Fellowship

Xartup TM     Fellowship

Why is Zomato Incurring Losses?

Idea Begin  with getting a masterplan for your business. Great plans reside beside you.

So let's give a quick glance on the Reasons why Zomato losses widens year by year

  • Zomato claimed that one of the main reasons for the increase in losses in Q1 of FY21 is due to non-cash Esop (employee stock ownership plan) expenses, which have increased this year due to significant Esop grants made.
  • The other reason for increase in losses is due to the hit of pandemic on the food industry- it increased the expenses and affected the dining out services.
  • The other reason for these losses is the competition faced from other big online food delivery and grocery delivery companies such as Swiggy, Grofers etc.
  • Despite all these Zomato reported the highest-ever GOV (Gross Order Value), number of orders, transacting users, active restaurant partners, and active delivery partners this year. Company food delivery charges also saw a rise this year.
  • In FY19, the food aggregator unicorn reported a revenue of $192 million and a loss of $277 million which is twice the loss from the previous year in 2018. The main reason behind this was the impact on the food industry from the early stage of Covid 19.In 2020, it reported Revenue of Rs 2,486 crore in FY20 and its Loss widened to Rs 2,451 crore.

Conclusion

  • Zomato has been facing huge losses for many years. The main reasons behind this are competitors, company’s expenses and the severe impact of pandemic. This also impacted the company’s share prices which has seen quite a huge decline in it. Also the major earnings of Zomato is through the commission it gets from restaurants for every delivery and dining which went downhill in the pandemic. Keeping this aside Deepinder Goyal founder of Zomato claimed that the revenues of Zomato is increasing significantly in the post pandemic stage and Zomato is trying to recover significantly from its losses.

 

Follow Us On

Leave a Reply