Food is older than civilisation. Agrarian cultivation dates back 5,000 years.

The first hunter-

gatherers were foraging for food 2 million years ago. It is now the most important part of
the global economy and is estimated to be about 20% of global GDP.

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Legend has it that a soup salesman named Boulanger opened the first modern restaurant
250 years ago in Paris. Since then, the ‘restaurant’ has been changing our food consumption
behaviour. Last year, for the first time in history, people in the United States spent almost as
much money on restaurants as they did on groceries*.

An artist’s render of Boulanger’s restaurant in Paris – 'The Corner of the Rue Bailleul and the Rue Jean Tison, 1831' is part of the 'Discovery of Paris' exhibition at
The Wallace Collection – Photo: Musee Carnavalet / Roger–Viollet – Source – Telegraph UK

Across the world, restaurants are competing with, and gaining share from home-cooking.
Their ability to do so depends on four parameters. These are the very parameters that
shape your, and my family’s decision on whether to cook at home, or go out, or request for
delivery from a restaurant. We call these four parameters the QAAA - Quality, Accessibility,
Affordability and Assortment. Anywhere in the world, when the restaurant industry improves
its score on these four parameters, there is a shift in user behaviour, away from the kitchen
in their homes, towards restaurants.

Zomato is one of the largest food aggregators in the world. And we play a uniquely
important role in improving the QAAA scores for the restaurant industry. 



Here’s how –

We impact the quality of food that restaurants serve, by keeping them accountable to their
users. We are the de-facto restaurant review and food discovery platform in 19 countries. In
each of these, users check restaurant ratings and reviews on Zomato before they choose a
place to eat out or get delivery from. A high rating on Zomato not only reflects the great
experience a restaurant offers, it also drives further growth through footfalls and higher
* Source – Passport, Euromonitor 2 of 13
spends. In several markets, we now work with restaurants to organise third-party quality
audits, leveraging our brand to endorse and showcase establishments that adhere to higher
quality standards.

We improve accessibility by providing instant information. Our food delivery service is also
constantly looking to deliver better food to more people from more restaurants, faster than
ever before.

We improve affordability by making it a level playing ground for everyone. By democratising

information we make sure users can make informed choices; and in that way we
democratise competition. Given restaurants now operate and grow their business from an
easily accessible and transparent platform, they must innovate and cut costs in order to win.
Zomato Gold also significantly improves affordability for users, while helping restaurants fill
their tables and increase their net profit.

Lastly, humans crave choice. Zomato drives assortment by helping users discover new
tastes and experiences across the world. We showcase ‘what’s new and fresh’ to our users,
and tell them what other users liked. Thus, we encourage restaurants to innovate, and give
them a chance to act on live, objective feedback.

However, in the midst of all this, lies a unique challenge. Nobody is really looking at the
quality of ingredients going into all that’s being served at restaurants (or even at home). The
food industry is so unregulated that we are ingesting pesticides and adulterants, leading to
increased incidents of cancer and other lifestyle diseases. This is not to mention our
consumption of antibiotic-laced meats, which might slowly be setting up our race for a
pandemic with the rise of an imminent superbug.

Hyperpure is the big step we are taking towards creating the future of food. It is a clean
food supply chain for restaurants to buy fresh and high-quality ingredients. Responsible
local farmers and suppliers are signing up on Hyperpure to find responsible restaurateurs
who will buy their produce — without the usual middlemen.

We showcase all such restaurants to our users, thus driving more business to these
restaurants. This creates a virtuous cycle of demand and supply of clean ingredients in a
city.

With a majority of the food consumption shifting to restaurants, we believe that there is a
unique, once-in-a-lifetime opportunity to fundamentally change the future of food — a
future where everybody in the world is eating clean food, no matter where they are, and
what they can afford.

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Everything that we do at Zomato today, equips us uniquely for this future. As the industry
standard for restaurant reviews, and as one of the largest players in delivery and dining out,
we have unparalleled access to user insights, and relationships with restaurateurs. This is
helping us design and scale business models that make this future viable.

You must be thinking, we are a private company, why would we so diligently publish our
annual reports right after the end of the financial year? This doesn’t usually happen.

