Zomato adds 17 new cities to its menu in Tier-2 push

Zomato is taking its food delivery service to 17 new cities as the Gurugram-based unicorn bets on expansion in Tier-2 locations to counter rival Swiggy.

By launching services in Bulandshahr, Palwal, Nandyal, Ongole, Kollam and Ambur among others, Zomato said in a statement that it now facilitates online ordering in 213 Indian cities.

The company, which also serves as a restaurant discovery platform, said that it had added a new city every day since December last year. In contrast, rival Swiggy had a presence in 102 cities at last count, adding a new city every two days.

The rush to corner the market in Tier-2 and Tier-3 cities comes with a better network of riders and a focus on profitability, after many food-tech firms were forced to wind up their operations in smaller centers in 2016-17.

“Emerging cities are a major growth avenue for us and we expect them to constitute more than 50% of our total order volume by the end of the year,” said Deepinder Goyal, chief executive officer of Zomato. “We are developing Zomato Kitchen (cloud kitchen) hubs in smaller cities in India to drive growth for our restaurant partners.”

Alibaba and Delivery Hero-backed Zomato currently lists 1 lakh restaurants on its app with a network of 1.8 lakh delivery personnel. Mohit Gupta, CEO of the food delivery business at Zomato, said that the company plans to offer delivery services in 500 cities by September this year.

HSBC Global Research recently pegged Zomato’s valuation at $3.6 billion, ahead of rival Swiggy, citing the contribution of food delivery (70%) to its total revenue.

In its quest to turn profitable by 2021, Zomato has introduced new business verticals including food supply warehouses for businesses and is reportedly in talks to acquire micro-delivery platform Dunzo.