Inspiring Success Story Of Zomato Will Make You Quit Your Job & Invest In Your Startup!

There were times when we would contact various restaurants to put orders, then call back for changes, instructions, and reservations. Then came apps like Zomato, which completely inverted the situation and made it exceedingly simple for consumers. Zomato, started by Deepinder Goyal and Pankaj Chaddah in 2008, enhanced the process of eating out and meal delivery even further.

Zomato was valued at $5.4 billion on February 22, 2021, following a $250 million fundraising round headed by Kora, Fidelity, Tiger Global Management, and others on the same date.

About Zomato and How it Works

Zomato is a restaurant aggregation and meal delivery service based in India. It mostly gives concrete restaurant information, menus, and user reviews. In addition, Zomato offers food delivery from partnered restaurants in the cities selected.

How was Zomato Started?

All of it began when the founders, Deepinder Goyal and Pankaj Chaddah, were in their New Delhi office and noticed a large number of people waiting in line for a flash of the menu card. And it was at that precise moment that the idea for finding a solution germinated in this duo's heads, leading to the establishment of Zomato, formerly known as 'Foodiebay.'

Zomato turns 13 in July 2021, and the company will celebrate with a party on July 10, 2021. On July 10, 2021, Pramod Rao, who worked as Zomato's VP of Marketing and was instrumental in creating the marketing team and growing out the firm's operations, posts a statement on his Linkedin profile complimenting the brand and including a joyful video of the brand at work.

Are you curious as to where they begin? They made soft copies of the menu cards and posted them to the internet. Following that, everyone in the office began to use it, resulting in significant time savings for them. As a result, their website saw a spike in traffic, and they soon expanded it to make it open to everyone in the city.

Business Model and Revenue Model

The adverts channel that Zomato gives to display is currently the portal's primary source of revenue. The majority of its earnings comes from this, followed by commissions charged to eateries. It operates on the basis of a commission-based business model.

Startup Challenges

The most difficult challenge in Zomato's path was figuring out how to cover all of the restaurants in all of the areas of all of the key cities so that the consumers who rely on them don't lose out on the best eateries in the area. Since the endeavor's inception, this milestone has been omnipresent and continues to fuel significant efforts on the part of the venture.

This, however, is not the case. Zomato was faced with a number of major obstacles from time to time, many of which were "make or break" moments for the team. Zomato had to let off 300 people in 2015 to reduce losses, which had a large-scale impact on the company because 10% of the layoffs were in the United States. In the same year, Zomato acquired Urbanspoon in the United States and renamed it as their own. Unfortunately, the rebranding did not go as planned, and the venture was a complete failure.

In 2016, things got so out of hand that Zomato had to shut down operations in a number of countries, including the United States, the United Kingdom, Chile, Canada, Brazil, Sri Lanka, Ireland, Italy, and Slovakia. When they returned, Zomato had no choice but to rely on remote services.

Then came 2017, when Zomato's existence was threatened by a hacker who gained access to 17 million user records from the company's database, putting the company's existence in jeopardy. While its initial fears were overpaying and the hacker accessing customer card and account information, Zomato quickly clarified that the hacker could only access names, user IDs, email addresses, usernames, and password hashes. Soon later, the breach was rectified by contacting with the hacker, who revealed that he only intended to prove that the system had security flaws.

The #logout campaign began in 2019 after restaurants featured on the platform complained that Zomato Gold and Infinity Dining, a Zomato feature that offered steep discounts, were eating into their profit margins. And it just so happened that the restaurant association brought up issues like "unreasonably high commissions, payment periods, and arbitrarily applied additional charges" that businesses were being paid to participate in Zomato's Zomato Gold project.

Following the campaign, Zomato dropped the Infinity dinner service, amended and adjusted the Zomato Gold rules while laying off employees, and faced a barrage of criticism from its restaurant partners.

Despite this, Zomato saw a 177 percent increase in restaurant partners, with an extra 73K businesses joining the platform. As of August 2021, Zomato had over 1.4 million eateries listed on its app and 12K+ restaurant partners.

Competitors

Despite its dominance in the business, Zomato is up against a lot of direct and indirect competition. Swiggy is a direct competitor, and regional meal delivery apps such as SendMe, DoorDash, and others are indirect competitors.

Future Plans

After shuttering most of its overseas operations, Zomato is now focusing on its Indian meal delivery company. Zomato is expected to expand at a 40% compound annual growth rate (CAGR).