Story of Zomato: From a start-up to a pioneering foodtech unicorn

Shivani Kava, Jul 11, 2021, 1:18 PM IST

There are ones to eat to live and others like who live to eat. For the people belonging to the latter category, Zomato turned out to be a great discovery. Like every other start-up,  Zomato too has seen many peaks and troughs in its journey.

It all began in the office of Bain & Company in Delhi, where Deepinder Goyal and Pankaj Chaddah, the founders of Zomato thought of an idea. They saw people standing in a queue at lunchtime and give the order for their food when their turn came, which paved the way to Foodiebay” which became a prologue to Zomato.

The duo started scanning all the menu items of the restaurant and listed them on their intranet website Foodiebay.com. After seeing a huge surge in their traffic, they decided to launch their website open to the public.

They started listing restaurants from Delhi NCR on their portal and quickly expanded to other cities like Kolkata and Mumbai.

In November 2010 they changed the name Foodiebay to Zomato.

In December of 2010, Sanjeev Bikhchandani provided Zomato with a funding of 1 million USD through his company Info Edge India and from here on, there was no looking back.

Other investors for Zomato include Sequoia Capital, VY Capital, and Temasek. The funds just kept coming in after this. By the end of 2018, it is estimated that Zomato would’ve received funding of more than 300 million USD. This funding then gave Zomato the idea of expanding into more cities across India apart from Delhi, Bangalore, Kolkata, and Mumbai. So, they moved into Hyderabad, Ahmedabad, Pune, Chennai, etc.

By 2012, Zomato had started expanding overseas by extending its services to Sri Lanka, UAE, Qatar, South Africa, UK, and the Philippines. The year 2013 saw New Zealand, Turkey, and Brazil get added to its list.

In order to make life easier, the founders’ came up with the idea of building a mobile application.

In 2014, Zomato acquired Gastronauci, Poland’s restaurant search service, and Cibando, an Italian restaurant finder. The next year, Zomato made its biggest acquisition — US-based online table reservation platform NexTable. Soon after, it acquired another US-based restaurant directory, Urbanspoon, but had to shut the app within just five months.

During the massive layoffs and losses of 2015, the chances of Zomato’s survival seemed slim. Reports state that the company laid off about 300 employees — nearly 10% of its total headcount — to cut costs in its weaker business aspects and shift the focus to more revenue-generating areas like reservations.

In 2018, Chaddah announced his decision to quit Zomato and take some time off before he became “professionally active” again. He continues to own his stake of 3.11% in Zomato.

At present,  there are over 100 million Zomato users worldwide and people use the application to get in touch with other foodies around the globe so that they can get the best of food in whatever place possible. Not only this, big restaurants from around the globe post their advertisements on the Zomato app and this is basically how Zomato makes its money.

At the same time, Zomato expanded to newer services like its dining-out features. With Zomato Gold, a programme by Zomato which provides free food and drinks on certain orders in select restaurants.

According to the company’s biannual report,  there has been a 40% decline in Zomato’s EBITDA (earnings before interest, tax, depreciation, and amortization) loss from March to September 2019. The company has also pointed out that its monthly burn rate, which measures the rate at which a company is losing money, is down by 60%.