“We understand our responsibility towards sustainability, safety, making sure the food quality is great, and also making sure we have a line of sight to profitability, as we start scaling this, which is why we are taking time in our pilot,” he told ET in an interview.
had announced its plan to
launch 10-minute food delivery in April this year, the first time any aggregator platform announced a foray into ultra-fast food delivery.
“We are going to make sure we understand the business model really well and then scale up; the plan is in the extended pilot phase, and we have now scaled from two to six locations in Delhi NCR. A couple of locations are coming up in Bengaluru, too,” Gupta said at a fireside chat with ET at the ETRetail.com Ecommerce and Digital Natives Summit in Bengaluru last week.
The Ant Group-backed company reported that it was positive on cash flow and had narrowed its losses in the June quarter, having broken even on food delivery.
This is a year after its stellar public listing, which had seen Zomato cross Rs 1 lakh crore in market capitalisation. But soon after, the narrative changed to jittery investors as markets globally turned volatile.
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“We’ve demonstrated that this (profitability) is not a flash in the pan… Of course, we work in a very dynamic and competitive environment and there could be times where that has an impact on temporal profitability…but I think in the long term, this business is going to be healthily profitable,” Gupta said.
On the long-standing dispute between aggregators and restaurants over deep discounting and commissions, he said, “There are a bunch of areas we are making progress. Some of the larger sticky points may take a little more time…specially when a matter is sub-judice…that also has an impact on how fast we can move on it.”
The Competition Commission of India (CCI) is examining complaints made by National Restaurants Association of India (NRAI) alleging
“unfair pricing practices” by aggregators.
“I am very optimistic we will continue to deepen our relationships with restaurant partners. It’s a symbiotic relationship. We need the restaurant partners to build the food industry, and similarly, we bring in a very interesting combination of technology, operational expertise and consumer insights, which I think is very valuable to make progress for the food industry,” Gupta said. He said the aggregators “want to work very closely with restaurant partners…and we do have regular engagement with industry bodies like NRAI and FHRAI”.
On when high cash-burn businesses like quick commerce would start making profits, Gupta said, “I do see quick commerce businesses breaking even soon.”
Zomato had in June this year acquired instant grocery start-up Blinkit for Rs 4,447 crore in an all-stock deal. “There are two aspects to quick commerce – one which is very widely reported that this is a cash-burn business, and there are real unit economic challenges to quick commerce. But there is lot of hope when you look at customer cohorts and the way you’re solving problems. The loyalty and usage frequency of consumers is so high, it forces you to realise there is a lot of real value you are creating,” he said. On the balance sheet, there is “a lot of progress that we are making”, Gupta added.
