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Zomato’s losses on a rise amidst a struggling foodtech scenario

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After a series of valuation markdowns, Zomato has reported a significant increase in its operating losses. Amidst a slowdown in food-tech startups, the online restaurant discovery platform is currently investing heavily into expanding its food-ordering service.

InfoEdge, a major investor in Zomato has disclosed the earning results, which show a sharp increase in the losses of the company. InfoEdge owns about 50.1 per cent stake in the food delivery startup and has raised around $225 million at ever-increasing valuations.

As Economic Times report suggests, the losses took a nosedive from Rs. 136 crore in the previous year to Rs. 492.3 crore for the financial year ended March 31, 2016 amounting to a 262 per cent change in the losses before taxation. The company’s operating revenues however have almost doubled, going from Rs. 96.7 crore in the previous year to Rs. 185 crore in the current financial year.

We’ve contacted Zomato to corroborate the revenue and losses, and will update you once we hear back from them.

The year 2016 has been off to a rough start for Zomato who first had to layoff about 10 per cent of its staff members in the name of a major strategy change(majority of those belonging to the U.S). This was followed by the mark-down in valuation of the company by HSBC who claimed that the company was non-profitable in last-mile delivery business and loss in fund-raising in international markets.

Deepinder Goyal, the CEO of Zomato however took a stand against the false claims and said that ‘Nobody Who Knows Our Business, Has Marked Down Our Valuations’.  And he also corrected HSBC analysts saying that the company was already profitable in six of its operating markets, including its headquarter India.

Zomato had rolled out at the speed of F1 racing cars to get its food ordering and delivery service out the door in a market that was already flooded with competitive players like TinyOwl, Swiggy, Fassos and many more. The company had to face issues in expanding the service on a large scale and also had to pull the plug on delivery services in four cities, in the beginning of 2016.

If you see the current mood of food-tech startups in the market, you’ll only notice only bloodshed and closed shops. Due to the slowdown in this segment, several companies have resorted to either shutting their startups or selling their business to big players, like Zomato.

One such example is of the Mumbai-based TinyOwl who is now hanging by a thin thread that can break anytime soon. The company has closed operations in all cities except Mumbai and is planning a comeback under a revamped identity –Runnr – in partnership with logistic startup Roadrunnr.

But the losses only suggest and back HSBC’s claims that Zomato is heading towards a downward slope that will only leave them with only option i.e to invest more and expand into other newer segments, like the introduction of merchant software, Zomato Base.


A hands-on guy fascinated by new apps, technologies and enterprise products.

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