What is Zomato and how does it work? Everything you need to know

Posted On: May 11, 2022

Posted By: appsrhino

blog-image

Given the current situation, the on-demand business model's bubble is unlikely to burst anytime soon. It has gained a lot of traction after the pandemic disrupted the usual business activities. Today, almost no one in the world is unaware of Uber's widely adopted business model and success story. Similarly, Zomato is a popular on-demand food delivery app that allows consumers to find new restaurants and deliver them to their door. There is something for everyone on the app. Hungry? Go to Zomato and grab a meal of your choice. 

The online meal delivery market is expected to increase at a 15.4 percent yearly rate by the end of 2025. To know why and how Zomato makes so much money solely by delivering food, let's take a closer look at how Zomato operates and how it's grown so quickly in recent years. More and more business owners are joining the online meal delivery system bandwagon because it is pocket-friendly and saves travel and food.

Summary

Zomato as a food delivery company has expanded a lot over the last year. The company has increased its presence in many regions and has also fought long-running struggles with eateries to change its discount-happy practices. All this has made a significant impact on Zomato's overall company, and Zomato's business model diversification has opened up many more revenue avenues. To know more about what Zomato is and how it works let's read the article below.

What is Zomato?

Zomato is one of the most comprehensive and user-friendly apps for finding nearby restaurants and cafés, ordering meals online, and delivering them right to their door. It also gives menus, reviews, and ratings to acquire factual information on eateries. Users can use this information to place orders and enjoy delectable food in the comfort of their own homes.

Zomato offers timely delivery to customers' doorstep, a joy for foodies. Customers no longer have to wait in restaurants for hours. Zomato is currently one of the most popular online food delivery systems, with users in nearly 22 countries. On the other hand, Restaurant owners can boost their internet presence by registering with the Zomato app. 

How does Zomato work?

How does Zomato work

Since 2008, Zomato has grown swiftly and is one of India's most successful startups. Even seasoned business owners and entrepreneurs are curious about how it operates and how it earns large profits despite offering appealing discounts. Zomato's major function is to recommend local and neighboring eateries to users and take orders from them. 

Users can place orders from their preferred restaurant based on previous customers' ratings and feedback. Perhaps this is why a growing number of entrepreneurs are interested in creating a Zomato-like app. It provides users with convenience and assists business owners in taking their local food business to new heights. 

Zomato's working model is simple, and to enjoy a lip-smacking meal, customers have to follow these 5 simple steps- 

Step 1: Users may browse and order meals from various restaurants via the desiccated app solution or website.

Step 2: When a restaurant owner receives an order request, they begin to prepare a dish.

Step 3: Once the meal is ready to be delivered, it will be given to delivery companies.

Step 4: The delivery service delivers the meal to the customer's preferred location.

Step 5: Customers can make purchases and provide evaluations based on their experience using the payment options. Foodies are encouraged to order meals online because of their simplicity. 

Zomato's Business Model

Zomato_s Business Model

Zomato's Business Model is divided into three categories

  1. Users: An online platform that allows users to identify nearby eateries is ideal for those who wish to have food delivered to their doorstep.
  2. Local Restaurants: The Zomato platform is important for restaurant owners who want to market their business and attract the attention of their target audience.
  3. Providers of Delivery: They can establish a reasonable revenue stream by providing part-time/full-time services.

Key Partners

Zomato was originally only a listing platform and a restaurant directory. Restaurants that joined the platform were able to earn advertising money due to this. Zomato is now charging restaurant commissions to be featured prominently on the feed after food delivery and restaurant bookings rollout. Restaurants can pay to advertise their events or special deals alongside their main banner, increasing visibility and conversions among Zomato users.

  1. Restaurant owners
  2. Retail grocery stores 
  3. Delivery providers

Key Activities 

First, Zomato charges restaurants a commission based on the number of orders placed through its food delivery service. Restaurants pay a commission for each delivery, which is subsequently split between the delivery partner and the corporation, while users pay a delivery fee. Restaurant commissions differ depending on whether Zomato completes the delivery or the restaurant utilizes its riders. Due to fierce competition and the requirement for steep discounts, this is claimed to generate only a small portion of the company's total revenue.

  1. Partnership with restaurants and retailers
  2. Managing and hiring delivery providers
  3. Collect data of users for smooth delivery and payments

Key Resources

Zomato opened up a consistent stream of revenue through Zomato Gold for consumers and users and subscription alternatives for eateries. Restaurants pay a monthly charge to be part of Zomato's bouquet of deals. Users pay a subscription fee to enter the Zomato Gold loyalty program, which provides unique discounts. Restaurants additionally pay Zomato a monthly charge for features like live tracking, tamper-proof packaging with the Zomato logo, and more.

  1. Large volume of data of restaurants
  2. Data of delivery providers and suppliers
  3. Active presence across 7 countries
  4. Modern technology stack

Value Proposition 

Zomato is a comprehensive online platform that allows customers to order food from a wide range of restaurants in their area. Zomato also helps you promote your food business if you are new to the food industry and want a strong web presence. As a result, Zomato bridges the gap between restaurant owners and customers. 

Users may follow their orders in real-time with an expected arrival time once they've placed them. Customers can place orders without hassle thanks to advanced search and filter features. Zomato also offers Gold Membership to help businesses grow their customer base and create loyalty. Customers who subscribe to Zomato's Gold service receive additional benefits such as substantial savings on food and beverage orders. 

Zomato's Revenue Model

Zomato_s Revenue Model

Since its inception, Zomato has increased its global footprint in the culinary business. Zomato offers a variety of revenue streams, some of which are detailed below to help you understand how Zomato makes such a large profit through its business model and diversification.

Advertisements on Zomato

Advertisements are one of Zomato's most reliable and important sources of revenue since it provides restaurants with advertising policies to help them increase their earnings and consumer base. This channel accounts for more than 70% of the company's income. It enables restaurant owners to display their banners on their websites to boost their visibility.

Subscription to Zomato

Zomato can predict user behavior using complex tools and software, such as what they are searching for, which dish is trending, which meal is in more demand, etc. In exchange for this information, restaurant owners must pay a fee to Zomato. They can improve their services and meet client expectations based on this information.

Food Delivery Services by Zomato

Zomato takes a 20-25 percent commission from the eatery for each order placed. The commission rate may range from 5-7 percent in different areas.

Zomato Event Management

Zomato conducts various events in partnership with restaurants, such as Christmas Eve, New Year's Eve, or any other events to enhance sales. Those who wish to attend these events are required to purchase tickets.

Kitchens on Zomato

Zomato offers a kitchen infrastructure service. They collaborate with restaurant owners that wish to extend their business to more locations at a low cost. It means that entrepreneurs can simply open a restaurant in the ideal location at the lowest possible fixed and operating costs.

Wrapping up

Every other entrepreneur who is still new to the food delivery sector can learn from Zomato's success. Zomato's process and business strategy are ideal for individuals looking to get in on the ground floor of a new market. It saves the customer time and provides convenience at every step of the process, from online ordering through payment to delivery to the user's doorstep. Are you thinking of making an app? Or do you have any other suggestions and ideas? If so, get in touch with AppsRhino right away, and we'll come up with the greatest and most innovative solutions to help your business grow better.