Are you a foodie? If yes, I’m sure Zomato crosses your mind and pops up on your phone with delicious offers for ‘n’ number of times. I’m also certain that you would’ve wondered how does Zomato make money even after providing such tempting discounts. Isn’t it?
Let’s put an end to this curiosity and you may also order a meal while you learn about Zomato’s business model.
Fun Fact: Currently, Zomato is one of the biggest online food ordering platforms in India and in 22 other countries across the world. People eat almost 90 million times every month and this is a contributing factor in the revenue stream of Zomato.
How does Zomato earn money?
Zomato initiated its operations as an information portal, providing information about the zillion number of restaurants across India. It started its operations by recommending nearby restaurants and gathered reviews from customers so that others could know about the restaurant.
As per your likeability, Zomato would be your one-stop solution for dining out. Eventually, with growing demand, Zomato introduced online food ordering services and table booking facilities in restaurants with just a tap of a finger.
Zomato’s Business Model
Zomato is present in 23 countries in the world and is ever-growing. But, it definitely strikes you hard when you think how can a company make revenues just by listing restaurants on its portal or just by putting an online ordering app in place?
The answer, in brief, is just that Zomato focuses on 1 million users across 23 countries. It is focusing on the Zomato mobile app, and they make money through advertisements, consulting services, and online ordering system Zomato and also helping all the users in finding the restaurants of their choice. Zomato makes money by being the intermediary between the customer and the restaurant owner. The following are the ways in which Zomato makes money:
Advertisements are one of the major contributors to income for Zomato as Zomato provides hyper-local advertising for restaurants that are beneficial for both the restaurants and the customers too. The listing on Zomato is purchased by restaurants in the form of advertisement spaces and is very similar to Google ads. Almost 62% of Zomato's revenue comes from advertisements.
Online Order Services
The restaurants that deliver food have to pay a nominal amount to get the online service from Zomato.
The restaurants that deliver online have to pay a certain fee to Zomato for listing them. This service has proved to be a boon for several restaurants. Those restaurants that usually looked empty are now getting good business through Zomato. About 30% of revenue comes annually from online orders.
Zomato is a little above the rest of the online food ordering platforms because it not only provides food solutions but also provides consulting services to new restaurant owners by delivering data and information about the where's and how's of starting a restaurant. Zomato quickly understands the opportunities and the setbacks for any new restaurant in a particular location and thus, earns by providing consulting services.
Zomato has limited edition events on occasions throughout the year like New Year’s Eve, Valentine’s Day, Christmas Eve or other festivals. Sale of tickets of these events also is a revenue earning source for Zomato.
Zomato Book & Gold
Through Zomato Book services, anyone can reserve a table in their favorite restaurants with a nominal pay. Similarly, Zomato Gold services provide membership to customers at a cost and provide additional benefits to them whenever they dine or order from a restaurant. Zomato Gold fetches about 12% of the revenue monthly.
The concept of ordering online is growing in India at a swift pace. Aggregator business models are the new trend of business models. Zomato’s business model is perfect as it is convenient and is a need-based model.
Going forward, the maximum revenue comes from advertisements, online ordering, and subscription services. Zomato has covered maximum restaurants in India and there is no more scope of ad revenues anymore. But, opening new revenue channels is a brilliant move by Zomato. Its subscription services are also growing very fast with almost no threat externally. Zomato will change its revenue profile dramatically in the years to come in the way it is advancing.
Learning about such business models is fun right? Learn how OYO is running its operations.