How Zomato Generates Revenue and Grows

Zomato, the popular food delivery and restaurant discovery platform, generates revenue through a variety of channels. Its primary source of income is commission-based fees from restaurants, which can range from 5% to 20% of the order value.

The platform also earns money from delivery fees, which are typically charged to customers. These fees can range from ₹20 to ₹50, depending on the location and type of order.

Zomato's growth can be attributed to its strategic acquisitions, such as Foodpanda and Urbanspoon, which have expanded its presence in new markets. The platform has also invested heavily in its technology and logistics infrastructure, enabling it to improve its delivery speed and efficiency.

Zomato began as a restaurant search, online ordering, and delivery service, but branched out to white label services and event hosts. It was initially launched as Foodiebay in 2008 and had the largest restaurants directory in Delhi.

Zomato's business model is quite different from that of other food delivery companies, such as Swiggy and Foodpanda. The company's key resource is its large database of restaurants across 10,000 cities in 24 different countries.

The company's business plan focuses on expanding its food delivery network, enhancing customer experience, and generating revenue through restaurant partnerships, advertisements, and subscription services. Zomato's mandatory rating system makes it easier for customers to locate restaurants, leave comments, check listings, and availability based on their preferred cuisine.

See what others are reading: Compute the Company's Net Sales for the Year

Zomato was founded in July 2008 by two IIT graduates, Deepinder Goyal and Pankaj Chaddah.

The idea for Zomato was born out of a demand from Deepinder's colleagues for paper menu leaflets from different restaurants to order food. This led Deepinder to think of converting the restaurants' paper menus to a digital app.

In just 9 months, the company grew to become the largest restaurant directory in Delhi and later expanded to other cities due to its success.

Zomato started expanding internationally to countries like the UK, South Africa, Qatar, Sri Lanka, New Zealand, and Brazil by 2012.

The company had to change its name from Foodiebay to Zomato in 2010 to avoid any legal issues due to the similarity in name with eBay.

By 2015, Zomato had forayed into the food delivery business and launched Gold in India, a subscription product that gave subscribers access to complimentary food and drinks.

Take a look at this: Deepinder Goyal Zomato Stake

Zomato's business model is quite different from that of other food delivery companies. It focuses on expanding its food delivery network, enhancing customer experience, and generating revenue through restaurant partnerships, advertisements, and subscription services.

The company's key resource is its large database of restaurants across 10,000 cities in 24 different countries. This database is used to provide local restaurant search services, collect data on food menu contacts, and provide relevant information to customers.

Zomato's main channels for reaching customers are mobile applications and its website. The company's target audience includes users who try to find local restaurants of various cuisines and restaurants who want their name to reach a large number of people.

Zomato's business model has revolutionized the food industry by incorporating various restaurants and making it convenient for people to find restaurants, provide feedback, and make food-related decisions.

The company's online service is built with a mandatory rating mechanism, which makes it easier for customers to locate restaurants, leave comments, check listings, and availability based on their preferred cuisine.

Zomato's business model has evolved over time, branching out from restaurant search and online ordering to white label services and event hosting. The company has also shifted its focus to hyperlocal services and advertising.

Zomato's primary focus is on offering local restaurant search services, gathering data on food menus, contacts, and presenting users with relevant information. However, its business model reaches far beyond just restaurant search and online ordering; it's now an advertising giant.

The company generates revenue from various sources, including online ordering, advertisements, and subscription services. Its revenue from the food delivery segment has been increasing, with a Gross Order Value (GOV) that grew by 19% QoQ in H1FY22 and 158% YoY to INR 54.1 billion or $721 million.

Explore further: What Does Revenue Mean in Business

Zomato generates revenue through various channels, with advertising being its primary source of income. It earns more than 70% of its revenue through advertising, which includes allowing restaurants to put their banners on the site to increase visibility.

Zomato charges restaurants a commission on orders placed through its food delivery service, ranging from 20% to 25% in most regions, with variations in some areas. This commission is split between the delivery partners and the company.

Restaurants can also pay a monthly subscription fee to Zomato, which provides them with analytical tools and customer data. This subscription model has proven to be a gold mine for Zomato, with its 1.4 million partners contributing significantly to its revenue.

