Zomato – The Cloud Kitchen

On the 14th of July 2021, Zomato went public with 9 thousand crores and this is by far one of the biggest and perhaps the most awaited IP0 of 2021. However, in terms of the number of companies, Zomato appears to be in serious trouble! From 2018 to 2020 the revenue of the company went from just $ 65 million to $ 368 million. During the same time, the losses were exploited by 20 times from just $ 15 million to more than $ 300 million. Every time Zomato tries to become profitable like Zomato gold, increasing the price and many more tactics it has led to nothing but outreach.

What exactly is this X factor and how can Zomato and Swiggy turn into a gold mine investment?

Data.

Zomato has all the data of thousands of restaurants and millions of customers who have used Zomato to order food. Zomato knows exactly which dishes are in high demand in which area and on top of that Zomato also knows what is the optimum price for a particular dish. They also know the best time to sell a particular dish. In this way, food tech startups are sitting on data of gold mines and they can use it very wisely to launch their food chain.

There are two Zomato services that very few people are talking about:

– Zomato kitchen

– Zomato hyperpure.

Cloud Kitchen is a hyper-efficient restaurant that only accepts takeout orders and has no dining area. Example- Behrouz biryani.

Why cloud kitchens over a 50 seater restaurant? This is the insane cost-benefit of a cloud kitchen over a traditional restaurant: you can save 5 lakh /month on rent, 19 lakh on a rental deposit, and 10 lakh/month on working capital. Here is where most people underestimate the power of digital marketing. Rebel foods is an excellent example. This company owns Faasos and Behrouz biryani. Both these brands individually bring in about 16 to 17 crore per month with 300 cloud kitchens in 35 cities. All of this was done in less than 10 years.

Just like Amazon has a superpower of digital real estate to enlist is its product on top. Zomato can particularly open its cloud kitchen and lists its product at the top with aggressive pricing models and undercut its bestsellers like Behrouz and Faasos. Zomato kitchen is this wonderful platform between Zomato and a bunch of handpicked brands across the country where Zomato uses super power of data and chooses the most profitable location in a particular area. Zomato will provide them with everything starting from raw material to kitchen infrastructure and this kitchen will have multiple sellers from a specific category and this space will be shared by all the cloud kitchens together which will maximize their profits and optimize their cost. This comes under the Zomato hyperpure model.

We can derive some very valuable insights about what is going to happen in the future. It is the rise of next-generation food tech startups and Zomato’s IPO will mark the beginnings of this revolution in India.

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