How Zomato Compares With Global Peers
Zomato Ltd. will be the first delivery platform in India to go public as it eyes a valuation of up to $8 billion in a public offering lined up this week.
The restaurant discovery and ordering portal has survived brutal competition in India, emerging as a dominant player along with Swiggy in a market that's now a duopoly.
Zomato will joins the likes U.K.-based Deliveroo and U.S.-based Doordash that have gone public in the last one year even as the pandemic raged.
While Deliveroo plunged 31% in its public debut due to concerns on how it treat its workers and governance, Doordash surged nearly 90% in its stock-market debut.
Here's how Zomato compares with global peers on key parameters:
Reach: Orders, Restaurants
With a network of more than 140,000 active delivery restaurants, Zomato has the smallest reach among global peers. Meituan, the largest aggregator in China, has 68 lakh restaurants listed on its platform. Other global aggregators also have a larger base
Zomato, however, has the highest orders per restaurant globally.
Meituan is the only profitable food-delivery firm. While Zomato narrowed its losses to Rs 812 crore in the year ended March from a loss of Rs 2,363 crore a year earlier. That came as it cut discounts and cost per order.
Zomato could be propelled into the league of India's 100 most valued firms as it looks to sell shares at up to Rs 76 apiece in the IPO. The 13-year-old firm could also become one of the top five listed food delivery companies by market value globally.
The food services market in India is worth $65 billion (about Rs 4.85 lakh crore), according to Redseer's estimates. Growing at an annualised rate of 9%, it can reach $110 billion by 2025.
By comparison, according to a Jefferies note, online food delivery is worth $4.2 billion.
But it's under-penetrated. And data underscores the potential:
Food consumption expenditure in India stands at $670 billion a year but only 10% of it is spent on restaurant food, while the rest is driven by home-cooked meals, according to Jefferies. However, 54% of food spends in the U.S. and 58% in China are on restaurant food.
About 9% of internet users in India order food online against 36% in the U.S. and 50% in China,
Delivery platforms have seen a huge spurt in orders riding globally because they offer convenience. Yet, Edelweiss said in the note, most make losses at an operating level, including the matured ones like Meituan.
Food-delivery companies are increasingly facing scrutiny for squeezing small businesses’ razor-thin margins by charging commissions that can could be as high as 30% of the order value.
Zomato bills its restaurants 18-25%, among the highest globally. Meituan and Doordash charge less than 15%.