Last week, reports of Zomato planning to pick up fresh investments to further expand its food ordering, table booking business, along with setting up a new cloud kitchen service had surfaced the interwebs. But, the speculations have now been confirmed by the founder and CEO Deepinder Goyal himself, who mentions that the food-tech behemoth is working on a couple new initiatives. These are a part of the plan to turn around the financials and boost revenue plus profitability of the company.
In an interview with Mint, Goyal mentions that Zomato netted a revenue of $4 million in October and now plans to double the same over next three years. But in the short term, he expects to see the annual sales of the company touch $50 – $60 million by the end of this fiscal year, in March 2017. After cutting down on overseas expansion earlier this year, these figures have been achieved largely on the back of the food delivery and table reservation business.
The restaurant aggregation business is now on the back foot. The company expects to launch two new initiatives — Zomato Red & Zomato Infrastructure Services — sometime between February and June 2017. Goyal also believes these businesses will provide some much-needed boost and start contributing towards revenue by next year itself. This will also give Zomato some cushion to fight against one of the fastest growing food delivery services in town — Swiggy.
Starting off with Zomato Red, the company plans to launch a membership feature to provide users with access to an annual or semi-annual subscription to receive exclusive offers at restaurants. Though information is sparse, this subscription will most likely enable you to secure additional discounts on meals and happy hour offers at your favorite pubs. This brand building loyalty programme will initially be trialed with the Dubai and Lisbon crowd starting January. It will eventually roll out to the Indian masses sometime in the next fiscal year.
Additionally, the second initiative which has been appropriately named ‘Zomato Infrastructure Services’ will complement the food delivery arm. It will see the food-tech company set up pop-up kitchen spaces in locations where users don’t have access to a good dining experience. Restaurants and iconic brands will then be invited to use this kitchen space to prepare and deliver food exclusively via Zomato.
Commenting on the construction of the same, Deepinder Goyal mentions,
We are already talking to restaurants and they are showing immense interest. The whole idea is to take iconic brands to cities and areas where they are not available. Also, we have enough data to predict which areas have demand for what kind of food. We will use that data to bring different cuisines and brands under one kitchen.
The company plans to handle (almost) everything from investment in infrastructure and raw materials in the kitchen to last mile delivery, thus it plans to ask these restaurants for commission as high as 35 percent on every order. Goyal mentions that Zomato has already picked up about 8,200 sq. ft. space with the capacity to house as many as eight kitchens in Gurgaon. After testing the idea of the kitchen space in the NCR region, the company
After testing the idea of the kitchen space in the NCR region, the company will extend this ideology to Tier II and III markets, where users do not have immediate access to iconic brands and restaurant chains. The company is, thus, eyeing fresh investments to fund both of their new initiatives with the focus on increasing the number of repeat orders. Zomato last raised $60 million in fresh capital from Temasek and existing backer back in September last year.
Zomato has already made certain sacrifices over the last ten months to cut down on its cash burn rate and bring it down under a million dollars. It is now focusing aggressively on cutting its surmounting losses and strengthening its key markets including India, the Middle East, Australia and New Zealand among others.