For years, Zomato has relied heavily on food delivery, with a recent foray into quick commerce. However, alongside these ventures, the company has quietly nurtured another arm for nearly half a decade: Hyperpure. Now, Zomato is poised to ramp up efforts in this domain, exploring opportunities in food processing and supplying semi-finished perishables.
In Q3 FY24, the revenue of Zomato’s Hyperpure vertical surged by more than 2X YoY, reaching INR 859 Cr. Comparatively, on a quarter-on-quarter basis, Hyperpure’s Q3 revenue showed a 15% increase from INR 745 Cr reported in the quarter ending September 2023.
Launched in April 2019, the B2B restaurant supplies venture is nearing its fifth anniversary, and is now demonstrating much of the potential that CEO Deepinder Goyal and other company leaders have previously highlighted.
In the Q3 FY24 shareholders’ letter, Zomato attributed Hyperpure’s revenue growth to the significant expansion in both its core restaurant supplies business and the emerging quick commerce sector.
“To address a growing need of our restaurant partners, we are now setting up a plant for processing value-added food supplies including, sauces, spreads, pre-cut and semi-finished perishable products, among others,” the company stated in the shareholders’ letter.
Despite receiving occasional acknowledgment from Zomato’s management in each quarterly report since its public listing, there has been little insight into how the company plans to scale Hyperpure and integrate it more substantially into its overall business strategy.
For instance, during its first annual general meeting (AGM) after the public listing, Zomato stated that Hyperpure could emerge as big as or even bigger than its food delivery business.
“We think that this business has the potential of becoming as large or even larger than our food delivery business because the addressable market here is potentially larger than food delivery,” Zomato chairman Kaushik Dutta had said in 2022.
However, there were tangible advancements in the Hyperpure sector indicating Zomato’s commitment to long-term growth in the B2B supplies segment.
In August 2022, Hyperpure completed the acquisition of Blinkit’s warehousing and ancillary services business for INR 61 Cr. Additionally, last year in May, Zomato appointed Rishi Arora as the CEO of the Hyperpure vertical, signaling a renewed emphasis on profitability.
Continue Exploring: Zomato strengthens core team with senior appointments in food delivery and Hyperpure divisions
In November 2023, while announcing the Q2 results, Zomato highlighted that Hyperpure, serving as a strategic back-end for restaurant partners, was experiencing improved success.
Presently, Zomato generates revenue through various streams including ad revenue, onboarding fees, delivery commissions, and per-order commissions from restaurants. Hyperpure, as a vertical, was envisioned as a means to expand this revenue umbrella by attracting more restaurants.
In its Q3 report, Zomato stated that the addition of a processing plant for food supplies holds the potential to increase margins and foster greater engagement with its restaurant partners.
This is significant because the company’s average monthly active food delivery restaurant partner base has increased by 21% over the last four quarters. Transitioning from 209 such partners in Q3 FY23 to 254 monthly active restaurant partners for food delivery as of Q3 FY24, Zomato aims to capitalize on this expanding base to maximize revenue from restaurant partners.
Meanwhile, Zomato experienced a significant surge in its consolidated profit after tax, rising to INR 138 Cr in Q3 FY24 from INR 36 Cr in the preceding September quarter.
Continue Exploring: Zomato reports third consecutive profitable quarter with INR 138 Cr PAT in Q3 FY24
