Zomato surviving covid -19 situations

Zomato was founded as Foodiebay in 2008, and was renamed Zomato on 18

January 2010 as Zomato Media Pvt. Ltd. In 2011, it expanded across India to Delhi
NCR, Mumbai, Bangalore, Chennai, Pune , Ahmedabad and Hyderabad. In 2012, it
expanded operations internationally in several countries, including the United
Arab Emirates, Sri Lanka] Qatar] the United Kingdom,[ the Philippines and South
Africa. In 2013, expanded to in New Zealand ,Turkey, Brazil and Indonesia, with
website and apps available in Turkish, Portuguese, Indonesian and English
languages] In April 2014, it launched in Portugal, which was followed by launches
in Canada, Lebanon and Ireland in 2015.
In 2015, the firm 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 domains in 2011, Zomato also launched zomato., 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.
In February 2017, the firm 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 it 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.[citation
needed]
Zomato reduced its losses by 34% to ₹389 crore[clarification needed] for the
financial year 2016–17, from ₹590.1 crore[clarification needed] in the previous
year 2015–16.] Zomato became a unicorn in February 2018.
In September 2019, the firm fired almost 10% of its workforce (540 people)
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, the firm launched its grocery delivery services
named Zomato Market in 80+ cities across India
In April 2020, Zomato introduced contactless dining to get ready for a post-
lockdown world, by eliminating the 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.[ Despite the fact that demand for services delivering food from
restaurants and takeaways surged, Zomato's given reasoning for needing cuts is
that coronavirus will be followed by an economic downturn, which could hit
orders
In August 2020, Zomato drew praise for introducing a period leave policy,
allowing female employees to take up to 10 days time off per year if they are
unable to work due to menstrual cycle health effects. The policy applies to
transgender employees as well.
On 23 July 2021, Zomato went public, opening its Initial public offering at a price
band of Rs 72-76 per share.
INVESTMENTS
Between 2010 and 2013, Zomato raised approximately US$16.7 million from Info
Edge India, giving Info Edge India a 57.9% stake in Zomato.[40] In November 2013,
it raised an additional US$37 million from Sequoia Capital and Info Edge India.
In November 2014, Zomato completed another round of funding of US$60 million
at a post-money valuation of ~US$660 million.[42] 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 US$50 million. This was followed by another US$60 million
funding led by Temasek, a Singapore government-owned investment company,
along with Vy Capital in September.
In October 2018, it raised $210 million from Alibaba's payment affiliate Ant
Financia, which 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 from Ant Financial earlier in 2018.
In September 2020, Zomato raised $62 million from Temasek, after previously
committed capitol from Ant Financial never came through.
In October 2020, as part of a Series J round of funding, Zomato raised $52 million
from Kora, a US-based Investment firm.
In February 2021, Zomato raised US$250 million from five investors, including
Tiger Global Management, at a valuation of US$5.4 billion.

Acquisition

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 US$3.25 million.
In September 2014, it acquired Poland-based restaurant search service
Gastronauci for an undisclosed
In December 2014, it acquired Italian restaurant search service Cibando.
It 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 (renamed Zomato Base),]and
NexTable, a US-based table reservation and restaurant management platform.
[61]
In 2016, it acquired Sparse Labs, a logistics technology startup,[ and the food
delivery startup, Runnr, in 2017 (renamed from Roadrunnr when it acquired
TinyOwl in 2016
In September 2018, it acquired Bengaluru-based food e-marketplace, TongueStun
Food, for about $18 million in a cash and stock deal.
In December 2018, it acquired a 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 21 January 2020, Zomato acquired its rival Uber Eats' business in India in an all
stock deal, giving Uber Eats 10% of the combined business.
On 29 June 2021, the firm signed a deal with Grofers to invest nearly $120 Million
in the online grocery firm by acquiring 9.3% stakes of the company.[

