Zomato, online restaurant discovery and food ordering portal, made news for the wrong reasons again when its annual earnings were reported on May 25.
Compared to the year before when Zomato had Rs 97 crore in revenue, its revenue nearly doubled to Rs 185 crore for the financial year 2015-16.
Despite its revenue being doubled, its losses increased more than three times to Rs. 440.96 crore according to a disclosure made by internet holding company Info Edge, which owns 50% of stake in Zomato. No one from Zomato was available for comment on the issue.
Zomato, founded by IIT graduates Deepinder Goyal and Pankaj Chaddah in 2008, has so far raised $225 million from investors, including Rs 483 crore from Info Edge.
From devaluation to layoffs, the online restaurant discovery portal seems to have made news for one PR disaster to another over the last few months.. A few days ago, HSBC’s brokerage arm HSBC Securities and Capital Markets had slashed the valuation of Zomato by half to $500 million.
Zomato had in February said that it operationally broke even in six markets including India. The company, operating in 23 countries, did not share details on what percentage of its business comes from these six markets.
The company was also in the news in 2015, too, for laying off around 300 employees, shutting down regional centres, and unmet financial targets. A month later, it made headlines when an angry email from founder and CEO Deepinder Goyal was leaked to journalists. In the email, Goyal had reprimanded Zomato’s sales staff over missing sales targets.
Food technology startups across the globe are struggling. Indian food tech startups are facing investor flak for offering heavy discounts and free delivery. This has raised a slew of concerns about Zomato’s advertisement-heavy business model, growing competition and businesses abroad.
BW Reporters
This is Meghna Shukla. She lives in Delhi. She is an engineering graduate and currently pursuing MBA from Jaypee Business School. She has a work experience of 2 years in content development. She loves to read and write.
