What did Zomato actually do?
Zomato did not start as a delivery company. Deepinder Goyal and Pankaj Chaddah co-founded it in 2008 as a restaurant discovery and reviews platform called FoodieBay, while both were working at Bain & Company.[1] The idea came from watching colleagues struggle to find takeaway menus.[2]
Zomato reached the top of Indian food delivery through choices that narrowed its focus rather than widened it. Five moves matter most.
1. It went global as a listings site, then shifted its weight back to India
As a discovery business, Zomato expanded abroad quickly. It bought US restaurant search site Urbanspoon from IAC for between $50 million and $60 million in cash. That deal capped a six-month buying spree of restaurant sites in New Zealand, Poland, the Czech Republic, Slovakia and other markets.[3]
The overseas push did not become the growth engine. Zomato sold its UAE food delivery business to talabat in 2019.[4] Its later market-share gains came in India. That is the reverse of the popular story that it dominated Indian cities first and then expanded globally.
2. It bought a rival instead of fighting it: Uber Eats India
On 21 January 2020, Uber sold Uber Eats India to Zomato in exchange for preference shares, according to Uber's annual filing. Uber valued what it received at $171 million for the investment plus $35 million of reimbursement of goods and services tax.[15] Press reports put the deal at about $350 million, but that figure does not appear in Uber's filing.[16]
The combined business was expected to hold close to 55% of food delivery.[16] India's food delivery market had become a duopoly, as Ola-owned FoodPanda made a major strategic move.[1] For the seller's side of this story, read how Uber Eats adapted to a changing market.
3. It ran experiments and shut the ones that did not work
During the first COVID-19 lockdown, Zomato started delivering groceries. TechCrunch reported in May 2020 that it was serving the category in 185 Indian cities.[7] That effort did not last. Zomato later re-entered grocery with a 45-minute delivery pilot in some markets.[8] It then announced it would shut the project from 17 September 2021.[10]
The company was blunt about why: “We have realised it is extremely difficult to pull off such a delivery promise with high fulfillment rates consistently in a marketplace model.”[9] It also closed its nutraceutical business.[12] Instead of building grocery in-house, it backed Grofers, saying Grofers “has found high quality product market fit in 10-minute grocery stores” and that it believed its investment in the company would generate better outcomes.[10]
4. It cut costs hard when the pandemic hit
In May 2020, Goyal told employees the company would lay off around 13% of its workforce.[11] He also proposed a salary cut across the company.[7] Zomato later estimated it would lose less than $1 million in July, the lowest in years for the 12-year-old firm.[1]
5. It built businesses next to food delivery
Zomato grew Hyperpure, its B2B business.[20] It then announced an all-stock purchase of Blinkit (formerly Grofers) for Rs 4,447 crore.[23] The price was 40% below Blinkit's last valuation of just over $1 billion.[24] Goyal later rebranded the group as Eternal following the Blinkit purchase.[6]
Why did it work?
It owned restaurant discovery before it owned delivery. Zomato started as a restaurant discovery and reviews platform[1], built around a problem its founders saw: colleagues struggling to find takeaway menus.[2] When it added delivery, it already had restaurants listed and users who opened the app to decide where to eat.
Consolidation beat a long price war. Buying Uber Eats India was expected to take the combined share close to 55%.[16] By December 2020, Bernstein analysts described Zomato as the market leader with about 50% share.[14]
Fast exits protected cash. Grocery was shut twice[8] and the nutraceutical business was closed.[12] Money went into Grofers, which Zomato said had found high quality product market fit in 10-minute grocery stores.[10]
Membership and execution, in the company's own words. Zomato credited its growth to improved execution, recovering demand and the popularity of its Zomato Gold membership programme.[5]
For balance, the company has come under fire in the past for deep discounting and driver safety.[6]
What were the results?
