Zomato’s burn to be under $1M, the revenue close to 60 pc of pre-COVID-19 peaks
The COVID-19 crisis has had a disastrous impact on food tech and food delivery businesses. Zomato, a unicorn founded by IIT alumni – Deepinder Goyal (Batch of 2005) and Pankaj Chaddah (Batch of 2007), announced its performance report on the company’s twelfth anniversary. On many levels, it has been a challenging year for the company.
However, the team stated, “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.”
In July, Zomato estimates its burn to be under $1 million, and revenue at close to 60 percent of pre-COVID-19 peaks of $23 million per month. They expect to make a complete recovery over the next three to six months while also maintaining tight control on costs/profitability.
The report added that Zomato’s FY20 India food delivery GMV grew by 108 percent over FY19. The team had also acquired UberEats’ India vertical in January this year. However, when the rise of COVID-19 cases started in March, Zomato’s food delivery business GMV was down by 80 percent as compared to its peak in February. As the country continues to open up and restrictions ease, they expect a sharp recovery in their order volumes. Moreover, they claim that over the last 18 months their unit economics of our food delivery business has improved consistently. However, The unicorn’s current contribution margin is still affected. While the team didn’t share the numbers in the report, it said it expects contribution margin per order to normalize between Rs 15 to Rs 20 per order.
On the bright side, the B2B business Hyperpure started in 2018, is going strong. The team added that they are now looking to expand it beyond Delhi and Bengaluru. Apart from this, the report outlined the efforts Zomato has been making to help solve the migrant labor and hunger crisis. The COVID-19 crisis has hit the daily wager community badly – leading to widespread hunger across the country. Zomato has launched various campaigns like ‘Feed the Daily Wager’ campaign to raise money and provide food support to daily wagers. It collected Rs 32 crore which was used to distribute over 65 million meals.
