Zomato Diaries: The Business Behind the Bites

-By Pari & Akshita

Zomato is no longer just the app you open during midnight cravings. By 2025, under Eternal Ltd., it has evolved into a full digital ecosystem: part delivery platform, part fintech engine, part data-driven loyalty system. Using its huge transaction network, Zomato now powers everything from merchant credit to subscription loyalty programs like Zomato Gold, functioning almost like a “super app” where money and meals move with equal speed.

Zomato’s Beginning: When Two Coders Solved Lunch-Time Madness

In July of 2008, two IIT graduates, Deepinder Goyal and Pankaj Chaddah formed Zomato, formerly known as Foodiebay. Deepinder first came up with the idea that his colleagues were always asked to order food from paper menus of various restaurants. This is when he was thinking of transforming the restaurant menus into a more accessible, much easier-to-use digital app.

Zomato has grown quickly since 2008 and is one of India’s most successful start-ups.,  Zomato had over 110,000 active restaurants on an average monthly basis during the first half of the financial year 2020,  Even well-known business owners and entrepreneurs want to know how it works and how it makes enormous profits even after attractive discounts. Zomato’s main task is to suggest and receive orders from local and nearby restaurants. Let’s look into its revenue model. 

Zomato’s Platform Economics: The Two Foundational Cashflow Pipelines

1) Take Rate -  the money it earns per order

2) Float Income-the money it earns from holding your payment before it reaches the restaurant

The ways through which zomato earns it money:

1. Commissions from Restaurants

   Zomato charges restaurants a percentage (usually 10–25%) on every order placed through its platform.

2. Delivery Charges 

• Customers pay a small delivery fee; Zomato keeps a part of this after paying delivery partners.

• Zomato Gold / Zomato Pro (Subscription) • Users pay a subscription fee for discounts and

exclusive offers, generating steady recurring income.

3. Advertisement Revenue 

• Restaurants pay Zomato to appear on top of search results or get featured listings in the app.

• Zomato Hyperpure: Sells ingredients and kitchen supplies directly to restaurants.

4. B2B (Business to Business) Services

   Data analytics, restaurant management software, and logistics solutions for partner restaurants.

5. Zomato Live & Events Hosts food festivals and events, earning through ticket sales and sponsorships.

6. Interest & InvestmentsEarns returns from short-term investments and strategic acquisitions (like Blinkit).

In short , Zomato doesn’t lend your money. It just holds it cleverly. Banks earn through Net Interest Margins (NIM) . The difference between what they pay on deposits and what they earn on loans. Zomato, on the other hand, earns commissions on orders. No lending, no risk.

Gold: Zomato’s Premium Membership Engine

→ Zomato Gold turns regular users into loyal customers.→ You pay once and get free delivery, discounts, and priority support. But the real trick? Psychology.

→ By paying, users feel a sense of ownership (Endowment Effect) and avoid losing benefits (loss aversion). So, they order more often, research shows paid members spend 60% more than free ones, and in India, such programs boost buying frequency by 40–200%.

→ One payment turns casual users into loyal, repeat customers.

Challenges Faced 

1. CCI (Competition Commission of India) 

The NRAI (National Restaurant Association of India) accused Zomato of charging up to 35% commissions, forcing discounts, and penalizing restaurants for differing menu prices. While some claims were dismissed, others like platform neutrality  are still being reviewed. Zomato’s daily payout move was partly a smart peace offering.

 2. RBI (Reserve Bank of India) 

Zomato is reorganizing its platform to fix these issues. It’s improving restaurant visibility, simplifying commission rules, and adding more transparency. On the fintech side, it’s adjusting payment and credit features to fully follow RBI’s 2025 guidelines through approved lending partners. With clearer processes and tighter compliance, Zomato aims to grow its fintech ecosystem smoothly while keeping trust intact.

The Road Ahead

Zomato isn’t just tweaking features; it’s rewriting its entire digital architecture. As regulators tighten the rules and users demand transparency, the company now stands at a crossroads where every update must balance innovation with compliance. If Zomato can execute this shift, India may witness one of the cleanest, most efficient food-tech ecosystems ever built. The next version of Zomato won’t just deliver food…it might deliver a smarter digital economy.