| When | Milestone |
|---|---|
| 2008 | FoodieBay launched as a restaurant discovery and reviews site[1] |
| 2019 | UAE food delivery business sold to talabat[4] |
| 21 January 2020 | Uber Eats India acquired for preference shares[15] |
| December 2020 | Raised $660 million; about 50% market share per Bernstein[14] |
| July 2021 | IPO of Rs 9,000 crore in fresh shares plus a Rs 375 crore offer for sale by Info Edge[17]; price band Rs 72–76, subscribed about 38 times[12][18] |
| 2021 listing | Listed at Rs 115, a 51.32% premium to the Rs 76 issue price[12]; market value crossed Rs 1 lakh crore on debut day[19] |
| Q1 FY24 (April–June 2023) | First-ever net profit of Rs 2 crore; Hyperpure revenue Rs 617 crore, up from Rs 273 crore a year earlier[20] |
| FY24 | Consolidated net profit of Rs 351 crore[21] |
| After Swiggy's stock market debut | 58% share of food delivery, with Swiggy at 42%, as reported by Inc42 citing ET[13] |
| 1 February 2026 | Goyal steps down as Director, MD and CEO[25]; Goyal stays as vice chairman[6] |
The recovery after the 2020 cuts was quick. In December 2020, Goyal said: “We are now clocking ~25% higher GMV than our previous peaks in February 2020.”[14]
Read the profit numbers with care. A tax provision contributed to the first Rs 2 crore profit.[5] One analysis argues that Zomato's FY25 profits were largely driven by other income of ₹1,077 crore.[22]
What did it cost or require?
Zomato's playbook was expensive and capital-heavy. The table below lists the sourced costs of its biggest moves.
| Move | What it cost |
|---|---|
| Urbanspoon acquisition | $50–60 million in cash[3] |
| Uber Eats India acquisition | Preference shares valued by Uber at $171 million[15] |
| Blinkit acquisition | Rs 4,447 crore in stock[23] |
| COVID-19 cost cuts | About 13% of staff laid off and a company-wide salary cut proposed[7][11] |
| Funding | $660 million raised in December 2020[14] and Rs 9,000 crore of fresh shares in the 2021 IPO[17] |
No Indian SME can copy these amounts. What you can copy is the order of the moves: get discovered first, win one market, test new lines cheaply and drop the ones that fail.
How can you apply this to your business?
- Start with discovery, not delivery. Zomato's first product was a restaurant discovery and reviews platform. Make sure your name, address, phone number, menu or catalogue are correct on every directory your customers check. Our guide to localization explains how to speak to each neighbourhood.
- Win one geography before adding another. Zomato's later wins came in India, not abroad. Pick one city or cluster of pin codes and aim to be the obvious choice there. See how DoorDash won by focusing on local delivery.
- Give every experiment a kill rule. Before you launch a new product line, write down the fulfilment rate, margin or repeat rate it must hit by a set date. If it misses, shut it, as Zomato did with grocery.
- Partner before you build. After shutting its own grocery pilot, Zomato backed Grofers, which it said had found product-market fit. Look for a local partner who already does the thing well.
- Check what is driving your profit. Separate operating profit from one-off or other income before deciding where to invest next.
To run step 1 without hiring, Haatopia's Local Visibility Kit covers 40 local directory listings (120 credits) and 10 local creatives (60 credits). That is 180 credits in total, or roughly ₹3,060–3,600 at ₹17–20 per credit depending on the pack. See campaign kits and pricing, or use the Campaign Finder to match a kit to your goal.
What mistakes should you avoid?
- Copying the myth instead of the record. Zomato went abroad early as a listings site and then shifted its weight back to India. Do not expand abroad on the belief that it started local.
- Keeping a weak line alive because you announced it. Zomato publicly launched grocery twice and publicly shut it twice. Pride is not a reason to keep spending.
- Buying growth with discounts alone. Deep discounting is one of the things the company has been criticised for. Discounts can win orders but rarely build loyalty on their own.
- Celebrating a headline profit too early. Zomato's first profit was helped by a tax provision. Look at the operating numbers first.
