How did Zomato make crores with just ₹1 profit? The secret revealed

The food delivery company Zomato has now started making a profit. But do you know that the secret of its earnings is hidden in just ₹1? Zomato's founder and CEO, Deepinder Goyal, have revealed this secret.

Dec 17, 2023 - 05:13
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How did Zomato make crores with just ₹1 profit? The secret revealed

Whether offering a 50% discount or an 80% discount on food delivery, the company Zomato, known for providing hefty discounts, has left many wondering how it manages to generate profits. If you've ever thought about starting a startup, you may have tried to understand Zomato's business model. Recently, Zomato's founder and CEO, Deepinder Goyal, himself unveiled the mystery.

Zomato is listed on the stock market. For a long time, the company's shares remained low, but as soon as the company started making a profit, its shares began to rise again. The company has started making a profit with just a savings of ₹1. Deepinder Goyal has shared the entire story.

Making Crores with Just ₹1

Deepinder Goyal recently detailed Zomato's earnings model in a podcast on social media. He explained that Zomato generates revenue through restaurant commissions, customer platform charges, and delivery fees.

On the other hand, Zomato has to spend money on delivery boys, refunds, platform running costs, etc. The simple calculation is that the money coming in from Zomato should be more than the money going out.

He explained it in a simple way, stating that the average order on Zomato is around ₹300 to ₹400. As a commission, they get around ₹80, and combining customer charges and delivery charges, they get a total revenue of approximately ₹100. Now, out of this, ₹60 to ₹70 is spent only on delivery boys.

Meanwhile, fixed costs such as refunds, customer care, tech team, office, payment gateway, and salary also incur expenses. In the end, Zomato is left with a profit of only ₹1 or ₹2. This is how Zomato's profit is made.

Zomato's Earnings in Crores

If we look at Zomato's financial statement, the company's profit was ₹36 crores for the quarter from July to September in the current fiscal year 2023-24. Whereas, in the same quarter of the previous fiscal year 2022-23, the company showed a loss of ₹251 crores. During this period, its revenue was ₹2,848 crores, which was ₹1,661 crores in the same period last year.

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