August 12, 2020
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A glint of hope for India’s food delivery market as Zomato projects monthly cash burn of less than $1M – TechCrunch

A glint of hope for India’s food delivery market as Zomato projects monthly cash burn of less than $1M – TechCrunch

AliExpress WW

Food startups in India have struggled for years to find financial meaning. Each of them lost up to $ 50 million a month to win and support customers by offering discounts. And unlike some other markets, food delivery startups have been hit hard by the coronavirus pandemic.

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But Zomato, one of the two leading startups operating in space today offered a rare sign of hope for the market after he said that he had greatly reduced his losses, as he hoped to become profitable.

The firm, headquartered in Gurgaon, said it estimated it would lose less than $ 1 million in July, the lowest figure in 12 years. earlier this year acquired Uber Eats business in India,

Zomato also shared its results for the fiscal year that ended March 31, 2020, and the quarter that ended June 30.

In fiscal 20, the startup said its revenue grew 105% to $ 394 million. Compared to last year, while its loss at EBIDTA, a popular indicator used by enterprises that does not take into account interest, taxes, depreciation and amortization, rose to $ 293 million from $ 277 million a year earlier.

But the startup said the coronavirus pandemic, which significantly reduced the number of orders placed by customers on the platform, also helped improve the unit’s economy.

In the quarter that ended last month, Zomato earned $ 41 million with an EBIDTA loss of $ 12 million. In June alone, the startup’s revenue was $ 17 million, and EBIDTA’s loss was $ 1.5 million.

As India loosens its nationwide blockage, which it imposed in late March, more workers are returning to larger cities. Zomato said this helped the firm increase the number of orders on its platform. The startup said it expects its revenue this month to be at 60% of the level before coronavirus damages the industry.

In the quarter that ended in June of this year, each order for Zomato received it – it amounted to a marginal contribution of 27 rupees (36 cents), compared with a loss of 47 rupees (62 cents) for the same period last year, claimed Dipinder Goyal, co-founder and CEO of Zomato.

However, Goal warned that the current contribution margin is not sustainable, and he expects that over time it will drop to 15-20 rupees per order.

Zomato which in May reduced its labor force by 13% and reduced salaries in all areas, said that he had restored existing employees to the previous level of wages, and his forecast takes this into account.

Firm competes with Prosus Ventures with support Swiggy which also has ruled out even more jobs in recent months and made other efforts to improve his financial performance. Two firms, both of which together have nearly $ 2.5 billion, are struggling to find new investors, as many venture and physical firms are losing their appetite for food delivery in India.

In recent weeks, several venture capitalists have told TechCrunch that they are trying to understand how food delivery companies will ever profit in India. Unlike Western markets such as the USA, where the cost of each item is about 33 US dollars; in India, a similar product costs $ 4, according to estimates by RedSeer, a Bangalore-based research firm.

The problem is that there are very few people in India who can afford to make orders at a food delivery company every day, said Anand Lunia, a venture investor from an Indian agency, in an interview with TechCrunch.

To meet demand, food-delivery firms must match what most working-class Indians spend on lunch, which is less than $ 2, he said. Swiggy tried to make its platform more accessible to consumers by creating cloud-based kitchens across the country.

In May, Swiggy said it was cutting its cloud kitchen business, citing uncertainty about demand this year.

More to follow …


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