Economic Downturn(covid19)

Impact On ZOMATO

SUBMITTED BY- GROUP 10-A

Ayushi Asthana Ayushi Agarwal

Avni Gupta Ayushi Gaur
Ayushi Gupta
ABSTRACT-

‘Online food-delivery platforms are expanding choice and convenience, allowing customers
to order from a wide array of restaurants with a single tap of their mobile phone’.
‘ZOMATO’ started in 2008 underneath the name, ‘Foodie bay’ to begin with. Later in 2010, it
had been renamed to ‘Zomato’
In the year 2012, the corporate extended working all around in various countries like the
UAE, Qatar, Sri Lanka, UK, South Africa and Philippines.
It work on aggregator tier of food delivery.
Aggregators build on the traditional model for food delivery, offering access to multiple
restaurants through a single online portal. By logging in to the site or the app, consumers can
quickly compare menus, prices, and reviews from peers. The aggregators collect a fixed
margin of the order, which is paid by the restaurant, and the restaurant handles the actual
delivery.
There is no additional cost for ordering to the consumer.
With their asset-light model, aggregators post earnings before interest, taxes, depreciation,
and amortization (EBITDA) margins of 40 to 50 percent.
The company got impacted by lockdown due to pandemic, increased price of
Petrol as delivery rely on it, and somehow price of food by restaurants too.
Our approach was conducting survey, collecting data from business newspapers, reports and
analyse it.
During this work we have found the ways company got affected and tackled economic
downturn and high prices of related goods.

KEYWORDS- zomato, economic downturn due to covid19, petrol prices, employees, swot
analysis, revenue, profit, customer perception
CONTENTS TABLE-
S.NO TOPIC PAGE
NO.

4
1 Introduction
2
5
Objective
3 5
Methodology
4 Literature review 5-6

5 Questionnaire 6

6 Economic downturn and its impact overview 6-7

7 Customers analysis and choices based on questionnaire 7
8 Swot analysis 8-9
9 Impact of high petrol prices 10
10 Impact on its employees 10-11
11 Findings 11-12
12 Conclusion 12
13 Recommendation
13
14 References
13
INTRODUCTION-
Zomato is accomplice to aggregator of Indian bistro and transport of sustenance leave fire up space
arranged in the year 2008. It had been begun by Pankaj Chaddah and Deepinder Goyal. It gives data,
menu card and reviews from customers of diners, and additionally it has transport of sustenance
choices from bistros that are accessory in picked urban regions. As on 2016, the gave organizations is
conceivable in twenty-four countries. Throughout the years, it has changed over itself into an online
nourishment conveyance stage. Individuals would now be able to arrange nourishment from the
cafés close to them utilizing their application or site. Zomato has conveyance administrators who get
the request from the restaurant and convey it to the location gave by the client.

As covid19 has impacted economy a lot, so do our willingness to dining out or order food online.
Despite being closed restaurants in lockdown you must have hesitated to order food online due to
health consciousness as a precaution against novel corona virus. But food being the love for all age
groups this COVID had controversial impact on our online food delivery king zomato.Some say it had
increased the profit of company and some are having view of decreasing jobs and earning of
employees due to closed restaurant, increased petrol prices, people’s health consciousness.

This article mainly focus on economic factors effecting zomato during FY2020 that includes rising
petrol prices, economic downturn, pricing of food items. It is structured and describe problems,
impact and ways by which company coped up.

As u already know zomato is food delivery king of India in past few years.

This paper is structured as follows. Following this introduction, we outline the approach to the
online surveys, we collected data conducted survey analysed it after which we summarised the
impact of COVID-19 and each of the sub economic factors on its working. Following
this, we summarised individual responses to the pandemic, next we discussed the impacts on the
online food delivery outcomes drawing on the results of it and its cope up methodologies, then we
reached to our findings of its future strategies and some recommendations in last.
OBJECTIVE-

The objective was to study the impact of-

1. economic downturn (pandemic) on major food delivery king of our country
ZOMATO
2. Changing fuel prices on its working
3. Effect on employees
4. Consumer’s view on online food tech.
5. The ways in which it tackled economic downturn.
6. Some findings and future recommendations

METHODOLOGY-
This article consists of economic downturn impact on zomato Financial Analysis and Order Analysis
of Zomato for which data are collected from blogs & website of Zomato. Different journal articles,
white-paper, websites have been referred for SWOT analysis, challenges and different initiatives by
Zomato. The survey is conducted to analyse different aspects of online food delivery system by
customers too.