To answer that question, we have to go back a couple of years. The last two times we
published the annual report, there was a lot of negative noise around us. We wanted to
address the perception–reality gap by sharing more information, because we were doing
well, and the external narrative did not reflect that reality.

The external narrative used to hurt our team’s morale. But this year, we have been attracting
extremely talented people, who are being given the independence and mentorship to
become successful at Zomato. Our people are the happiest ever, and have been working
their hardest ever as well — all a testimony to the incredible progress we have made over
the last year to sow the seeds for building the new world food order that we obsess about.

This time, we are publishing our financial report for three reasons –

1. As a recruitment pitch for readers who might identify with our mission — better food for
more people. We believe we can never have enough great people working with us — we
are looking for diversity of thought, and the zeal to contribute towards a meaningful
mission for the long term.

2. Set a precedent for when we go public and get everybody who matters used to getting
our numbers on our blog, along with a from–the–heart critique on our business. Annual
reports also keep our finance team disciplined. We have one of the best finance teams,
they juggle several balls simultaneously, and drop none.

3. We want to demystify the food–tech ecosystem. While a lot gets written, we are
uniquely positioned to tell you the truth as it happens, from the front row.

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Here are some of the things which stood out for me and the team at Zomato –

1. Peace is a myth. There is only passion.


There are two kinds of people; some who keep seeking peace in their lives, and others
who are so passionate about what they are doing, that doing what they love gives them
peace — the kind which you cannot take away from them. We have an incredible bunch
of passionate people at Zomato, and they are leading our mission from the front. Over
the last year or so, we have put a lot of such people in important roles at Zomato —
irrespective of their age, tenure, or experience. And it is transforming the speed and
quality of our work as a team.

2. Challenge your beliefs


We used to think that food delivery will only be a niche for Tier 1 cities in India. But then,
we decided to test a small town with a mere 150k people. It was mind boggling to see
the latent potential of that town; and that taught us that small towns in India hold
humungous potential, and now, we have set our eyes on launching in 1,000 cities in India.
But this has led to another unfounded belief at Zomato — that food delivery in India will
be bigger than e-commerce. We will prove it right, or prove ourselves wrong.


3. Set audacious goals and beat them


Always think backwards from the problem. Last year, we clocked $68m in revenue; and
in March’18, when we were planning for FY19, we set an audacious goal of $180m — most
of us thought that this was near impossible, but the team worked backwards from there
and comfortably beat the goal.


4. Always think first principles up – precedents/analogies only matter so much


So many times, when something works for other companies in different sectors, we say
we should try implementing that idea as well. We say that without understanding what
made that idea tick for that company, what the underlying context was, why it
succeeded, what’s different about the other sector that cannot be assumed to be true
about ours?

5. Simplicity trumps complexity


Simple products work. When we launched Gold, our only premise was that the product
should be simple for users as well as restaurants; we also said that we will create a T&C
free product. And that’s the single most important reason that Gold has done well.


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Today, Zomato is present in over 10,000 cities across the globe with over 1.4m active
restaurants on our platform. We are the market leaders in restaurant search/discovery in 19
of the 24 countries we are in, and have 70m monthly active users on our platform. We have
5m new user registrations and 11m app installations (Android + iOS), every month.
User engagement has grown very well — we received 16m user reviews and photos in
March’19, compared to 4.5m in March’18.

FY19 Financials

Before you go any further, please note that all financials in this short form annual report are basis management
information systems and unaudited. Also, the financials underneath follow the Indian Accounting Standard
applicable last year (FY18) — which means discount driven promotional cost borne by the company has not been
deducted from revenue. That will happen when we file our audited financials with the RoC.

This year, we hit all of the goals we had set for ourselves out of the park. Our core lines of
business continue to be key contributors, and the new initiatives we’ve launched have
started playing a big role in consolidating and cleaning the food value chain.

Most of the losses ($294m) are on account of the food delivery business in India. We have
had tremendous growth aided by promotional marketing spends to acquire new users and
be the first-to-market in many cities in India. In our experience, being first-to-market gives us
a distinct competitive advantage in the food delivery sector.