Let's take a look at Zomato's revenue from FY 2019 to 2023. Zomato's revenue for this period is available.

One key point to note is that Zomato's revenue has likely been impacted by the COVID-19 pandemic, which affected the food delivery industry in various ways.

According to the data, Zomato's revenue for the period FY 2019-2023 is available for Premium users.

If you're interested in understanding the revenue breakdown of other companies, you can check out the revenue breakdown of Swiggy for FY 2025, which is also available for Premium users.

Here's a brief summary of Zomato's revenue for the period FY 2019-2023:

Keep in mind that this information is only available for Premium users and may not reflect the companies' current financial situation.

Advertisements are a trusted and main source of income for Zomato, generating more than 70% of its revenue through this channel.

Zomato offers advertising policies to restaurants that want to maximize their profits and customer base.

Restaurants can use Zomato to advertise their banner on the site to gain more attention and appeal to a larger audience.

Advertising is Zomato's major source of revenue.

Zomato charges commissions from restaurants that want to be placed on the feed for features like food delivery and restaurant reservations.

By advertising on Zomato, restaurants can increase their visibility and reach a large section of the audience.

Zomato earns a significant portion of its revenue through advertising, accounting for more than 70% of its income.

Restaurants can advertise their banners on Zomato's site to increase visibility and reach a larger audience.

Zomato charges a commission ranging from 20% to 25% on each order made at a specific restaurant, with potential variations in commission rates from 5% to 7% in certain regions.

This commission-based model is used for food delivery, where Zomato earns a fee from the restaurants for each delivery.

Restaurants pay a monthly subscription fee to Zomato, which provides them with analytical tools, customer data, and other benefits.

Zomato's subscription programs are a goldmine, with over 1.4 million partners contributing to the revenue stream.

By offering these tools and services, Zomato helps restaurants maximize their profits and customer base.

Zomato also generates revenue through its food delivery service, although this stream contributes a low percentage of income compared to other revenue streams.

The company's commission-based model for food delivery has been criticized for eating into restaurant margins, particularly in regions with high competition and the need for deep discounts.

You might enjoy: Revenue Model

Event Organization is a revenue stream that Zomato has successfully tapped into by collaborating with restaurants to host events like Christmas Eve and New Year’s Eve. These events are designed to boost sales, and attendees must purchase tickets to participate.

By hosting events, Zomato creates a unique experience for customers, which can lead to increased sales and revenue.

Zomato's current valuation is a staggering $10.7B, as of January 2022, which is a testament to the company's growth and success.

Zomato's estimated revenue per employee is a respectable $1,557, indicating a strong financial performance.

Zomato has received a total of $2.5B in funding, which has helped the company achieve its current valuation.

For more insights, see: Tesla Company Revenue

Zomato has three main customer segments that are crucial to its business model.

The first segment is users, who can find nearby restaurants and opt for doorstep delivery through the online platform.

Users are the backbone of the business, as they drive the demand for food delivery services.

A unique perspective: What Is a Margin in Business

They can browse through various restaurants, read reviews, and make informed decisions about their food choices.

For instance, I've used Zomato to find restaurants in my area and even ordered food through the platform.

It's a convenient and user-friendly experience that makes me want to come back for more.

The second segment is local restaurants, who can promote their business on the Zomato platform to attract target users.

This segment is essential for Zomato, as it helps to increase the number of restaurants on the platform and provide more options for users.

By partnering with local restaurants, Zomato can offer a wider range of cuisines and dining experiences to its users.

The third segment is delivery providers, who can offer part-time or full-time services to generate a decent revenue source.

This segment is vital for Zomato, as it enables the company to offer fast and reliable delivery services to its users.

Delivery providers can choose their own schedules and work as much or as little as they want, making it a flexible option for those looking to earn extra income.

Zomato's current valuation is a staggering $10.7 billion, as of January 2022.

This valuation is a result of the company's successful fundraising efforts, with a total funding of $2.5 billion.

Zomato's estimated revenue per employee is a notable $1,557, highlighting the company's efficiency in generating revenue.

Here's a breakdown of Zomato's estimated revenue and valuation:

Zomato received a significant boost of $62.5 million in venture funding in March 2019, which likely contributed to its current valuation.