Zomato, a leading foodtech company, has reportedly requested its restaurant partners to increase their marketing spends on advertisements and share the cost of cancellations occurring on its platform. The move is aimed at improving restaurant partners’ visibility on the Zomato app and increasing their footfall, but it is optional for the restaurant partners to participate.
According to a recent report, Zomato has asked some restaurateurs to allocate at least 5% of their revenue generated on the platform to marketing advertisements to enhance their visibility on the app. The platform has also asked its restaurant partners to maintain a uniform pricing structure across both online and offline platforms, which means slashing their food prices on the app to match their offline charges.
Zomato spokesperson, said, “No policy mandates marketing spends on our app for restaurant partners. We have policies in place for underperforming restaurants that require additional support ( for instance, the ones who mix up the most veg/non-veg orders, have recurring hygiene and quality issues, etc.) on the platform so that the minimum viable experience for customers stays intact. There’s nothing new behind this exercise.”
Deepinder Goyal, Co-founder of Zomato, said, “Internally, that is the goal that by 2030ish we should be about 100ish billion and the way we see the business growing and changing in terms of scale and profit I think we can easily be billion dollars plus in profit in seven-eight years’ time,”
It is worth noting that restaurants typically keep their prices high on Zomato to offset discounts and other charges imposed on them. However, Zomato’s move to request uniform pricing is aimed at creating a level playing field for all the partners.
This move comes after Zomato asked restaurant chains for a 6% increase in commissions to cope with rising losses and the pressure to become profitable. Zomato offers restaurateurs the option of advertising through videos and banner listings using the cost-per-click (CPC) advertising method, which helps them get more visibility at the top of the search page on the mobile app.
Zomato’s expansion plans also include launching handyman services such as plumbing and AC repair through Blinkit in the coming weeks.
According to its Q3 FY23 results, Zomato’s food delivery arm reported an adjusted revenue of INR 1,565 Cr, down by 1% from INR 1,581 Cr in Q2 FY23. Additionally, the count of its monthly transacting users dropped to 17.4 Mn in Q3 FY23 from 17.5 Mn in Q2 FY23.
Despite the decline in revenue and user count, Zomato’s co-founder Deepinder Goyal remains optimistic about the company’s future growth. In a recent announcement, he stated that the company could reach a size of $100 Bn in the next seven to eight years and earn a profit of over $1 Bn.