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 the 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[clarification needed]. This led Zomato to reduce its workforce
by 10%, or around 300 people
On 18 May 2017, a security blog called Hack read 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
(Bitcoins 0.5587). The vendor also shared a trove of sample data to prove it is
legit", the Hackread's post said. Hacked 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[citation needed].
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 (human)
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.
COVID 19 LOCKDOWN IN INDIA
On the evening of 24 March 2020, the Government of India ordered a nationwide
lockdown for 21 days, limiting movement of the entire 1.38 billion (138 crore)
population of India as a preventive measure against the COVID-19 pandemic in
India. It was ordered after a 14-hour voluntary public curfew on 22 March,
followed by enforcement of a series of regulations in the countries' COVID-19
affected regions. The lockdown was placed when the number of confirmed
positive coronavirus cases in India was approximately 500.[ Upon its
announcement, a mass movement people across the country was described as
the largest since the partition of India in 1947.] Observers stated that the
lockdown had slowed the growth rate of the pandemic by 6 April to a rate of
doubling every six days, and by 18 April, to a rate of doubling every eight days.As
the end of the first lockdown period approached, state governments and other
advisory committees recommended extending the lockdown.] The governments
of Odisha and Punjab extended the state lockdowns to 1 May.] Maharashtra,
Karnataka, West Bengal and Telangana followed suit.[ On 14 April, Prime minister
Narendra Modi extended the nationwide lockdown until 3 May, on written
recommendation of governors and lieutenant governors of all the states, with a
conditional relaxations after 20 April for the regions where the spread had been
contained or was minimal.
Zomato IPO | Lockdown likely to impact business, losses may continue:
Company
Zomato, on April 28, filed the much-awaited Draft Red Herring Prospectus (DRHP)
with the Securities and Exchange Board of India (SEBI). The company will offer
equity shares of up to Rs 8,250 crore (nearly $1.1 billion). Of this, Rs 7,500 crore
will be a fresh issue, while Rs 750 crore will be an offer for sale for its existing
investor Info Edge.
The online food delivery segment has seen significant growth in the last few years
with Zomato and Swiggy competing head-on to grab the biggest pie of the market
share.
In the DRHP, under a section titled ‘Risk Factors’, Zomato said that it anticipated
an increase in expenses and the losses may continue.
Zomato incurred a restated loss of Rs 1,069.16 million, Rs 10,102.33 million, Rs
23,856.01 million and Rs 6,821.99 million in 2018, 2019 and 2020, and in the nine
months ended December 31, 2020, respectively.
“We expect our costs to increase over time and our losses will continue given
significant investments expected towards growing our business,” it said.
The firm plans to use “substantial financial and other resources” on advertising,
sales promotion, developing the platform, developing or acquiring new platform
features and services, expanding into new markets in India, and expanding our
delivery partner network.
Detailing the impact of the COVID-19 pandemic, Zomato said that the imposition
of lockdown-like curbs might impact its business further.

"While our food delivery business has recovered since lockdowns eased in India,
our dining-out business is still recovering. In addition, further government actions
and lockdowns to contain the spread of COVID-19 could adversely impact us," it
said in the DRHP.

If we are unable to generate adequate revenue growth and manage our expenses
and cash flows, we may continue to incur significant losses in the future, it added.
The company also said that the public's hesitant approach towards restaurants
may also impact the cash flow and revenue. "Even if a virus or other disease does
not spread significantly and such measures are not implemented, the perceived
risk of infection or significant health risk may adversely affect our business," it
added.

The food delivery aggregator said that it may also experience a decline in revenue
growth rate due to factors such as slowing demand for Zomato, insufficient
growth in restaurant partners and customers, increasing competition, increasing
regulatory costs.

Zomato's FY20 revenue jumped over two-fold to $394 million (around Rs 2,960
crore) from the previous fiscal, while its Earnings Before Interest, Taxes,
Depreciation, and Amortization (EBITDA) loss was around Rs 2,200 crore.

In February, Zomato raised $250 million (over Rs 1,800 crore) in funding from
Tiger Global, Kora and others, valuing the online food ordering platform at $5.4
billion.

