Foodiebay's New Avatar Zomato On India Plans, Foreign Expansion

23 Feb, 2011

Zomato.com, (formerly Foodiebay), which began as a restaurant reference site two years ago offering online dining options to the gourmet audience, is diversifying into new listing categories such as capturing night life and events. In fact, Zomato's brand makeover, last year, was in line with this extension strategy. Zomato, which received funding from InfoEdge (whose flagship is Naukri.com) in 2010, is currently in the process of sprucing up its services by developing mobile apps, integrating maps and branching out to new cities. Will its strategy cut ice with gourmands and night birds when other online as well as offline options such as Burrp.com, AskLaila, Justdial, Buzzintown, and Hungryzone (not to mention Facebook) are active destinations for information on restaurants and happy hours? Read on to know more about the new recipes on their menu card:-

New Plans What started as a simple concept of uploading menus of various restaurants, Zomato today plans to juggle three categories - delivery, dining and events. "We are entering into events with restaurants and nightlife, which is the next trend in market," said Saurabh Sengupta, co-founder, Zomato, over a mug of cappuccino.

Users are scouring Zomato for restaurants by location, cuisines, names, latest menus (such as Domino's latest menu) and nightlife-related searches such as pubs/bars in south extension (Delhi) and late night pubs are picking up fast. And so the decision to rebrand was necessary, according to Sengupta. "We wanted to expand into nightlife and events. So food is not the only category users associate with us," he said.


The website, which covers 10,000 merchants in Mumbai, NCR, Bangalore, Kolkata and Pune, has just launched in Chennai and is expanding its coverage to Hyderabad and Goa soon. Zomato is also exploring international partnerships to reach Dubai, Singapore and Hong Kong in the next six months. Deepinder Goyal, co-founder and CEO, Zomato, said, "We will be looking at restaurants – not travel - only food. We will replicate the India model and plan to launch the site in March."

In contrast to their international foray, adding Tier-2 cities to Zomato.com has been put on the backburner. According to Sengupta, demand is coming in from Raipur, Jaipur and Ahmedabad. "We have realized that if there are less than 1,000 restaurants in a city it does not make business sense for us to add it. The result of our efforts in adding Kolkata and Pune has not been up to expectations. So we will be taking a decision on expanding to Tier 2 cities only next year."

Nightlife & Events Zomato will be up against Buzzintown.com which currently rules the events and nightlife space. In India, this space is too niche and small even in market size, notes Shantanu Sirohi, COO, Interactive Avenues. Just two websites – Mypurplemartini.com and India-nightlife.com - appear to directly address this space.


Sengupta believes differentiation can be achieved with a focused user base. He said, "Buzzintown is basically events - what we have noticed is if we focus on, and brand it as purely nightlife events, we will get a more targeted user base and that is how we will differ. The other competitor is Times City's Nightlife which is a print edition."

Photos will replace menu card scans in the new nightlife section of Zomato, which will be launched mid-2011. "So far, we have not had an outlet to showcase restaurant-specific events such as food festivals and restaurant specials. The idea is to cover more bars and nightlife in cities and offer photos, videos of venues as well as bar menu prices," says Goyal.

Zomato will target five-star hotels for branding and advertisements and has tied up with 120 premium hotels so far. According to Ashok Lalla, President - Digital at Euro RSCG, leading hoteliers such as Taj, Oberoi, ITC, Leela have consistently focused on online marketing and the opportunity is ripe. "Travel and hospitality is the top e-commerce category globally and hotel chains in India are investing 2-10% of their overall marketing budgets into online branding and promotion," he said.


Business Model Zomato's revenue model is a combination of advertising, coupons and premium listings and lead generation. It has also entered into arrangements with daily deal sites such as Mydala, Dealmagic and Koovs, who advertise on Zomato.com and, in return, share 25% of each deal with the site. Goyal claims this contributes to less than 1% of his revenues. "We are not doing it for revenue but for brand presence. It's a value add for our users to receive restaurant related deals," he said.

It also shares its listings with classifieds site Sulekha.com for food related listings. What's in it for classifieds sites? "It is difficult for classifieds services to update their restaurant listings as frequently as we do. We understand the food industry – around 10% of restaurants shut down every quarter. So we specialise in the restaurants listings and, in return, they send traffic our way," says Goyal. The Gurgaon-based Zomato has a team of 22, of which 8 are in sales and two feet on the street per city who visit restaurants every day to keep the database up to date. How this team will fare against the massive sales force of daily deals sites who are also scouring the markets is worth tracking.

Mobile & Tablet Strategy Zomato has already launched an Android app. Blackberry and iPhone apps are on their way too. The firm also wants to tap the opportunity in the tablet PC market. "Things have changed since 2005, mobile is the new platform on which people are operating and apps are going to be a game changer," said Sengupta. It currently powers the 'Places to Eat' section of Makemytrip's travel app for mobiles, which is also available for Blackberry users.


The company is in talks with both phone and tablet manufacturers to pre-install the apps. "A lot of OEMs are coming up with Android phones so we want to partner with some of them and install it out of the box. We are also talking to tab manufacturers to add apps," said Goyal.

These apps will offer the same features as the website but location-specific information and routing is expected to be a huge pull on the mobile. Google search on mobile is popular amongst foodies and offering it as a layer on Zomato was a no-brainer. Mobile applications will be integrated with Google Maps so users can search for nearby restaurants and learn where their friends are eating. Zomato will refrain from pushing information out to mobile users. "We will be pull-based, so users can search, read reviews and check for recommended restaurants on the mobile," said Sengupta.

Competition The largest competitor to Zomato is the Infomedia 18 owned Burrp.com, and industry experts are skeptical about how well Zomato can stand up to it. "Burrp has the advantage of being around for longer, and they have now gone on-ground with their 'Burrp Reviews' -- that is really what will drive success for these sites -- driving their online presence into on-ground visibility and recognition by users," said Lalla. Indiatimes' TimesCity.com and Hungryzone.com are its other competitors.


Zomato.com is modelled along the lines of Menupages.com.

The Facebook Threat According to Sirohi, websites in the nightlife category face a threat from Facebook Events. "Facebook Events offers ESVPs and Facebook Places allows you to "check in" - these are killer ideas for the parties and events space. Any club worth its salt will come onto Facebook and Burrp or Buzzintown. This also gets naturally extended via Facebook Mobile," he notes.

Zomato is, in the true spirit of Web 2.0, dealing with competition from the social networking major by embracing it. The firm plans to integrate Facebook events within the site so foodies get the best of both worlds.