Zomato puts talks around restaurant loyalty program on hold

Zomato has put on hold a fresh initiative to build a restaurant loyalty program it hopes to roll out later with a better plan.

According to a source close to the development, the talks around building a loyalty program are estimated to have been postponed in the last week of July or the first week of August. In a note sent to restaurant partners at that time, Zomato had said that it will come back with a better plan for the loyalty program later.

Retain customers

These discussions were part of a periodic outreach that the company does with restaurant partners and delivery partners. The company was exploring a loyalty program to help restaurants retain regular customers.

“This was a preliminary discussion and Zomato was considering building something along these lines because some restaurants have shared interest in this. But the plans were never finalised,” the source added.

Gupta’s exit

Earlier this week, Zomato co-founder and head of supply, Gaurav Gupta, left the company after spending six years there. Gupta’s exit came on the heels of Zomato shutting down its in-house grocery delivery pilot and nutraceutical business. He was also the face of the company’s $1.3 billion IPO in July 2021, which was fully subscribed on the first day of bidding.

Also see: Zomato co-founder Gaurav Gupta quits

In an internal email sent to employees earlier today, Gupta wrote, “I am taking a new turn in my life and will be starting a new chapter, taking a lot from this defining chapter of my life – the last 6 years at Zomato. We have a great team now to take Zomato forward and it’s time for me to take an alternate path in my journey.”

Financial status

In its quarterly results, Zomato reported 26 per cent growth in its adjusted revenue quarter-on-quarter to ₹11.6 billion. Revenue growth was largely attributed to growth in the company’s core food delivery business which continued to grow despite the second Covid-19 wave.

Further, adjusted EBITDA loss reported by the company was ₹1.7 billion in Q1FY22 as compared to ₹1.2 billion in Q4FY21. Loss for Q1 FY22 reported in the company’s financial statements is ₹3.6 billion as compared to adjusted EBITDA loss of ₹1.7 billion. This was said to be largely because of non-cash employee stock ownership plan (ESOP) expenses which had increased in Q1FY22 due to significant ESOP grants made for the creation of a new ESOP 2021 scheme.

Zomato claims to have delivered a billion orders in the past six years, of which about 10 per cent were delivered in the last three months. Last month, it acquired 9.16 per cent stakes in Grofers India Private and 8.94 per cent shares in Grofers’ wholesale vertical Hands on Trades Private Limited.