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Business News/ Companies / News/  Zomato seeking small stakes in food ordering start-ups abroad

Zomato seeking small stakes in food ordering start-ups abroad

Zomato, with presence in 22 countries, is trying to compensate for a late entry into the food ordering business

Pankaj Chaddah and Deepinder Goyal, co-founders of Zomato. Photo: Ramesh Pathania/MintPremium
Pankaj Chaddah and Deepinder Goyal, co-founders of Zomato. Photo: Ramesh Pathania/Mint

New Delhi: Zomato, a Gurgaon-based restaurant search and review website, is looking to buy minority stakes in food- delivery firms outside India as it seeks to expand its online ordering business in overseas markets, said co-founder and CEO Deepinder Goyal.

The Gurgaon-based company, which has presence in 22 countries including the US, the UAE, Australia and Turkey, is trying to compensate for having been a late entrant into the potentially lucrative food-ordering business, which it ventured into only in May.

Zomato Media Pvt. Ltd, which operates the restaurant search site and app, plans to buysmall stakes of 5-10% in early-stage food delivery firms, Goyal said.

“We do not have the team or bandwidth to do last-mile delivery on our own; it’s a completely different business," Goyal said in an interview on Saturday.

“If we make these investments they will be just like the seven acquisitions we made one after the other in a very short span."

Zomato, which has thus far raised $113 million, acquired companies including US-based Urbanspoon and Nextable, Turkey’s Mekanist, Cibando in Italy, Menu Mania in New Zealand, Lunchtime in the Czech Republic and Obedovat in Slovakia, among others, within a six-month period.

The company is in early-stage discussions with food delivery companies in India. Goyal did not disclose further details.

The Indian start-up ecosystem has seen the emergence of several hyperlocal delivery companies including Grab, RoadRunnr, Shadowfax, Opinio and Quickli. RoadRunnr is backed by Sequoia Capital and Nexus Venture Partners and Opinio by TracxnLabs, data analytics firm for start-ups.

Zomato introduced a food-ordering option in India this year, only after well-funded food-tech start-ups, like Foodpanda, TinyOwl and Swiggy, grabbed a significant chunk of the market.

While Zomato is planning to outsource the function of last-mile delivery, Foodpanda, TinyOwl and Swiggy have decided to build the capability in-house to keep a tighter control over the service.

“It’s natural for the food ordering platforms to either buy or partner with the third-party companies. While order booking is a natural expansion for their business—delivery is not," said Abhishek Goyal, co-founder of TracxnLabs.

Zomato will soon launch food delivery services in countries, such as the United Arab Emirates, the Philippines, Australia and South Africa, within the next 30 days.

Founded in 2008 by Goyal and Pankaj Chaddah, Zomato is already getting close to 6,000 orders a day on its platform, with an average order size of 600.

The company is expecting the food-ordering business to contribute significantly to its revenue. It currently charges close to 10% commission on every order.

“Unlike the competition, we do not indulge in discounting and have made zero marketing effort," said Zomato’s Goyal.

Zomato is also getting into table reservations and online ordering, he added.

Zomato’s online ordering services are currently available for around 12,000 restaurant partners, and it expects to take that to over 20,000 by the end of this year. It currently has 70,000 restaurants listed on India platform.

The start-up, valued at around $1 billion, has invested outside India, buying the US-based rival Urbanspoon for about $50 million in January in one of the biggest overseas deals by an Indian start-up.

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Updated: 11 Aug 2015, 07:07 AM IST
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