Zomato to shut down intercity ‘Legends’ services with immediate effect; here’s why

Zomato announced on Thursday, August 22, that it has immediately shut down its intercity ‘Legends’ services. Deepinder Goyal, chief executive officer (CEO) of the online food delivery giant, said on microblogging platform ‘X’ ‘’Update on Zomato Legends - after two years of trying, not finding product market fit, we have decided to shut down the service with immediate effect.''

The intercity food delivery service has been discontinued. In July 2024, the company temporarily paused the service and restarted it with a few changes to make orders more profitable. Zomato Legends offered iconic dishes from 10 cities to other parts of the country. Following the shutdown, Zomato's food-delivery service will operate only within cities.

Also Read: Mint Explainer: Zomato’s Paytm deal and its big bet on entertainment

Zomato-Paytm deal

The announcement comes one day after the food delivery app said it would acquire the movie and events ticketing businesses of fintech major Paytm for ₹2,034 crore. Zomato and Paytm parent company One 97 Communications boards had approved the all-cash deal.

As part of the agreement, Paytm's entertainment ticketing business will be transferred to its subsidiaries Orbgen Technologies Pvt Ltd (OTPL) and Wasteland Entertainment Pvt Ltd (WEPL), followed by the sale of a 100 per cent stake in these subsidiaries (which operate the TicketNew and Insider platforms) to Zomato.

Subsequently, Zomato will spin off the new business into a new app called 'District'. Under the deal, Zomato will fully acquire Orbgen Technologies Pvt Ltd (OTPL), which is into movie ticketing, for ₹1,264.6 crore and buy Wasteland Entertainment Pvt Ltd, which is into events ticketing for ₹783.8 crore.

Although food delivery is Zomato's largest business—accounting for 46 per cent of its first-quarter revenue—it has not disclosed the contribution of its inter-city service. Zomato's other segments include its quick commerce division Blinkit and business-facing kitchen supplies platform Hyperpure. It also began operating its ticketing business more than a year ago.

Also Read: Zomato expands horizons with new ’District’ app amid strong earnings
 

Zomato Q1 Results

Zomato’s net profit surged to ₹253 crore in the three months through June, from ₹2 crore a year ago, driven by higher gross order value across its food delivery, quick commerce, and going-out verticals. The quick commerce vertical led the growth with a 130 per cent increase in gross order value, while the food delivery and going-out verticals rose 27 per cent and 106 per cent, respectively. 

Zomato reported consolidated quarterly revenue of ₹4,442 crore for the April-June period, compared to ₹2,597 crore a year earlier. Zomato’s food delivery business experienced a slight contraction in its contribution margin, down to 7.3 per cent from 7.5 per cent in the previous quarter, due to factors like seasonality and external events such as heatwaves and elections. On Thursday, shares of Zomato settled 0.83 per cent lower at ₹257.80 apiece on the BSE.