Zomato buys minority stakes in Grab and Pickingo

The move will help Zomato bring restaurants that typically do not deliver food online on Zomato Order

New Delhi: Restaurant search and review website Zomato has bought minority stakes in hyperlocal delivery companies Grab and Pickingo as it looks to strengthen its food ordering business, the company said on Tuesday.

The company has taken high single-digit stakes in Grab and Pickingo, according to Deepinder Goyal, co-founder and chief executive, Zomato. The company did not disclose financial details of the transaction.

In August, Mint reported that Zomato was in talks to buy 5-10% stake in food delivery firms in India and abroad as the company seeks to rapidly expand its presence in online ordering, a business it ventured in May.

Zomato till now was functioning as the technology portal to facilitate the online ordering process but did not have any presence in last-mile delivery.

Zomato has also tied up with logistics firm Delhivery to help in last-mile delivery of food from restaurants.

The move will help Zomato bring restaurants that typically do not deliver food online on Zomato Order. To start with, the services will be available in five cities—NCR, Mumbai, Bengaluru, Hyderabad and Pune. It expects to expand to other cities within a few months.

“We have unequivocally the largest restaurant base in India and we will work closely with Pickingo, Grab, and Delhivery to improve the last-mile delivery experience for users placing orders online on Zomato. So far, restaurants have been delivering on their own, but with this partnership, we will also be able to target restaurants across the country that don’t otherwise deliver," said Goyal.

Zomato is also launching online ordering service in Dubai, Australia and South Africa later this month. The company is in conversation with a couple of hyperlocal logistics firms in other countries too.

“The food-tech space in India is heating up, and we’re excited about this partnership with Zomato. Delivery logistics for restaurants have always been a challenge, and we believe the technology-first approach will help simplify operations for them, as well as enrich customer experiences," said Sahil Barua, co-founder and chief executive, Delhivery.

Grab, run by Grub Services Pvt. Ltd, was founded in 2012 by Jignesh Patel, Nishant Vora and Pratish Sanghvi and is in the market to raise about $10 million in fresh capital, Mint reported in August. According to Sanghvi, the money from Zomato is over and above the funds it is looking to raise and this capital will be used to expand its presence.

Gurgaon-based Pickingo Logixpress Pvt. Ltd was founded in 2014 by Rahul Gill, Piyush Sharma, Rishab Papneja and Siddharth Maheswari.

According to Zomato, last week, it touched a peak of 10,000 orders a day with average ticket size of 600.

Founded in 2008 by Goyal and Pankaj Chaddah, Zomato is already getting close to 6,000 orders.

Zomato introduced a food-ordering option in India this year, only after well-funded food-tech start-ups, such as 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.

Zomato’s online ordering services are currently available for around 12,000 restaurant partners, and it expects to take that to more than 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, is in talks to raise its next round of funds, according to several media reports.

“This investment will not only infuse funds into the company but will also allow us to scale rapidly with Zomato’s online ordering business, while also leveraging Zomato’s strong relationship with restaurants across the country. We have already started working together to deliver from select restaurants in New Delhi, and we look forward to taking this partnership further," Rahul Gill, co-founder and chief executive, Pickingo, said in an email statement.

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