LITERATURE REVIEW-

Since the startup the company has grown rapidly increasing revenue year by year. The research on
online food ordering and other related topics in the Indian context are limited as the online food
ordering services has entered into Indian market only a few years back. The food industries are
exponentially growing in overseas and after getting name and acclaim outside the India. Few years
back, industry found a new place in Asian continent that is India with having a huge population. Food
tech industry is a well-known in India and has grown up now. They are targeting people with fancy
offers and discounts and less delivery time.

 Various research studies have analyzed the behavior and perception of customers towards
the food tech industry.
 According to Jyotishman Das (2018) empirical study Zomato has acquired the first position
among all food companies because of its wonderful discount offers and coupons, powerful
campaigns and on time delivery nature.
 According to Suryadev Singh Rathore and Mahik Chaudhary (2018) this study food tech
industry is targeting youths mainly they’re focusing on the people like students, working
people whom are vulnerable. They concluded their theory by giving 3 key points. Their
research says that they are influencing people by their honey coated discounts and offers
and reasonable rates another one is ease of accessibility and last one is lesser delivery time.
 According to Leong Wai Hong (2016), the technological improvement has changed the
business model to grow in many trades. Efficient systems can help improve the productivity
and profitability of a restaurant
 According to kiran raj (2020) covid impacted the online delivery services are progressing at a
rapid rate. Even though there has been a slowdown in the market due to customer buying
habit is influenced by fear of spreading COVID-19 and implementation of Lockdown. After
 loosening of lockdown hotel-related industry in growing back, we can see increase in
demand for online food delivery service.

QUESTIONNAIRE-

1. Do you order food online?

Yes
No
2. How many times do you order delivery each week on average?
Less than 3 times
3-5 times
everyday
3. How much you are likely to spend per order?
50-100
100-150
150-200
Above 200
4. Which is your preferred food delivery platform?
Zomato
Swiggy
Whichever gives better discount
5. Please rank the factors which would most influence your decision while ordering
food online.
A) Price of food
B) Quality of food
C) Delivery time
D) Packing
E) Food safety
6. Why zomato sis successful startup in India what is your views.Has covid impacted
your food preferences and ordering food by zomato?

WHAT IS ECONOMIC DOWNRURN DUE TO COVID19

A recession is an extended period of economic contraction. It’s often said that a recession occurs
when the economy experiences two consecutive quarters or six of negative GDP growth. In simple
words we can say the economy isn’t growing, but shrinking. Recession is a period of negative growth
lasting for several months. Shifting market indicator such as rising unemployment, falling GDP, and
lower consumer spending, can signal as economic downturn, or a budding recession.

IMPACT OF DOWNTURN ON ZOMATO

Indian food delivery app Zomato is set to lay off more than 500 employees amid the downturn
caused by the Covid-19 pandemic .As most of restaurants were closed and people were preferring
home food so company got reduction in revenue. Zomato took steps to cut sales and logistical
expenses by reducing its real estate costs. The plan involves implementing permanent working from
home for certain departments with office presence required during meetings, performance reviews
and other tasks.

 Conveyance income for FY19 is $155m contrasted with $38m in FY18 (development). It
presently contributes 75% to their complete income, up from 55% in FY19.They made about
conveyances in March'19(7xdevelopment).

 Over 100k cafés are recorded in India, creating a yearly run-rate GMV of over $1.5bn. 94%
of these conveyances are satisfied by their solid dynamic conveyance.

CUSTOMERS ANALYSIS-

100%
preference
80%
60% using online delivery
100%
40%
20%
0% 50%

preference
0%
. . urban rural

 Preferred method for ordering food using online food delivery service through Food
Delivery Mobile Apps/Food Delivery Website is high in 86.2% compared to that of ordering
food through Phone Calls and Restaurant Website.

 Shows primary reason for ordering food shows 50% of customers order food because of
convenience. So, it's good for food companies to focus on maintaining good quality,
packaging, freshness and taste of food and timely delivery of order.

 75.9% and 24.1% individuals use online food delivery services in urban and rural area.

