Quick Commerce Steals the Show, Leaves Zomato’s Food Delivery Hungry for Growth

Zomato's expansion has encountered a speed bump, with CEO Deepinder Goyal blaming particularly the slowdown in its food delivery business on the extremely high growth of quick commerce platforms. In a statement today, Goyal explained that competition from ultra-fast delivery platforms selling packaged food has resulted in a decline in restaurant-based food ordering, significantly altering the consumers' habit.

 

Three issues underscored the lackluster performance, Goyal said: weak demand, a short-term shortage of delivery partners following the rapid expansion of the quick commerce segment, and the spiking demand for instant delivery of packaged food. "Yes, growth does remain below our expectations for now," Goyal said, noting that the industry's fast expansion has pushed customers and delivery capacity away from traditional food delivery.

 

To the list of issues, Zomato delisted close to 19,000 restaurants in the fourth quarter on grounds of hygiene issues, brand duplication, and listing tampering-measures taken to ensure trust but which also impacted order volumes. The company also shut down its 15-minute delivery platform, Zomato Quick, and the Everyday meal service on grounds of unprofitability and low demand.

 

Despite these setbacks, Goyal was optimistic about the long-term outlook for the industry, pointing to low penetration of restaurant food in India and growing urbanization in the country as the key drivers for future growth.

 

Source: Business Today