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Deepinder Goyal | October 1, 2019 | 12 min read
Zomato H1 FY2020 Report

Click here to download the PDF version of this report.

“One of the nicest things about life is the way we must regularly stop whatever it is we are doing and devote our attention to eating.” – Unknown

We celebrated our 11th anniversary on the 10th of July. Continuing the tradition we started last year, we marked it by sharing meals with the underprivileged in our communities. Thousands of Zomans and Feeding India Hunger Heroes distributed over 100,000 healthy and hygienic meals across 11 countries.

Our company-wide Town Hall on the same day was made extra special because some of our highest performing delivery partners joined us with their families, to share their stories. It was humbling to hear how transformative financial independence has been for our delivery partners; and how Zomato has impacted their lives.

Every anniversary makes us proud of what we have achieved yet, acutely aware of how much there is left to do. Overall, we feel lucky and grateful to be building a business in the world of food. The impact we can make is humungous, and there is so much to do to further our vision of ‘better food for more people’. 

The quality of our business has come a long way in the last six months, and we are proud to share the results with you.

Business Performance

In the last six months, we had put two audacious goals ahead of us, and worked our strategy and execution backwards from there. We said we will shoot for market leadership, and simultaneously steer the business towards a more sustainable P&L.

Revenue in the first six months of FY2020 has exceeded our last year’s (like to like) annual revenue.

Loss – our monthly burn rate is down to 60% of what it was six months ago. We achieved tremendous results in optimising our costs, without affecting new product launches or innovation.

Let’s dive into the three business segments that we operate in – 


  1. Food Delivery 2. Dining Out and 3. Sustainability.

Food Delivery

“Who earns more, a fresher at a software services company, or a food delivery agent?” – a recent question on Quora

The food delivery business surprises us every day. Each time that we think we have reached a new peak, we find yet another one to conquer. In April ‘19, we were in 200 cities. Today, we offer our food delivery service in over 500 cities across India, and are contribution margin positive across the country.

Our order volumes in top 15 cities have doubled in the last 12 months; while the remaining cities already contribute 35% to our order volumes.

Our food@work business is growing well, and some very large accounts are slated to go live soon. We are already doing ~3m orders a month for food@work (this is in addition to the orders reported in the chart above).

We are very excited to change the paradigm of food, as we continue to let every town in India get a taste of Zomato.

We expect the trends across all these charts to continue looking better in the future.

Our delivery partners are the backbone of our operations. Their hard work and determination is what drives this sector forward, and we are proud to be working with 200k+ delivery partners – to create an unprecedented number of jobs, and social impact.

Areas of urgent concern in the food delivery business –
As our order volumes go up, the amount of plastic packaging waste we generate goes up proportionally. We will put in a coordinated effort to reduce/eliminate the use of plastic in deliveries made by Zomato and lower our carbon footprint significantly.

Dining Out

“Together, we can help make sure that every family that walks into a restaurant can make an easy, healthy choice.” – Michelle Obama

All our services – listings, reviews, and table reservations are geared towards finding new experiences and making them yours.

The number of restaurant listings globally on Zomato has grown from 1.2m in Sep 2018 to 1.5m in Sep 2019. Half of this increase comes from India alone – this huge increase is testament to the pace at which restaurants are mushrooming all over India, and grabbing share from home kitchens.

Table reservations – we’ve grown from 800k booked covers in Jan 2019 to 1.3m+ booked covers in Sep 2019 – organically and with zero investment.

Gold takes the Zomato experience one notch further – from discovery to loyalty. We now have 1.4m members world wide on Zomato Gold; who are using their privileges more than thrice a month. Gold is a niche, but large loyalty program. Having said that, so far, less than 5% restaurants participate in Zomato Gold, and less than 5% of our MAUs are Gold members. There’s so much headroom to grow here.

From a restaurateur point of view, Gold is not for everyone. We always encourage restaurants to
determine if participating in Zomato Gold makes commercial sense for them. Some restaurant
owners in India campaigned against Zomato Gold last month (#logout campaign); we engaged with the restaurant owner community and rolled out
some changes to the program that were widely accepted by most restaurants, as well as users –
thus creating more balance in the program. A
number of restaurants who have returned to
Zomato Gold post these changes have seen a
100% increase in revenue.

