An appetite for more

An appetite for more

Deepinder Goyal loves food. But that is an understatement – he loves it so much that he decided to start a company that revolves purely around his passion, and make money out of it. Now, three years after having founded the online food and lifestyle guide Zomato.com (Zomato), along with his friend Pankaj Chaddah, they have decided to make a foray into e-commerce through its events section. As a first, this December, Zomato sold tickets for New Year parties in four cities – New Delhi, Mumbai, Pune and Bengaluru. “They were restaurant-based events since we’ve established a good relationship with many of them. The website had over 1.75 lakh tickets spread over 175 avenues,” says the 28-year-old. The Gurgaon-based Zomato witnesses significant amount of traction with three million people visiting its website, which lists 18,000 restaurants, every month.

snapshot

Zomato.com

Founders: Deepinder Goyal, Pankaj Chaddah

City: Gurgaon

Year: 2008

Investors: Info Edge (India)

Concept in Brief:

Having gained a stronghold in its restaurants and events section, Zomato has now forayed into e-commerce space when it started selling tickets for New Year parties. The website had over 1.75 lakh tickets spread over 175 avenues. A major share of the New Year events’ tickets was sold at the venues itself. Zomato sold Rs. 8 crore worth of tickets of the Rs. 16 crore inventory it had. Recently, it also received its second round of funding from Info Edge to the tune of Rs. 13.5 crore, which is being used for marketing primarily and to ramp up its events section. About 10 per cent of its ticket volume was through its cash-on-delivery process and hopes to have a solid foundation in place when it decides to expand further in that direction with movies, other shows and even sports events. To become a prominent player in this, Zomato needs to invest in its backend, get its logistics operations in place, ensure prompt delivery and keep up its user-friendly up-to-date content.

Zomato has also attracted considerable attention from investors. About four months ago, it received its second round of funding from Info Edge (India) Ltd. (parent company of Naukri.com) to the tune of Rs. 13.5 crore, which is being primarily used for marketing and to ramp up its events section. “We were advertising on television mainly to sell these tickets. Less than 10 per cent of our spending is used for this,” shares Goyal. It raised its first round of funding, to the tune of Rs 4.7 crore, from Info Edge in July 2010. The association with Info Edge, Goyal feels, has been greatly helpful because “they’ve been there and done that.” He also regularly gets to talk to Sanjeev Bikhchandani (founder of Info Edge). “The most valuable advice that he has given me is to not let go of the bootstrapping culture and to never overspend,” adds Goyal. The initial amount was used for scaling into other cities, marketing and expanding its team size from a five-member team. It now has around 100 people spread in the 10 cities that Zomato covers, with 65 of them in its head office. Zomato’s revenues have been doubling every quarter for the last four quarters, and Goyal hopes to maintain that growth in the coming year.

New direction

Zomato started listing events from restaurants in October last year; something Goyal says keeps them on tenterhooks. “We started the events section because the restaurants approached us. So, we moved some of the team into this section and hired more for the restaurants section,” says Goyal. A major share of the New Year events’ tickets was sold at the venues itself. Zomato sold Rs. 8 crore worth of tickets of the Rs. 16 crore inventory it had. “Almost the whole team was focussed on it in the last week of December. In the last two days, we were handling about 14 transactions/minute and found good traction from the traffic – one out of every two visitors bought a ticket,” he adds. Zomato had also helped with ticket and guest list management at the venue. “Some of the venues did not host certain type of events as they had advertised. We need to crosscheck that in the future because our customers expect it from us.” Though it was experimenting with cash-on-delivery process, it constituted only 10 per cent of the ticket volume with e-payments making up the remaining.

Besides selling these tickets, Zomato’s main revenue comes from restaurants that are charged for hyper-local advertising. “We charge about Rs. 600 – 700/ CPM (cost per impression) while the industry rate is usually around Rs. 100/CPM because we’ve the traffic to back that up,” states Goyal. Zomato primarily markets through Google advertisements and its Facebook page.

The idea

Goyal is a graduate of mathematics and computing from IIT-Delhi. After college, he worked for a well-known consulting company, Bain & Company for four years. It was while working for the organisation that the big idea struck him. “Everyone used to line up to see the stack of menu cards at the cafeteria since there was a rule that you cannot take them to your desk. So, people often wasted time queuing up to read these menu cards. That’s when I realised it would be much easier if I put it online for everyone to access,” says Goyal. So, he and his colleague Chaddah did just that and soon the website received a lot of traffic.

In July 2008, Foodiebay.com became functional. The name was subsequently changed to Zomato in November 2010 as they wanted to foray beyond restaurants and also avoid any future legal clashes with eBay.com. Foobiebay received significant traffic and calls from restaurants. “The biggest challenge was to collect menus and there were just three of us who would do it in the weekends. It took us two months to collect and scan menu cards of 1200 restaurants in New Delhi and NCR region,” recalls Goyal. By November 2009, Goyal quit Bain and took it on full-time. But it wasn’t too hard to get a young team in place. “People knew us by then and our revenues were not bad. The first set of recruits was from IIT-Delhi.” The company’s major expense now goes towards the salaries of its team.

“Almost the whole team was focussed on selling tickets in the last week of December. In the last two days, we were handling about 14 transactions/minute and we found good traction from the traffic – one out of every two visitors bought a ticket.”

Zomato’s biggest markets are New Delhi and Mumbai, with Bengaluru and Pune coming a close second. Goyal believes Zomato is better than its competitors due to the extent of menus the website offers. “We’ve more in-depth content that is updated every three months. Unlike other websites, only less than five per cent of our listings will show restaurants that have shut shop. We’ve people every day on the field sending real time updates about restaurants to our servers,” he says. The company has faced copyright issues in the past, where its data has been duplicated in other such similar online food guides. To counter this, Zomato’s value-added calling feature (Zomato’s number is provided on the listing for restaurants it has tied up with) and purposefully-placed bugs help detect such infringement.

Adding to the cart

“Online tickets are a huge market. Hence, we definitely want to expand further in that direction with movies, other shows and even sports events. For now, we are looking at selling tickets for Valentine’s Day, but stick to the top 20 venues,” says Goyal. As it readies itself to cover bigger events, Goyal has already started investing in getting resources in place and has hired experienced people. “Many restaurants have approached us to do end-to-end ticketing and we are considering it,” he adds. It started its mobile app in January 2011, and it is now available for most smart phones and one for Samsung Smart TVs. With 6.5 lakh downloads so far, mobile apps contribute one-fourth of the total traffic, while Blackberry users alone constitute one-third of mobile downloads.

Goyal hopes to soon offer online reservations for food and table. ”We want to focus on top four metros and grow this segment further. Right now, we have offices in four cities and we want to set up in six more cities,” he states. Bon Appétit to that.