Mid COVID-19 Performance Report

We have been publishing our annual report in the first week of April for the last three years.
Typically, our annual reports outline our performance during the last year, and some narrative
on what we think the future holds in store for us. This year, when the pandemic hit the world,
our past became irrelevant, and the future uncertain. We decided to delay our annual report
by a few months (some perks of being a private company).
Right now, in the middle of July, as our future seems more predictable, we
decided to publish this performance report for the last five quarters combined.
This performance report consists of three parts –
1 – Financial performance (FY19 vs FY20, Q1 FY21)
2 – Business segment performance (2a – India Food Delivery, 2b – Dining Out, 2c –
B2B Supplies)
3 – Social Responsibility (Feeding Foundation)
1 – Financials (FY19 vs FY20, Q1 FY21)
Our revenue in FY20 grew by 105% as compared to FY19 while the costs grew by
only 47% in the corresponding period. Moving our business towards profitability
was a core focus for us in FY20 and we made significant progress along that
journey.

In the last few quarters, as is evident from the charts above, we fast tracked our
efforts towards making our business profitable and drive efficiency into our
spends. While COVID-19 has impacted the size of our business, it has accelerated
our journey to profitability. In terms of the size of the business, COVID-19 has set
us back by a year or so – but a year is only a small blip when you are building a
company for the next 100 years.

Having said that, COVID-19 has positively impacted the health of our business –
we seem to have gained 2-3 years along this vector. In July 2020, we estimate our
monthly burn rate to land under $1m, while our revenue should land at ~60% of
pre-COVID peaks ($23m per month). We expect to make a complete recovery in
the coming 3-6 months while continuing to maintain tight control on
costs/profitability.

Now, let’s dive deep into our three business segments –

2a – India Food Delivery

FY20 was a defining year for food delivery in India. While FY19 saw hyper-
competition between four well-funded food delivery players, FY20 ended with a
two player market structure. Zomato’s FY20 India Food Delivery GMV grew by
108% over FY19.
We acquired Uber Eats India business in January 2020 which helped propel us to
market leadership in this hotly contested space. The transition of users and
merchants from Uber Eats India to Zomato was swift, and so well coordinated by
both the teams that we were able to transfer and retain 97% of the combined
GMV on the Zomato app.

Right after the rise of COVID-19 cases in India towards the end of March, our food
delivery GMV hit its lowest point in two years – GMV was 80% down in the last
week of March 2020, compared to our peak pre-COVID-19 week (in mid
February).
As of now, our food delivery GMV has recovered to 60% of pre-COVID levels. We
have taken a number of important steps to ensure safety of our food delivery
customers, which has been a significant driver of the rebound in our business so
far.
Most of the remaining delta in demand is due to young professionals in large
cities migrating to their parents’ homes (often in small town India) where home
cooked food is the norm, especially during a pandemic.
As offices start opening up, these professionals are now starting to move back to
the larger cities. We expect sharp recovery in our order volumes as lockdowns
continue to ease and the operating environment continues to improve.
The unit economics of our food delivery business has improved consistently over
the last 18 months. In Q1 FY20, we used to make a contribution margin of – ₹47
per order; in Q1 FY21, we made a contribution margin of +₹27 per order.

We do not believe that the current contribution margin in our business is

sustainable in the long term. Over time, we expect contribution margin per order
to normalise between +₹15-20 per order. Net EBITDA for this business segment is
expected to improve, as the growth in order volume hereon should offset any
corresponding drop in contribution margin.

2b – Dining Out
Our dining out business grew steadily in spite of headwinds (e.g. logout campaign
against Zomato Gold by restaurants in India) with significant gains in EBITDA
margins across India and our international markets in FY20.

This business is fast moving towards being a transaction-led business where the
focus is to close-the-loop with restaurants by encouraging users to pay their
eating-out bills through the Zomato app.

Last month, we rebranded Zomato Gold to Zomato Pro with an enhanced value
proposition for both users and restaurants (more details here). Deals on Zomato
Pro are now only available if a user pays their restaurant bill through the Zomato
app.