customer analysis

60%
50%
40%
30%
20%
10%
0%
discount convenience menu quality
selection

customer analysis
SWOT ANALYSIS OF ZOMATO-
1 Strengths

Innovative Approach Zomato has implemented many new ideas in every aspect and can take
advantage of it. In COVID-19 period, the demand for online grocery delivery implemented it in
certain major metro cities. Started contactless dinning encouraged cashless payment and food
takeout services to prevent spreading of COVID-19 and provide confidence in restaurant partners,
customers and delivery personals. Providing Hyperpure service in Bangaluru and Delhi where it
supplies the 1200+ fresh hygienic ingredients and kitchen products to the restaurants in the
preferred period. Providing period leaves for women's, which got huge public support. Global
Presence Zomato is pioneer in online food delivery service/system in many countries, which has
provided a major advantage in market share. Zomato is operating in 24 countries, 10000+ cities with
a team of 5000+. 1.5 million+ listed restaurants provided various number of choices for the
customer. Compared with its competitors it has huge customer base with 100 million+ monthly
active customers. Acquisition Zomato easily established its stronghold in various countries, cities by
acquiring 12 established wellknown startups, which not only reduced the fierce competition but also
increased customer base by acquiring the resources and customer of acquired companies. Simple
and User Friendly Interface the acquired startup belonging to technology helps in increased focus to
the IT department. As the number of customers, listed restaurants, menu cards and reviews increase
complexity increases and managing the system will be difficult. Zomato’s design system Sushi, which
is user centric, inclusive, simple and consistent. Increased user familiarity.

2 Weakness

Security The Company should maintain the security and integrity of the application to have the
confidence of the customer. The Zomato uses the email address, phone number and location of the
customer for providing better accessibility and service. The security of application was breached in
2015 and 2017 with loss of user information. The IT team is working mainly on this aspect to provide
better security. Upgradation on Menu Cards and Growth at Rapid Rate The Company is growing at a
rapid rate with a huge number of listed restaurants. Zomato app consists of outdated menu cards,
partial information, low-quality images about dishes, restaurants and other details that need to be
updated. The menu card and restaurant details of unlisted and blacklisted restaurants need to be
removed from the app. Removing unwanted contents will decrease the burden on system/app and
decrease the complexity of the system. Finding and up gradation of Menu cards, removing details
related to blacklisted restaurants and its dishes becomes difficult rapid growth in company.

3 Opportunities

Expand to Rural Areas & Countries the Zomato is expanding in the rapid rate, but it can only create
influence only in certain countries. It has low influence in European countries. It can expand to other
countries and expand its influence and customer base. Zomato along with other online food delivery
systems is focusing on metro, city, semi urban and urban regions, since most of the orders and listed
restaurants belong to these areas. The food delivery service is not provided in rural regions because
of logistical issues, distance from the restaurant to the customer and unlisted restaurant in rural
areas. The focus on rural areas will open completely new markets to online food delivery
system/services. Increasing Number of smartphone Users the online food service of Zomato is
provided by website and application. The individuals below the age of 35 and students are the main
customer base. The increase in penetration of internet increases the customer base. The importance
needs to be provided to people not using the particular application to order, which will increase
customer base.

4 Threats

Competitors the market of online food delivery service/system remains unexplored and different
companies are trying to gain the loyalty or trust of customer. Due to which there is an intense
competition between competitors like Food Panda, Yelp, Beer Cafe, Eat, Swiggy, Dominos, Pizza Hut,
Scootsy, Dunzo, etc. Aggressive market strategies are created which is making companies to set low
profit margin or loss. Google Services Zomato not only provides services such as food delivery and
recommendations, navigation, dine out, menu cards, which are also provided by Google services.
Google services provide details of different restaurants according to your location. Google services
redirect customer/user to restaurants website or any online food delivery service/system where
similar services are provided. Business Models Being the pioneer in the online food delivery service
number of market strategies, business models were created by Zomato. Zomato's competitors are
easily replicating strategies, business models used by Zomato and giving the intense competition.

Fig showing revenue data of zomato

IMPACT OF HIGH PETROL PRICE-
On an average, a Zomato delivery partner travels anywhere between 100-120 km in a day,
consuming 60-80 litres of fuel in a typical month, according to the company

 With rising fuel prices pinching the pockets of its delivery partners, foodtech
platform Zomato has put in place a revised pay structure for them which will now include a
component of distance pay.
 It has also introduced a long-distance return pay which means for every long-distance order
completed, its delivery partner would either receive another order within 15 minutes that
would bring them back closer to their base working location or they will get an additional
pay-out for travelling the extra distance.
 The company has already implemented the new structure in about 40 cities and will be
rolling it out in other cities in the coming week.
 Fuel prices have been on the rise in India for over several days with petrol prices crossing ₹
100 per litre in Rajasthan.

