Zomato shuts food-ordering operations in four small cities in India

Zomato Media Pvt. Ltd, one of the few Indian Internet start-ups with a global presence, has shut operations in four cities, as food tech companies seek to cut spending in the face of a funding slowdown.

“We are shutting down the ordering business in Lucknow, Kochi, Indore and Coimbatore. The size of the market in these cities is small right now and is growing with time,” co-founder Pankaj Chaddah, who also heads the food-ordering operations, said in a statement. “We will relaunch when the time is right. We will continue to offer the best content.”

As per the reports Zomato’s food ordering which they had launched recently is not working well, they are having a tough competition with Foodpanda in this space.

Business in these cities failed to take off despite aggressive marketing and accounted for less than 2% of the total orders placed on Zomato, the company said. Overall, online orders are growing at a pace of 40% every month, it said.

The online restaurant discovery and review platform launched its food-ordering business in April 2015. The company partnered with logistics firm Delhivery (SSN Logistics Pvt. Ltd) and invested in hyperlocal delivery start-up Grab a Grub Services Pvt. Ltd to facilitate food delivery.

Zomato has since May rolled out its food-ordering business in global markets such as the United Arab Emirates (UAE), the Philippines, Australia and South Africa.

Zomato, which started out in 2008, has so far raised about $224 million from Sequoia Capital and Info Edge (India) Ltd, among others.

In an interview with Mint in December, co-founder Deepinder Goyal said the company will invest $40 million in its food-ordering business in the next six months to capture a dominant share of the market in India and the UAE. He said Zomato expects the food-ordering business to break even by March.

“We are aiming for a monthly increase in revenue of $400,000 every month and the growth will be largely driven by online ordering business in India and the UAE,” Goyal said.