Zomato is an Indian restaurant aggregator and food deliverystart-up founded by Deepinder Goyal and Pankaj Chaddah in 2008. Zomato provides information, menus and user-reviews of restaurants as well as food delivery options from partner restaurants in select cities. Zomato also began grocery delivery amid the COVID-19 outbreak., the service is available in 24 countries and in more than 10,000 cities.
History
Zomato was founded as Foodiebay in 2008, and was renamed Zomato in 2010. In 2011, Zomato expanded across India to Delhi NCR, Mumbai, Bangalore, Chennai, Pune and Kolkata. In 2012, the company expanded operations internationally in several countries, including the United Arab Emirates, Sri Lanka, Qatar, the United Kingdom, the Philippines, and South Africa. In 2013, Zomato was launched in New Zealand, Turkey, Brazil and Indonesia, with its website and apps available in Turkish, Brazilian Portuguese, Indonesian and English languages. In April 2014, Zomato launched its services in Portugal, which was followed by launches in Canada, Lebanon and Ireland in 2015. In 2019, Zomato acquired Seattle-based food portal Urbanspoon, which led to the firm's entry into the United States and Australia. This U.S.-expansion brought Zomato into direct competition with similar models such as Yelp and Foursquare. With the introduction of.xxx domains in 2011, Zomato also launched zomato.xxx, a site dedicated to food porn. In May 2012, it launched a print version of the website named "Citibank Zomato Restaurant Guide," in collaboration with Citibank, but it has since been discontinued. Zomato had also made a name for itself for its prowess in digital marketing. In February 2017, Zomato announced plans to launch Zomato Infrastructure services, a service to help restaurants expand their presence without incurring any fixed costs. In September 2017, Zomato claimed the company had "turned profitable" in all 24 countries where it operated and introduced a "zero-commission model" for partner restaurants. Towards the end of 2017, Zomato stopped accepting updates from its active users by not utilizing moderators to verify and make updates. Users of the app reported issues with new features to pay for orders. Zomato narrowed down its losses by 34% to ₹389 crore for the financial year 2016–17, from ₹590.1 crore in the previous year 2015–16. In September 2019, Zomato fired almost 10% of its workforce tending to back-end activities like customer service, merchant and delivery partner support functions. In April 2020, due to rising demand for online groceries amid the COVID-19 pandemic, Zomato launched its grocery delivery services named Zomato Market in 80+ cities across India. In April 2020, to get ready for a post-lockdown world. Through this initiative the company aims to minimise customer contact with anything that someone else might have touched, by eliminating use of high-touch elements such as the menu, ordering and bill payments through bar codes or the app while the staff will wear masks. In May 2020, Zomato further laid off 520 employees due to the COVID-19 pandemic.
Investments
Between 2010–13, Zomato raised approximately 16.7 million from Info Edge India, giving Info Edge India a 57.9% stake in Zomato. In November 2013, it raised an additional 37 million from Sequoia Capital and Info Edge India. In November 2014, Zomato completed another round of funding of 60 million at a post-money valuation of ~US$660 million. This round of funding was being led jointly by Info Edge India and Vy Capital, with participation from Sequoia Capital. While in April 2015, Info Edge India, Vy Capital and Sequoia Capital led another round of funding for 50 million. This was followed by another 60 million funding led by Temasek, a Singapore government-owned investment company, along with Vy Capital in September. In October 2018, Zomato raised $210 million from Alibaba's payment affiliate Ant Financial. Ant Financial received an ownership stake of over 10% of the company as part of the round, which valued Zomato at around $2 billion. Zomato had also raised an additional $150 million also from Ant Financial earlier in 2018.
Acquisitions
Zomato has acquired 12 startups globally. In July 2014, Zomato made its first acquisition by buying Menu-mania for an undisclosed sum. The company pursued other acquisitions including lunchtime.cz and obedovat.sk for a combined 3.25 million. In September 2014, Zomato acquired Poland-based restaurant search service Gastronauci for an undisclosed sum. In December 2014, it acquired Italian restaurant search service Cibando. Zomato also acquired Seattle-based food portal, Urbanspoon, for an estimated $60 million in 2015. Other acquisitions of 2015 include Mekanist in an all-cash deal, the Delhi-based startup MapleGraph that built MaplePOS, and NexTable, a US-based table reservation and restaurant management platform. In 2016, the company acquired Sparse Labs, a logistics technology startup, and the food delivery startup, Runnr, in 2017. In September 2018, Zomato acquired Bengaluru-based food e-marketplace, TongueStun Food, for about $18 million in a cash and stock deal. In December 2018, Zomato acquired Lucknow-based startup, TechEagle Innovations, that works exclusively on drones, for an undisclosed amount. Zomato claimed that the acquisition will help pave the way towards drone-based food delivery in India, building technology aimed at a hub-to-hub delivery network. On 21st January, 2020, Zomato acquired its rival Uber Eats' business in India in an all stock deal, giving Uber Eats 10% of the combined business.
Security breaches
On 4 June 2015, an Indian security researcher hacked the Zomato website and gained access to information about 62.5 million users. Using the vulnerability, he was able to access personal data of users such as telephone numbers, email addresses and Instagram private photos using their Instagram access token. Zomato fixed the issue within 48 hours of it becoming apparent. On 15 October 2015, Zomato changed business strategies from a Full-Stack market to an Enterprise market. This led Zomato to reduce its workforce by 10%, or around 300 people. On 18 May 2017, a security blog called Hackread claimed over 17 million accounts had been breached. "The database includes emails and password hashes of Zomato users, while the price was set for the whole package is $1,001.43. The vendor also shared a trove of sample data to prove it is legit", the Hackread's post said. Hackread claimed details of 17 million users had meanwhile been sold on the Dark Web. Zomato confirmed that names, email addresses and encrypted passwords were taken from its database. The company reassured affected customers that no payment information or credit card details were stolen. Zomato said the security measures it uses to ensure the stolen passwords cannot be converted back into normal text, but it still urged users who use the same password on other services to change them. It also logged the affected users out of the app and reset their passwords. "So far, it looks like an internal security breach - some employee's development account got compromised", the company said in a blog post but later, when Zomato contacted the hacker, they discovered a loophole in their security. The hacker removed the stolen content from Dark Web asking for a healthy bug bounty programme.
Controversies
"Food has no religion" tweet
In July 2019, Zomato received a Hindu customer's complaint that he was assigned a non-Hindu delivery boy for his food order in Jabalpur and had asked Zomato to provide a Hindu delivery boy. The customer alleged that Zomato had refused to change the rider after which he asked to cancel the order. The customer then posted this incident on Twitter, after which Zomato responded to the message stating: "Food doesn't have a religion. It is a religion." The tweet received mixed responses, and some Twitter users further criticised the company for using Jain food and halal tags on food items. Zomato then issued a clarification that these tags were placed by restaurant owners and not by Zomato.
Logout campaign
On 17 August 2019, more than 1,200 restaurants logged off from Zomato because of their offer of discount programmes at dine-in restaurants. In Pune alone, more than 450 restaurants stopped serving to Zomato Gold because of aggressive discounts and loss of business. Its premium subscription-based dining out service Zomato Gold had 6,500 restaurants partners and a total of 1.1 million subscribers in India as of August 2019. As part of the campaign, around 2,500 restaurants logged out from the Zomato Gold service. After Zomato made some changes, National Restaurant Association of India still refused to accept the modified version of the plan, saying that the corrective measures would not resolve the key issue of deep discounts. However, Zomato founder Goyal admitted mistake, became ready to rectify it and called for sanity and truce. He also urged restaurants to stop #Logout campaign.
