Zomato eyes 30% growth in food delivery as Swiggy’s IPO sparks industry optimism

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Zomato eyes 30% growth in food delivery as Swiggy's IPO sparks industry optimism

India’s burgeoning food delivery landscape is witnessing an exciting period of expansion, fueled by the growing demands of affluent and middle-class urbanites.

Zomato, a leading player in this arena, projects a robust 30% annual growth rate for its core food delivery business over the next five years.

This optimistic outlook comes on the heels of competitor Swiggy’s successful IPO, an event Zomato views as a positive catalyst for the entire sector.

Rakesh Ranjan, Zomato’s food delivery CEO, stated on Monday, “The food delivery sector is still in its nascent stages in the country and … more competition will only foster innovation and growth which will benefit the sector overall.”

This sentiment underscores the collaborative spirit within the industry, recognizing that a rising tide lifts all boats.

Zomato’s recipe for success

Zomato currently commands a significant 58% market share in the food delivery space, outpacing Swiggy’s 34%.

This dominance translates into impressive financial figures. Food delivery constitutes approximately 58% of Zomato’s total revenue.

The gross order value (GOV), encompassing food prices, platform fees, and delivery charges, reached a substantial 322.24 billion rupees ($3.82 billion) last fiscal year, demonstrating a consistent 30% average annual growth over the past four years.

Looking ahead, Ranjan expects this growth trajectory to continue, if not accelerate, over the next four to five years, fueled by the addition of new restaurants to the platform.

Expanding ecosystem and innovative features

As of March, Zomato boasted an impressive network of approximately 247,000 average monthly active restaurant partners on its app, an 18% increase from the previous year.

This expanding ecosystem is complemented by a suite of innovative features designed to enhance the customer experience.

These include scheduled delivery, a system for grabbing canceled orders at discounted prices, and a specialized large order fleet capable of catering to gatherings of up to 50 people.

Addressing the delivery driver challenge

Despite the positive momentum, Zomato faces the challenge of high attrition rates among its delivery drivers.

This is a common hurdle within the gig economy, and Zomato is actively working to mitigate this issue by offering improved benefits and greater flexibility to attract and retain its delivery workforce.

The post Zomato eyes 30% growth in food delivery as Swiggy’s IPO sparks industry optimism appeared first on Invezz


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