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Food delivery in India is creating an entirely new market; 70% of our regular users in
Kolhapur had never tried food delivery in their life (even over a phone call), and Zomato was
the first food delivery experience of their lives. All the marketing investment we made in
FY19 will bear fruit in FY20 and beyond — when we realise the LTV (Lifetime Value) of the
users that we have acquired.

Will we continue to invest in growing the market at the same pace? Yes — as long as there is
long term value to create, we will continue to invest and expand this category.

Realigning our business segments

Three years ago, advertising represented 100% of our revenue and focus. Today, we are
largely a transactions company — 85% of our revenue in March’19 was driven by
transactions.

Growth in transactions challenged our mental models of advertising being a separate line of
business. With increase in commissions, our ads revenue would take a hit, and vice versa. In
that spirit, we realigned our business to the core tenets of the food industry. We stopped
considering advertising revenue as a standalone P&L last year, and we now think of our
business as a combination of three key large pillars — Delivery, Dining Out, and
Sustainability.

We have restated our FY18 financials in this report based on this categorisation for an
apples to apples comparison.

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 Here’s how we fared in each of our three lines of business in FY19 –


Delivery

Delivery revenue for FY19 is $155m compared to $38m in FY18 (4x annual growth). It now
contributes ~75% to our total revenue, up from ~55% in FY18. We now operate the service in
over 200 cities in India, up from 15 cities in FY18; and we made nearly 33m deliveries in
March’19 (~7x y-o-y growth).

Over 100k restaurants are listed in India, generating an annual run-rate GMV of over $1.5bn.
~94% of these deliveries are fulfilled by our ~180k strong active delivery fleet.

Unit economics of the food delivery business have come a long way. We now lose Rs 25 per
delivery, compared to Rs 44 per delivery in March’18. Our last mile cost per delivery is now
Rs 65, compared to Rs 86 in March’18. The key driver metric of unit economics — number of
deliveries per rider per hour has gone up to 1.4 from 0.9 last year.

Important note – some high density neighbourhoods in larger cities are already unit
economics positive. So are, some Tier-3/4 cities.

Zomato Valets waiting to pick up their assignments

at the Bawarchi restaurant in Hyderabad
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Bawarchi typically receives ~2,000 orders a day from Zomato

With Piggybank, our loyalty program for food delivery, users save upto 10% of their total
amount. 2m+ users across 17 cities in India have collectively saved a staggering Rs 260m+

People often tell us that we should open our own branded chain of dark kitchens; so that we
can ‘exploit’ our demand pipeline and improve the margins of our food delivery business.
We react to such statements with — “is that a question, or an answer?” We would rather ask
ourselves the question — “how can we improve the margins of our food delivery business”? 



After thinking of various possibilities and scenarios, we concluded that there are far better
ways to improve the margin profile of our food delivery business than taking the irreversible
step of competing with our own partners (restaurant owners). Some of these initiatives are
already underway and are showing great results. In the long term, we stay committed to not
competing with restaurants — and we will help the best food operators build larger
businesses in every way we can. But at no point will we compromise our neutrality as a
platform.

Here are some interesting nibbles about our India food delivery business –

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Dining out

Zomato Gold has partnered with over 10,000 restaurants globally to offer either 1+1 on
food, or 2+2 on beverages, allowing users to get more bang for their buck each time they
dine out. Zomato Gold will continue to be a program that constantly provides benefits that
are uniquely designed for users who see great value in frequently dining out.

As on 31 March 2019, we have over 1m active subscribers of Zomato Gold globally compared
to 170k active users as on 31 March 2018.

We have recently launched Zomato Gold in 4 new cities outside of India — Jakarta, Manila,
Auckland, and Beirut. The number of subscribers who signed up for Gold in the first 15 days
of launch in all these cities exceeded the number of subscribers we added in Bengaluru in
the first 15 days. This is a testimony to the focus of the Gold team; we keep sharpening the
playbook, and every month, Gold turns out to be more successful than before.

Last year, we also extended the vision of better food for more people to the workplace.
Through a digitised platform, currently active in seven cities, food@work by Zomato serves
125,000 meals a day, partners with 300 caterers and serves 70 companies. We have also
partnered with Tier–1 caterers like Elior and Voila to the cash-and-carry segment providing
better compliance and food safety. Food@work has revolutionised cafeteria management
by introducing more choice as well as an app to simplify the purchase process for
employees.

