Spice up your search

Deepinder Goyal, founder-CEO, Zomato, wants to stick to doing just one thing. While he’s at it, he wants Zomato to be the best restaurant search engine, world over

DEEPINDER GOYAL, FOUNDER AND CEO , ZOMATO

To run a restaurant search engine that features 1,20,500 restaurants spread over 32 cities is a gastronomical feat. Zomato’s founder-CEO, Deepinder Goyal, likes to keep things simple and this approach has taken the company places. At present, Zomato has spread its operations to over 11 countries and more than a quarter of its revenue comes from foreign markets. Turning back in time to when we last wrote about Zomato (January 2012), Goyal says “We were merely thinking of crossing international boundaries at that time.” Since then, it has grown on a simple two-pronged mandate. One, better the product with linear additions such as online ordering and table booking and two, take it to as many countries as possible.

Going local

At present, Zomato is in the middle of commencing operations in three countries, Brazil (Sao Paulo, Rio de Janeiro), Turkey (Istanbul) and Indonesia (Jakarta). Working in multiple geographies does present several challenges, the foremost being hiring a local team to run the daily operations. “While we have been continuously moving some of our best people from our India operations to some of our overseas operations, a sustainable operation can only be run by locals who know the inside-out of our business,” shares Goyal. Zomato focuses a lot of its time, energy and money on hiring the right people and imparting relevant training. It also follows a no-outsourcing policy and all its processes are tended to in-house. Despite the lure of cost benefits, Goyal fears that outsourcing any component of business will lead to a dilution of the final product offering. “We still maintain our core principle that outsourcing compromises quality. We do everything in-house and work on making our processes simpler, better and more efficient,” he explains. Accordingly, as the organisation has spread out, its strength has multiplied by a little over six, to go from 65 people to its current figure of 410.


“The mistakes we made in the past were essential to our learning curve. With such things, you only learn when you experience them first hand.”


Catering to different markets also means tweaking the product to suit varying needs. And Zomato has understood customer needs in each geography and customised its website to suit the same. Whichever market it operates in, the company has great clarity on its pricing strategy. Its CPM rates are higher than market standards and Goyal is clear in his justification, “Our pricing strategy depends a lot on the maturity of our product in each hyper-local market. If we are getting a lot of quality traffic, we will charge higher. In general, our CPM rates are higher than market standards because we are a very niche product with very qualified customers who transact at a restaurant within a couple of hours of visiting Zomato.”

Gaining goodwill

When it comes to generating advertising revenues or increasing traffic, Goyal maintains that goodwill has been the most helpful. “Luckily, our customers tell us that we have an amazing product. So for most of the markets we are in, we do not have to advertise. Word-of-mouth does the magic for us,” he says. The exception here is the U.K. market where, Goyal says, Zomato did experiment with its communication strategy in a bid to grab market leadership.  Even so, Zomato is not a big spender on marketing. “Annually, we spend about 10 per cent of our revenues on marketing initiatives with most of it being spent on advertising through television,” says Goyal.

Learning from mistakes

In 2012, Zomato launched its events section and soon after, it took a critical decision to shut it down. “We figured out that there is not much juice in the market, except in movie tickets –which is what Bookmyshow dominates,” reasons Goyal. However, he doesn’t rue any of the decisions he or his team have made in the past and is glad to have been on a learning curve. “The mistakes we made in the past were essential to our learning curve. With such things, you only learn when you experience them first hand. So even if we went back and did things differently, we would have made the same mistakes at a later point in time,” elaborates Goyal. Wiser from experience, Goyal is wary about diversifying into areas such as direct home-delivery and is steely in his resolve of not sticking his fingers in many pies, “We want to own ‘restaurant search and discovery’ – making a good product which does one thing well is hard enough for us.”

Since July 2010, Info Edge has been with the company as an investor and its ruthless focus on sales has helped Zomato streamline and strengthen its business model. “Working with Info Edge pushed us to figure out the nuances of scaling our sales team much earlier in our lifecycle. Currently, we are very comfortable about what our business model is and where it is going,” says Goyal. He also shares that working with Info Edge is very different from working with venture capitalists, who are purely finance professionals, as the investors have been entrepreneurs themselves. In the near future, Zomato will look to raise another round of funding to the tune of US $40 million to US $50 million which will help it break into other international markets. Simultaneously, the company will also look to better its product offering by improving categories such as mobile applications. The process of understanding customer needs and translating that to changes in the product is an ongoing one, admits Goyal and he adds, “Our latest iOS app is significantly different and better than the older one. One feature that we introduced this time is the ability for users to upload pictures for restaurants without the need to write a review.”

