The delivery arm of Zomato, the online restaurant search, discovery and delivery portal, loses an average of Rs 1.5 lakh a month.
Deepinder Goyal, co-founder, said on Thursday in an investor call organised by Info Edge (which owns 47 per cent in Zomato) that they lost Rs 2 on every food delivery.
Zomato gets 25,000 orders a day, of which it handles about 20 per cent — that is, 5,000. So, its loss is Rs 1.5 lakh a month.
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“We make a negative Rs 2 despite having outsourced delivery. Our logistics partners are not able to make the unit economics work well. Restaurants are best equipped to deliver locally," he said during the investor call.
Adding: “We are building tech and efficiency to get into the green and make last-mile logistics work.”
Zomato has around 70,000 restaurants listed on its platform, of which only six per cent are paid listings. Goyal said the company was growing in India at 30 per cent a year.
The company has shrunk its operations from 23 countries to 14, having stopped in Chile, Britain, Ireland and Sri Lanka, among others. It remotely operates the portals still working in these countries, as these were high burn (cash and management time) and high risk markets, he said.
Asked when the whole operation would break even, Goyal said with growth in revenue from advertising and the burn rate being down, he hoped to reach break-even in the next six to nine months. He also said they needed to focus more on sales than raising prices.
Earlier this year, Zomato had said the company was looking for investments of $200 million; it no longer is. “The business corrected well, so we dropped the idea,” said Goyal. “We have a cash balance of $35 mn and 18 months of runway time.”
While Zomato claims the highest gross merchandise value in the country in terms of average food order size, the average has reduced from Rs 575 to Rs 480. Goyal attributed this to restaurants voluntarily discounting on Zomato. “We have restaurants discounting on a real time basis on the platform,” he said.
The loss before tax shot up 262 per cent to Rs 492 crore for the financial year ended March 2016. Info Edge disclosed this in its earnings results on Wednesday. The Deepinder Goyal and Pankaj Chaddah-led company had reported a loss of Rs 136 crore the previous year. Operational revenues doubled to Rs 185 crore for 2015-16, from Rs 96.7 crore earlier. None from Zomato was available for comment on the issue.
Info Edge, which also owns job search discovery portal Naukri.com and real estate portal 99acres.com, has a 47 per cent stake in Zomato. Its balance sheet states a total loss before tax of Rs 492 crore for Zomato. HSBC's brokerage arm, HSBC Securities and Capital Markets, had also recently slashed the valuation of Zomato by half to $500 million.