At the start of the ‘logout’ campaign, we had ~6,100 restaurants in India on Zomato Gold (for Dining Out); as of today, we have ~6,300 restaurants in India on Gold (for Dining Out). In addition to that, we have 10,000 restaurants that are participating in recently launched Zomato Gold for delivery (more on how successful this has been in a few weeks). The number of restaurants participating in Gold outside of India stands at 6,500.

A third party report (by Redseer) validated much of our belief in Gold. The report shows that –
• 90% of Zomato Gold members try out new restaurants because of the
program, thus leading to new trials for participating restaurants
• Gold increases the total size of the restaurant industry. The frequency of
dining out for Gold members has increased from 2.8 to 3.3 times/month post Gold membership
The survey also showed that the impact on restaurants has been positive –
• Gold Partners have witnessed ~35% average growth in bill volumes after
partnering with Zomato Gold
• Partners report a marked increase in net profit due to increased utilisation

Sustainability

“You are what you eat eats.” – Michael Pollan (In Defense of Food)

We set up Hyperpure to not only provide fresh and clean ingredients to our restaurant partners, but to also reduce wastage and inefficiencies in the supply chain.

In the past six months, we have successfully executed over 65,000 orders for 2,200 restaurants across Delhi and Bengaluru. On an average restaurants place 5-7orders every month, with an average order value of $100.

Our revenue from Hyperpure for H1 stands at $6.5m (compared to zero in H1 FY19) with a hearty FY20 projection (10x growth🌲).

NEW – In July, we started collecting used cooking oil (UCO) from restaurants, processing it in our facilities and delivering it to biodiesel manufacturing facilities. The fuel thus created, emits 75 per cent less carbon than diesel/petrol. We collect ~130 tonnes of used oil per month, from 1000+ kitchens in Delhi NCR, and will expand operations to five more cities this October. We expect this to grow very fast, create a lot of positive environmental impact, and be a significant contributor to the Indian government’s goals for bio-diesel production.

This January, Zomato and Feeding India‘s association gave birth to The Feeding Foundation – moving from a primarily philanthropic relationship to a deeply collaborative alliance. While Feeding India continues to remain a non profit – managing their own finances, data, infrastructure and strategy; Zomato’s expertise in consumer tech and deep understanding of the food ecosystem will play a key part in the Feeding Foundation’s goal of designing interventions to eliminate hunger and food wastage globally.

Feeding India distributed 78,300 monthly meals to the underprivileged in the first month of this year. This figure has now skyrocketed to over 1.6m meals a month in September 2019. Feeding India now has 22,500+ volunteers in 95 cities, up from 8,500 volunteers in 54 cities in Jan ’19.

People

In the last few months, we are proud to have undertaken industry leading initiatives including, but not limited to –

Paathshala
Our initiative पाठशाला, began with a simple thought – create possibilities for the children of our delivery partners to invent and discover a better future. We want every one of them to adapt to a mindset of ‘I can’ by enabling them with right skills, securing them with knowledge and empowering them towards a sustainable future. We now have about 100 children across seven cities in India who attend Paathshala every Sunday.

Parental Leave Policy
The first few months of parenting are a challenging time as life changes, financial pressure mounts and sleep departs. Work pressure should not be an additional burden. That is why we give 26 weeks paid leave to all new parents (men and women), so that they can enjoy the new gift of life and love. We also provide a $1000 endowment to new parents to get them off to the best start.

Pradyot (VP Product) and his wife Himanie with their new-born-twins – Abeer (means ‘strong’) and Tahaan (means ‘merciful’). He is able to do his equal part in helping take care of their twins without any pressure of showing up at work, while making sure that his team doesn’t drop any balls at work.

Probation and notice periods
We do not have probation or notice periods at Zomato. We are a company of people connected by relationships, built on trust. No policies will save a failed relationship or change an inevitable outcome of broken trust. By removing these policies our teams focus on working together and finding constructive ways to “work it out” and build mutual respect, rather than fall back on policies.

