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Zomato hits profitability in its high priority markets, India included

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Online food ordering and restaurant guide Zomato has announced that it is now profitable in its high priority markets: India, Philippines, Indonesia and UAE, Lebanon and Qatar in the Middle East. In a press statement, Deepinder Goyal, founder & CEO of Zomato, said, “.. We have more than doubled our revenue year-on-year for the last few years, and we are going to post some great growth numbers this year as well,” echoing the sentiments of Sanjeev Bikhchandani from InfoEdge’s analysts call in December.

India operations broke even in 2013
Note that the company had broken even in India in July 2013, when it was operational in 14 cities in India. At the same time, InfoEdge said that Zomato and Meritnation had combined sales of Rs 8 crore, but lost only Rs 6.4 crores at EBITDA level. In the same article, MediaNama had correctly predicted that Zomato may get into online food ordering after listing restaurants under clusters of ‘home delivery, meals, drinks or catching up with friends’. Then, the company was vocal about not launching an online home delivery service but ended up biting a piece of the pie with a new food ordering app called Order in May 2015.

Profits will be used for experiments
As of now, the company will channelise the profits to grow in countries where it sees competition, and use it for experiments and initiatives in India and outside of it, according to Pankaj Chaddah, co-founder of Zomato. The company added that its daily orders grew 4x in the last 3 months under Chaddah’s leadership. Zomato states that 22% of its traffic and 35% of its revenue comes from India, seeing 10 million unique monthly users, and gets 15,000 orders daily, at an average ticket price of Rs 575.

Business streamlining
Zomato’s focus on streamlining its business is showing through multiple measures it took last year and this year. Last month, it shut down online ordering operations in 4 cities; Lucknow, Indore, Cochin and Coimbatore citing that the market size in these cities accounted for less than 2% of its order volumes. Then, it claimed that its online order volume continues to grow by 40% month on month in the rest of the cities.

In October, the 8 year old company laid off around 300 employees, about 10% of its 3,000 strong workforce, mostly from the US content teams who collected data from restaurants. In 2015, its management bandwidth was fairly stretched since it also had issues retaining senior leadership (read this, this and this).

Other developments:

– In the same month, it shut down its Cashless product in Dubai six months after it launched, because of ‘lack of a product-market fit’.

– In September, Zomato raised $60 million to invest in online ordering, table reservations, point of sales, and the whitelabel platform.

– The same month, Zomato started offering a whitelabel platform to help restaurants create their own mobile apps.

Also read:

–  We’re the first ones to know when a restaurant shuts or opens: Surobhi Das, Zomato

Ad sales will remain the mainstay of our business: Deepinder Goyal, founder, Zomato

Zero customer acquisition cost is the biggest unfair competitive advantage we have: Deepinder Goyal, founder, Zomato

Our Zomato coverage.

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