With the aim of becoming the “Google of food”, Zomato made five acquisitions in 2014 — one each in New Zealand, Czech Republic, Slovakia, Poland and Italy.
It also raised Rs 365 crore or Rs 3.65 billion) in a fresh round of funding, taking its total funding to $113 million.
Pankaj Chaddah, co-founder and chief operating officer, tells Itika Sharma Punit the company will continue to explore acquisition opportunities and that Zomato has done “only one per cent” of its potential. Excerpts:
This year has been eventful for your company. What was the approach like?
We have had a two-pronged approach — expansion across multiple geographies and building vertical depth within the restaurant space.
Besides our aggressive focus on global and local expansion, we expect to see in-app payments and real-time consumer-merchant interaction very soon in the markets where we have strong merchant relationships.
What’s the strategy in the string of acquisitions you have done?
The strategy is not really about build-versus-buy for us; it's about hitting the ground running with the right team.
We have a labour-intensive model, and execution is very important for us.
We enter markets as soon as we see a product-market fit and have a team that can make things happen quickly.
These acquisitions will definitely help us strengthen our market share across the various countries.
In countries where there is a gap in the market and no clear market leader, we will continue to build from the scratch.
Acquiring leaders with local insight and experience in countries we want to expand to, is obviously a good choice.
Could we see you continuing the current pace of acquisitions? If yes, which geographies are on your radar?
We are entering Malaysia in the next quarter, and are looking at more markets in Europe and South East Asia at an organic level. We are looking at launching in Australia very soon as well.
If there are great local products whose vision matches ours and we see value in combining our products, we are open to exploring the acquisition route in these markets as well.
While your inorganic expansion has made headlines, how is business moving organically?
We are leaders in most markets of our presence.
Our Indian operations reached Ebitda (earnings before interest, tax, depreciation and amortisation) break even in December 2012 and we had already broken-even with our operational costs in Dubai in a span of only six months since our launch there in September 2012.
We have strong market share in the Philippines, South Africa, New Zealand, Portugal, the Czech Republic, Slovakia, and Indonesia.
Even tough markets like the UK and Turkey have started showing considerable growth in terms of traffic and user adoption. We’re continually evolving with both our consumer and restaurant services, but we believe we’re only one per cent done at the moment with loads more to do.
How are you managing integration of so many acquisitions?
For every acquisition, we chart an integration timeline.
There are various factors that come into play during the consolidation period of each acquisition, so integrations are phased out to ensure a smooth transition in the user experience for users and merchants from the acquired company into Zomato.
It also depends on the nature of the product we acquire.
For example, the consolidation of MenuMania and Zomato took only about a month, while consolidation of the Czech and Slovak products took a little under three months. Needless to say, our mergers and acquisitions, legal, technology and international operations teams have been extremely agile and very efficient in making this happen.
What is your view of the internet-based restaurant discovery guide market?
Do you believe multiple players will continue to be around or a single one will emerge as the winner?
The modern customer and businesses rely heavily on the internet to find products and services they need, and people will love a service if it makes their lives simpler.
Multiple players will definitely continue to emerge because of the massive potential of the internet-based restaurant search and discovery space. What’s going to set a particular player apart is a unique product and service offering.
We are constantly working to disrupt the restaurant sector through product innovation, with the aim of becoming the go-to restaurant search service in every market we’re in.
Photograph: Hitesh Harisinghani/Rediff