Launching the Founder Program at Zomato
What does a ‘founder’ mean? According to me, it just means that you have now earned the leadership team’s trust to be able to take decisions on behalf of the company. Simple, but not easy. This year, we announced Gaurav Gupta (aka GG) as a Founder of Zomato. And when that happened, some people asked me – “I like GG, but how did you decide that he should now be called a founder?”

Over time, after speaking to, hearing from, and reading about other founders, I have developed a set of founder ‘values’ that I think are necessary for someone to be a good founder –

Commitment – you realise that as a founder, your commitment is not only to the role you play, but to the vision and mission you share with thousands of people who work with you everyday. You value the opportunity to serve millions of people, and the responsibility that comes with being a founder. You deeply understand the commitment and sacrifices it requires to live up to the responsibility.

Resilience – when we are rejected, the door before us becomes a wall. We can either push against the wall pretending it’s a door and tell ourselves those who rejected us made a mistake. Or cry on the wall, bemoaning our lack of talent. Or try to scale the wall, realising it is unyielding. Or we can walk away and look for another door. A founder finds other doors. Those new doors mean resilience. When you address uncertainty with flexibility, you exhibit resilience.

Culture driver – you are an embodiment and evangelist for the company’s culture and values, both within the company and externally — to employees, customers and business partners.

Sunshine test – you are mindful of the sunshine test – i.e. everything you do should be able to stand public scrutiny.

More hits than misses – founders have strong business and people instincts and make decisions that are mostly right.

People first
– you prioritise your actions along the interests of the community of employees, consumers and business partners.

High standards – you uphold the highest standards for quality of work for yourself and your teams. You stay connected to details, and only have tolerance for well-intended mistakes.

Personal mastery – you have a learning mindset, are intellectually honest, and are open to new ideas and change. You proactively seek feedback, take everything positively, and invest in your own learning and growth.

Eye for talent – you not only have the ability to hire people better than yourself, but also invest in converting people’s capabilities into their abilities. You bet on exceptional talent, irrespective of their age and experience and put these people at the right places where they can add the most amount of value.

Go wide, and deep – founders have a reasonable amount of meaningful input for each aspect of the business; and when required, founders can quickly master any topic that they need to (irrespective of whether they like that topic or not).

Self confidence – founders are fearless and comfortable to respectfully challenge decisions when they disagree. They do not submit to authority and operate from deep-rooted, mission-oriented convictions.

Ambition – you create and communicate a bold direction that inspires extraordinary action. Then you inspire people to execute and beat these goals.

Humility – you look into the mirror and take ownership for negative outcomes, whereas you look out of the window and give credit to those responsible for positive ones.

Prudence – you do more with less and maximise the output of your own and your team’s work, while keeping budgets and costs as low as possible.

Source of energy – a founder is a source of energy for everyone around them. Founders have to energise, and build morale around lots of stakeholders. They know that if they are drained of energy, then other people around them will also feel drained.

Ignorance – founders are blindly ignorant to the challenges around the problems they’re seeking to solve. That means they think outside the box and are undeterred by the failings of those who have tried before them.

This is not an exhaustive list and I can add more points to it, but in my opinion, these are the most important aspects of being in a founder’s mindset. If you zoom out and look at this list, operating with a founder’s mindset is simple, but not easy. It just needs you to detach from yourself, and bring your soul to work. Also, it is not necessary that you are in the founder’s mindset everyday; what’s important is whether the days you are in the founder’s mindset are significantly more than the days you are not.

Creating the Founder Program – we formalised a program where people who have contributed to Zomato deeply; have built/scaled businesses, and have consistently demonstrated a founder’s mindset for a reasonable period of time, are acknowledged for their passion, commitment and perseverance. They should have the ability, and our trust to take decisions on behalf of the company. Every year, we will assess and announce deserving individuals as founders at Zomato. Being a founder gives you the privilege of serving our employees, our customers and our business partners from the highest possible level. It is a privilege to play a cornerstone role in building out our ambitious vision – ‘better food for
more people’.

All growth begins with discomfort. Without it, there is no reason to change. We mature when we finally realise that life is not about achieving absolute peace but about effectively managing tension.

Until next time,
Deepinder

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