Zomato has decided to terminate its Intercity Legends service. The service allowed consumers residing primarily in metro cities, far away from their birthplaces, to order legendary and famous food items from iconic smaller town eateries. This decision comes after a two-year period marked by significant operational and financial challenges, said the company.
Intercity Legends was introduced in 2022 with the goal of bridging the culinary divide between India’s diverse regions. The service aimed to offer iconic dishes from ten major cities—such as Hyderabadi biryani from Hyderabad and Kolkata’s famed sweets—delivered to customers in distant locations across the country. Eventually, the initiative was launched and shelved multiple times – the last time it was relaunched was in July. The deliveries were enabled using air based courier and Zomato’s on-ground delivery fleet.
Initially, Intercity Legends operated without a minimum order requirement, which was intended to entice a broad customer base and generate interest. The idea was to make regional specialties accessible to anyone willing to pay for the premium service. However, this approach quickly revealed itself to be financially unsustainable. The logistical complexity of preserving and transporting food over long distances, coupled with the high costs involved, began to undermine the service’s viability.
Due to this, Zomato eventually made adjustments to the service, introducing a minimum order value of ₹5,000. This change aimed to mitigate the service’s financial losses by ensuring that each transaction would cover the associated costs of preservation and delivery. Despite this adjustment, the service continued to struggle, failing to meet its profitability targets. The logistical challenges of maintaining food quality over long distances, combined with the high operational costs, proved too significant to overcome.
Deepinder Goyal, Zomato’s co-founder and group CEO, communicated the company’s decision to shut down Intercity Legends via a tweet on X (formerly Twitter). “After two years of trying and not finding product-market fit, we have decided to shut down the service with immediate effect,” read his post.
Update on Zomato Legends – after two years of trying, not finding product market fit, we have decided to shut down the service with immediate effect.
— Deepinder Goyal (@deepigoyal) August 22, 2024
The decision to shut down this service comes at a time when Zomato is actively pursuing diversification into other adjacent sectors. It recently announced the purchase of Paytm’s entertainment and ticketing businesses for ₹2,048 crore. This acquisition includes Orbgen Technologies Pvt Ltd and Wasteland Entertainment Pvt Ltd, which operate the TicketNew and Insider platforms, respectively. The acquisition of Paytm’s ticketing business represents a significant pivot for Zomato, positioning it to capitalize on the growing demand for entertainment and event booking services. Furthermore, the launch of a new app, ‘District,’ is expected to integrate these ticketing services, providing users with a comprehensive platform for booking movies, live performances, and other events.
For the quarter ending June 2024, Zomato reported a net profit of ₹253 crore, a dramatic increase from the ₹2 crore profit recorded in the same quarter the previous year. This growth was driven by strong performance in its core food delivery and quick commerce segments. Zomato’s quick commerce arm, Blinkit, saw a remarkable 130% increase in gross order value, while the food delivery segment experienced a 27% rise. However, Zomato’s food delivery business also faced a slight contraction in its contribution margin, down to 7.3% from 7.5% in the previous quarter.