People are increasingly going online to book tables. Our reservations service is now offered
in eight countries across 16,000+ restaurants. Over 1m diners in India are reserving tables on
Zomato every month.

We organised Zomaland — a food carnival, a first-of-its-kind across the world, in Delhi,

Bengaluru and Pune. The vision is to champion the restaurant industry — and create a
showcase of the best culinary talent available in a city to our users. Zomaland hosted larger-
than-life attractions, street performances, a stellar
line-up of music artists and DJs, along with a
dedicated zone for the little ones. Attended by
120k people collectively, featuring over 200 of the
best restaurants, it was the perfect opportunity for
more people to discover new culinary delights, as
well as enjoy some of their old favourites.

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Sustainability

Hyperpure was launched in August 2018 to supply fresh, clean
ingredients to restaurants. This first-of-its-kind initiative uses an
end-to-end technology-driven platform custom-built to
provide online access to fresh and clean food ingredients to restaurants. In February 2019, a
30,000 sq. ft warehouse, built to serve 4,000 metric ton capacity per month, was launched
in Bengaluru to cater to 2500 restaurants every day. An even larger 40,000 sq. ft
warehouse in Delhi was launched in March’19.

Restaurants buying ingredients through Hyperpure are recognised through a ‘Hyperpure

Inside’ tag on Zomato, allowing users to trust that the food they are eating is made using
fully-traceable, high quality ingredients.

We are also helping farmers develop better crops that are pesticide and chemical-free,
providing them assured demand cycles and better pricing throughout the year. Hyperpure is
solving a number of supply-chain problems and simultaneously building a more ecological
model with plans to integrate rainwater harvesting, and composting for waste.


Feeding India

Better food for more people was a key driver in consolidating Feeding India with Zomato.
Hunger and food-wastage are important problems to solve, and what better way to take
the challenge head-on than with motivated Hunger Heroes that work on innovative and
sustainable programs to ensure all excess food from various restaurants and venues, that
would otherwise go to landfills is donated to people in need. Feeding India has served 20
million meals with its 5 key programs including 8,500+ volunteers working in 71 cities, 50+
community fridges, and 21 food recovery vans.

Together, we can end hunger.

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I am very proud of the entire team at Zomato, and here are some of the key people who
lead our mission of better food for more people –

We also challenged some norms when we started calling Gaurav Gupta (GG), a founder at
Zomato. He’s been incredible, and deserves to make decisions on behalf of Zomato.

The number of women leaders at Zomato has dropped from 45% to 15% over the last two
years. Yes, that bad. We are committed to taking that number up in the near future.

We have also doubled the strength of our engineering team, and are heavily investing in
technology which will drive the future of Zomato.

New investors and partnerships

We welcomed Glade Brook Capital, Shunwei Capital and CDH Investments as our investors in
the past year. Our older investors — Ant Financial, Info Edge, Sequoia, Vy Capital and
Temasek continue to be tremendous partners for us, and we look forward to working with
them closely over the next few years.

We also kickstarted a global partnership with Delivery Hero, where we will build our
respective businesses in collaboration with each other in countries of overlap. The
partnership began with Delivery Hero acquiring our UAE food delivery business to remove
areas of conflict. On top of that, Delivery Hero also invested primary money in Zomato.


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Our new Gurgaon HQ

A couple of months ago, we moved to an economical, and nicer workspace in Gurgaon.

There are so many popular sayings which highlight the importance of food in our lives. ‘You
are what you eat’, ‘Food is thy medicine’, ‘If more of us valued food and cheer and song
above hoarded gold, it would be a merrier world’, or even ‘One cannot think well, love well,
sleep well, if one has not dined well’. Food connects people like nothing else. So much so,
that Jahnvi Kapoor once mentioned on Koffee with Karan that she would rather use Zomato
than Tinder to find a date for herself.

We are committed to bringing the best food to everyone; no matter who they are and what
they can afford. Over the next year, we are going to work towards making each of our users
a brand ambassador for our mission, and will make every effort to provide a delightful
experience to our users every time they think of food.

This is a long journey, and every day, the energy at Zomato makes me feel like we are just
getting started.

Deepinder Goyal

Founder & CEO, Zomato

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