FOOD

Gold hasn’t lost shine: Zomato CEO Deepinder Goyal

NEW DELHI | MUMBAI: Zomato has once again dismissed claims of dwindling membership numbers for its contentious Gold programme.

In an exclusive interview to ET, the company’s CEO Deepinder Goyal said that, contrary to what the National Restaurant Association of India (NRAI) has been claiming, the number of establishments registered on Gold has increased about 6% since August, to 6,450 restaurants across 41 cities as of now.

The NRAI launched its #logout campaign against Zomato Gold on August 15. “A lot of restaurants which had left are now back on Gold. The campaign is mostly being led by five restaurant brands. Whoever has not joined back is bleeding,” the Zomato founder asserted.

Last week, Zomato recorded 1.6 times the peak number of Gold subscriptions sold in March, he said.

“The number of customers signing up for Gold, too, has increased threefold,” he added.

Last month, Zomato opened up the loyalty and subscription programme to online orders as well — which restaurant owners’ bodies and lobby groups have opposed as it entitles customers to free food and drinks.

Goyal claimed that 70% of Gold members who had not ordered online previously, have done so on Zomato now.

NRAI has, however, rebutted Zomato’s claims. At a press conference in Mumbai last week, the association said more than 2,000 restaurants had logged out from Gold, including Indigo Deli, Jamie Oliver, Farzi Cafe, The Big Chill, Carl’s Jr and WOW! Momo.

NRAI said a further 1,500 were serving notice to quit. Anurag Katriar, the president of NRAI, also claimed at the press conference that Zomato had been listing cloud kitchens as restaurants to bump up the numbers, especially for food delivery.

Zomato denied it operates any cloud kitchens of its own.

Focusing on small towns
The ongoing fight between Zomato and the restaurant body comes amid a planned fundraising effort by the food delivery, listing and discovery platform. Earlier this month, ET reported that Zomato was in final stages of talks to raise $600 million, likely led by existing Chinese investor Ant Financial, which would see its valuation cross $3 billion and further its battle with Swiggy.

Beyond big cities
Even as the war of words continues, Zomato and Swiggy are both targeting customers beyond the big cities. Goyal told ET that most cities and towns beyond the top 15 markets now contribute to more than a third of its revenue, and are run profitably.

Zomato expects this market to contribute about 50% to its total revenue by the end of the fiscal year, when it would have expanded to 700 cities from 600 now.

“The key is keeping the fixed cost low. The average cost per delivery is 60% lower in these cities, while order value is about 25% lower,” Goyal said.

Earlier this month, Zomato said it had reduced cash burn to 60% of what it was six months ago without providing details, indicating that it had managed to cut expenses by increasing the number of orders and improving efficiency.

Some small towns see seasonal demand. For instance, hill station Manali only operates for four months in a year when tourism peaks, while university campuses like Lovely Professional University are shut during summers.

“(About) 4-5% towns are such where demand is inconsistent, but largely, towns are consistent with a minimum of 1,000 orders per day,” he said.

There are nearly 4,000 towns and cities in the country. Several internet companies, from payments to commerce and social commerce, have focused on tapping customers in the remotest regions.

Earlier this month, ecommerce companies Amazon, Flipkart and Snapdeal said a majority of their festive period sales orders had come from tier 2 cities and beyond. Zomato’s rival, Swiggy, also said it would expand to more than 600 cities by the end of December.

Analysts told ET that companies would have to experiment with several operating models to make businesses viable in small towns, and that modelling them on the basis of the top 50 cities will not make economic sense.

“For instance, outsourcing logistics, franchise-operated cities, among others, are all models to be experimented to tap this market,” an industry expert said.

Zomato’s Goyal said the company’s infrastructure business, which enables restaurants to launch delivery-only kitchens, is live across 50 cities and 650 kitchens, with two thirds in tier 3 towns. “The idea is, from next year we take it to at least 100 cities, and 1,500 kitchens,” he said.

Zomato said recently that revenue for the first half of the ongoing financial year jumped more than three-fold to $205 million, compared with the same period last year when it stood at $63 million.

The company said it recorded 214 million orders in the first half of the year, or about 35 million orders on average a month. It said Gross Merchandise Value stood at $821 million in the same period.




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