Our dining out business segment is the hardest hit as restaurants remain shut for
dining-out – leading to almost negligible revenue across advertising and Zomato
Pro. The recovery here is going to be slow. Users will be concerned about social
distancing and hygiene and restaurants will need to reorganise themselves to be
able to build trust with users on these fronts.

To help our industry, we have launched ‘Contactless Dining’ in India and eight
more countries. With Contactless Dining, users can enjoy visiting a restaurant
without touching any menu cards or interacting with the restaurant staff.

2c – B2B Supplies (Hyperpure)

Hyperpure is growing strongly, and we believe that we have early indications of a

strong product market fit. Until now, we have only been serving Delhi and
Bangalore with Hyperpure. We have covered a lot of ground in the last two years,
and we are now expanding rapidly into new cities.

3 – Social Responsibility (Feeding Foundation)

Zomato Feeding Foundation aims to be the largest and most impactful not-for-
profit aimed at solving hunger in the developing world.

The COVID-19 crisis hit the daily wager community badly – leading to widespread
hunger across the country. Springing into action, Feeding India (the India chapter
of Zomato Feeding Foundation) launched ‘Feed the Daily Wager’ campaign to
raise money and provide food support to daily wagers who lost their livelihood
during the COVID-19 lockdown. Feed the Daily Wager collected ₹32 Cr (~$4.2m)
which was used to distribute over 65 million meals (in the form of ration kits, see
photo below) to the daily wager community.

At Zomato, we deeply appreciate the trust our countrymen put in us to make us

one of the largest and most impactful social campaigns in the country during the
COVID-19 crisis. We are deeply grateful to the thousands of volunteers and
partners who helped us (help them) make thousands of tonnes of food reach the
needy.
Working with the Feeding Foundation team will make you realise (if you don’t
already) that the world is full of nice people who want to help make it a better
place. We sometimes feel that the world is going to hell, but there’s plenty of
good out there – it just doesn’t get seen as much.
We aim to grow our Feeding Foundation community multiple folds going forward.
Solving hunger is a massive problem, but a solvable one if all of us just started
caring about it enough.
Team updates
In order to quickly reduce our costs during the initial days of the COVID-19 crisis,
we had requested our staff to volunteer for salary cuts. 75% of our employees
volunteered for partial salary cuts resulting in a total reduction of 14% in our
payroll costs. As of today, all the original salaries have been re-instated, and our
net losses of under $1m for July reflect the increased payroll cost already.
We strongly believe that a founder in an organisation is not a title, but only a
mindset. We announced Mohit Gupta (MG, he leads our food delivery business,
among other things) as a founder at Zomato. While the foundation of Zomato was
built before MG joined us, he has been instrumental in significantly strengthening
it over the last two years. What he and his team have built is a very large part of
our business, and our DNA today.
When I introduced the Founders Program a little over a year ago (refer to our
annual report for FY19), I outlined a few qualities that founders must exhibit.
These qualities include trustworthiness, commitment and resilience among other
things. MG checks all these boxes and more. He never shies away from telling me,
or anyone, the truth.
MG is very committed towards building Zomato for the long term, and has
extremely high levels of ownership. His resilience to continue building and aim for
victory even during the toughest times, is something a number of people at
Zomato lean on as we continue to build Zomato.
The way the coronavirus suddenly hit the entire world made me realise that our
world runs on an assumption of certainty, while there is none. Nobody, no matter
how big or small, poor or rich, has any control over many important aspects of the
way this world works. The world will change when it has to. Tough times will
happen when they have to. The onl
Being tough means that you handle pressure cooker situations calmly, and
continue to find ways to get out of them. The path to building a company is non
linear – you need to make enough of the right calls to make sure that you catch
the tailwind, and not make so many bad calls that you get caught in the
headwind.
That’s all for now. We wish everyone the best of health, and hope that the world
gets over the pandemic soon