IMPACT ON EMPLOYEES-
 During first wave in pandemic FY20 ZOMATO reduced 13% or about 520 jobs due to
extended lockdown and restaurant shutting shop.
 It’s multiple aspects have changed dramatically
 At that time employees were 4000 in number when ZOMATO decided to pay half salary for
next 6 months.
 75% employees volunteered for salary cut during initial COVID crisis.
 Their health insurance remained continued.
  In spite of cutting workers its CEO said he will generate job 10 times more.
 At that time Company was more focussing on automation and AI.
 App. 1200 jobs were there but in non-delivery section.
 But after COVID second wave this online food delivery company came back to recovery.
 This was the effect of pandemic that people start preferring online safe food delivery than
dining out in restaurant.
 In FY21 ZOMATO has recovered from COVID-19 with GMV increasing from 20% of pre COVID
level in march April to 125% of pre COVID level in December 2020
 After this it announced COVID-19 had positively impacted health of business, and
It re-instated original salary of its employees.
 Employees are given salary according to amount of work they do.
 Overall their profitability increased due to pandemic situation in whole world.
 Unit financial matters of the nourishment conveyance business have progressed
significantly. Employees lose Rs 25 for each conveyance, contrasted with Rs 44 for every
conveyance in March'18.their last mile cost per conveyance is currently Rs 65, contrasted
with Rs 86 in March'18. The key driver metric of unit financial matters — number of
conveyances per rider every hour has gone up to 1.4 from 0.9 a year ago.

Price
transpare More
Accuracy
ncy productivity

Custome Restauran
rs Benefits ts
Convenience
Lesser
running
cost
No long
Earn queues
Easier to
loyalty retain
points customer

FINDINGS-

In Mid COVID-19 to decrease the loss incurred itself and its delivery, restaurant partners due to the
following lockdown rules. In Lockdown period, 60%-70% of orders were reduced. Zomato
understood the need of delivery of grocery, and it started online delivery of grocery in 80+ cities. It
also partnered with Grofers for delivery. Grocery delivery not only reduced the financial burden on
company but also competed with JioMart and BigBasket .

For Customers: To remove the fear of getting transmitted with virus contactless delivery, where
delivery personal drop delivery at a particular location, or in front of a door started. Face masks
were distributed to customers and its partners Completely disabled cash on delivery and
encouraged digital payment to reduce contact. Started grocery delivery to deliver groceries.  The
subscription plan Zomato Gold was extended .

For Delivery Partners: Donated money through Rider Relief Fund to the delivery personals since
their earnings dropped with decrease in online food delivery Partner Insurance Plan helped delivery
personals by covering hospitalization charges, and lost earning if they infected by COVID-19 for
Restaurant Partners & Workers: The Zomato Gold Support Fund helped the restaurant personal
where annual subscription plan money was provided to them.  Takeaway not only allowed
customers to directly collect food from restaurants but also zero commissioned. Which reduced
burden of customer and restaurants.

Moreover it has decided to launch its IPO in June 2020.overeall Company got good revenue during
second wave of covid19.

CONCLUSION-
Even though there has been a slowdown in the market due to customer buying habit is influenced
by fear of spreading COVID-19 and implementation of Lockdown. After loosening of lockdown hotel-
related industry in growing back, we can see increase in demand for online food delivery service.
Zomato has taken lot of steps to come out of the crisis of COVID-19 and initiatives to help its
partners. From the conducted survey decrease in the ordering can be seen, but as the time
progresses, it is expected to grow back. From the survey, it can be noticed that customers are not
loyal to one service provider. The zomato should expand itself to rural areas since lot of customers
are available. The quality of food and logistical issues should be solved so food can be delivered on
time.
RECOMMENDATION-
 The Zomato/online food delivery service does not have a strong base in the rural region
because of a lack of delivery service and restaurant partners.
 Zomato can target college students in these areas since students spend more time in social
media, in the period of developing buying/eating habits, limited mobility.
 The Zomato has a separate review system for online food delivery service and dine out but
it should also provide a separate review system for delivery service since they influence one
another. The actions can be easily implemented in the respective area.
 Providing offers will increase the financial burden on company and not help in gaining
customer loyalty, instead removing delivery charges can gain trust and more popularity with
customers.

REFERENCES-
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Retrieved on January 10, 2021 from https://www.zomato.com/blog/mid-covid-
report
2. Goyal, D. (2020). Food Delivery India – Mid-COVID Report 2 September 2020. In
Zomato Pvt Ltd. (Issue September). Retrieved on January 11, 2021 from
https://www.zomato.com/blog/mid-covidreport-2
3. Bhasin, H. (2018). SWOT analysis of Zomato – Zomato SWOT. Marketing91.
Retrieved on December 28, 2020 from https://www.marketing91.com/swot-
analysis-of-zomato/
4. All Answers Ltd. (2018). SWOT Analysis of Zomato | Business Teacher. Retrieved on
January 20, 2021 from https://businessteacher.org/swot/zomato-swot.php
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Perception about Online Food Ordering Services in Amravati City. International
Journal of Latest Technology in Engineering, Management & Applied Science
(IJLTEMAS), 8(4), 114–116.
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delivery apps
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International Journal of Case Studies in Business, IT and Education

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