Zomato to Invest $400M more in Quick Commerce; Will Set up a Lending Business for Restaurants

Zomato has reiterated its focus on the quick-commerce segment and added that it will invest an additional $400 million in the space over the next two years.

The company also expanded to 180 new cities, taking its presence in India to more than 700 cities.

Zomato’s adjusted revenue — a combination of revenue from operations and customer delivery charges — increased 78% on year, the company saw a massive increase in food order volumes on New Year’s Eve, resulting in gross order value (GOV) of $18 million, 78% higher than the same day last year.

 Zomato said over the years, unit economics in its food delivery business has improved with scale. Contribution margin (as a percentage of GOV) has improved steadily from a negative 15% in 2019 to 1% today, it said. “A 5% contribution margin in our food delivery business (at the current scale) should get us to Ebitda break-even as a company (covering all common corporate costs as well).”

The company said it has invested $225 million across Blinkit (formerly Grofers), Shiprocket and Magicpin and that Blinkit has scaled its operations rapidly in the buzzy quick-commerce space. Based on January sales, it is on an annual gross merchandise value run rate of $450 million with more than 400 dark stores across 20 cities in India.

Zomato said the category offers a “huge addressable market” and is also “synergistic to its food delivery business”.

Zomato also outlined its lending ambition with an announcement to set up a non-banking financial company that would allow it to extend short-term credit to its restaurant partners, delivery partners and even customers.

In November last year, Zomato launched Zomato Wings to help restaurants secure funding by acting as a conduit between restaurant, cloud kitchen businesses and the investors.