Looking to the future, Zomato will continue to explore unchartered geographies with its plans to enter newer international markets. At the same time, it will strive to better its product offering to keep with emerging trends and go the extra mile to give the customer more than is desired. As Goyal signs off, he speaks of his continued mission for Zomato, “We need to understand how we can truly disrupt ourselves when it comes to restaurant search and discovery.”

Then Now
No. of employees – 65 No. of employees -410
No. of offices across cities – 5 No. of offices across cities -18
No. of cities covered – 9 No. of cities covered – 32
Investments: Info Edge / $6.5M Investments: Info Edge / $16.5M

STARTUP SCHOOL WITH DEEPINDER GOYAL, FOUNDER, ZOMATO 

For a five-year-old company, Zomato has an impressive presence in over 11 countries. While faith in itself might have propelled it to go international, a deeper understanding of customer needs has made it tick in different geographies

Faith first – establishing the first international operation 

1,20,500 restaurants. 32 cities across the globe. Such statistics boggle the mind. Deepinder Goyal, however, is calm as he looks ahead to his baby, Zomato’s (restaurant search engine) future. More countries to see and conquer, he says. The confidence to go international came from the company’s first foray into the Middle East. After three months of hard work which included hiring a local team and getting a handle on its business functions, it launched in Dubai and this move paid off.

Take away: You don’t have to fear an unknown territory so long as your processes are in place.


“In New Zealand, nobody orders home delivery and Zomato had to change its homepage for the country. Even the data that it collects is very different in various markets. For example, in Dubai, it checks whether a café serves shisha or not, as it is one of the most popular search queries.”


Customised offering  –  catering to different markets 

As Goyal states, different markets imply different customer behaviour. Here’s how Zomato made the difference. Home delivery is one of the key options available on its home page in India. In New Zealand, nobody orders home delivery and Zomato had to change its homepage for the country. Even the data that it collects is very different in various markets. For example, in Dubai, it checks whether a café serves shisha or not, as it is one of the most popular search queries. In London, Zomato has a separate section for finding rooftop restaurants. In Manila, it has a section for restaurants which let you bring your pets to the dinner table.

Take away: You are truly at the command of the customer, so pay attention!

Keeping it fresh – collecting data and ensuring updation 

Data is critical to Zomato’s business and making sure that it has the most fresh and encyclopaedic content really matters. As Goyal says, “We have people trolling the streets everyday to check if a restaurant has shut down or if a new one has opened up. On an ongoing basis, we make sure that we visit each restaurant on our database at least once every quarter to make sure that what we serve to our customers (menu cards, phone numbers, other details) is fresh (or at most, three months old)!”

Take away: Keep constant tabs on your product offering to improve it. That’s the key to customer loyalty.

Letting go – making critical business exits 

Soon after it launched its events section, Zomato made the critical business decision to shut down the same. As Goyal reasons, any business must have a future to invest in. As the team at Zomato discovered, the events space did not present a sizable market and with so little to fight for, the few competitors that did exist were locked in price-wars. “That is something we stay away from and since we had only entered it, we decided to pull out without inflicting much damage to our overall health as an organisation,” he explains.

Take away: Know when to let go. In doing so, you ensure that you’re not wasting your time, effort and money on something with no future.

Creating a foodie movement – India’s in! 

There was a time when eating out was less common. There was also a time when eating out was a very personal decision that one made on the basis of a whim, a craving or a recommendation. Never has making this decision been based on extensive insight and comparison and in India, especially, Zomato can take a lot of credit for creating curiosity in the minds of customers and tickling more than a taste bud with cuisine that is not a staple choice. Ask Goyal and he’ll tell you, Zomato is now a buzzing community where people exchange food stories and anecdotes and that’s the first step in the right direction to create a foodie revolution.

Take away: Where the tongue wills, there is a way! On a serious note, food is a promising space to be in, for Indians are starting to want a lot more to choose from.