app.
- Zomato consultation for opening restaurants, cloud kitchens or any food-related business.
- Zomato provides infrastructure to set up your restaurant or to start a brand new food business.
Problems Identified And Solutions Offered under the Zomato business model
Zomato grabs the opportunity to digitalize the food industry. The business model of Zomato is beneficial for restaurants as well as customers:
- With Zomato app, now it is easy to compare foods and prices, making it easy for people to decide quickly.
- It solves the problem of finding restaurants’ nearby customers’ locations that allow people to receive their orders at doorstep.
- Customers can choose the food places based on the reviews and ratings.
- Zomato ensures affordability for every customer.
- Restaurants get the benefit of the advertisement through Zomato to get more orders.
- The Zomato partners get the advantage of consultancy, including finding the correct location, market research, and operational management at minimum prices.
- The Hyperpure initiative by Zomato helps to bring and deliver high quality fresh ingredients to its partner restaurants.
Zomato Business Plan – Marketing Strategies
Zomato marketing is literally crazy !! Like seriously, you can’t ignore it. It uses filmy dialogues and songs to grab attention.
Have you seen this?
After lots of research, we found that Zomato gets its significant traffic from search engines. The company has established its powerful presence with digital marketing as follows:
Search Engine Optimization
Zomato highly invests in SEO with lots of “near me” keywords that bring almost 66% of its customers. As Zomato already has a restaurant directory, it is easy for them to work on long-tail keywords for different areas, such as “Chinese food near me.”
Social media marketing
Next in Zomato business model canvas is to build a brand with social media marketing by creating engaging posts that customers can relate to. It has used viral marketing with meme posting.
You must have seen Zomato ads on YouTube, Google, Facebook, etc. It also runs Google ads to target specific customers.
The company has a huge database of customers, which makes it easy to run an email marketing campaign. You must have seen many weekend emails from Zomato that create the temptation to order food. The brand uses compelling email marketing based on various web series dialogues.
The billboard advertisement targets users based on the location and showcases the food which is famous in cities.
So, these are the marketing strategies that Zomato follows to maintain its strong presence and increase orders. All the marketing strategies have a common focus in the Zomato business model, i.e., reminding the audience to order food from them.
Zomato Revenue Model
“Did you know the most expensive order placed on Zomato costs around 2 Lakh? Okay, it was Rs. 1,99,950.” And, that person also got a discount of Rs. 66,650.
As Zomato has captured the complete food industry, it opened various opportunities in the Zomato business model to generate income. These are the sources from where Zomato earns:
Sponsored advertisements: Zomato offers advertising services to the restaurants by putting their banners on the top to increase their visibility and enhance their customer base. It is also known as restaurant listings. Simply put, it partners with restaurants to promote its products and services.
Food delivery charges: Next in the Zomato revenue model is charging around 20-25% commission from the restaurants for each order.
Zomato gold and pro subscription services: Zomato subscription models offer discounts on food and delivery to frequent customers. Its gold subscription plan provides additional perks, like heavy discounts on food orders, earn loyalty points and many more.
Consultancy services: It is also known as Zomato white label access, where the company helps the restaurants to identify locations, develop customised food delivery apps, and provide required licences and other services for the smooth establishment of a new restaurant.
Live events organisation: The company also hosts events by collaborating with restaurants, such as Christmas eve, new year’s eve. So, here Zomato earns by selling the entry tickets for such events.
Zomato Kitchens: Zomato kitchens basically provide a complete infrastructure to set up their own restaurants at minimum costs. So, anyone who wants to start their own food startup can connect with Zomato, which will help them to establish their kitchens at suitable locations.
Have you seen how a small idea can give birth to a giant Zomato business plan?
If you are also looking to market your business like the Zomato business model, you can contact us for search engine optimization and social media marketing services.
Frequently Asked Questions
1. How many countries do Zomato operate in?
Currently, Zomato operates in 10000 cities in 25 counties, which include India, the USA, New Zealand, US, Singapore, Australia, Brazil and Middle East Qatar.
2. How does Zomato make money?
Zomato earns from various segments, including food delivery, advertisement, hyperpure, cloud kitchen, and consultancy services. These are the primary sources under the Zomato business model.
3. How much does Zomato earn in each order?
Zomato charges Rs. 40 to 80 for delivering each order, depending upon the location, plus a 25-30% commission from restaurants on each order.
4. Is Zomato profitable?
Zomato has posted a net loss of Rs. 1,222 crores for Q4 FY22. Although Zomato’s sales are increasing, their expansions and expenses, including discounts and marketing, are the main reasons that Zomato is still not profitable