Zomato Lost Market Share In Food Delivery Market In Q3: ICICI Securities

Zomato may have lost market share in the food delivery segment in the third quarter (Q3) of the financial year 2024-25 (FY25) amid rising competition, according to ICICI Securities. 

As per Economic Times, the brokerage attributed this potential decline to Zomato’s rivals scaling up 10-15 minute food delivery business faster. 

“Food delivery growth slowed in Q3 FY25… Management attributed this to a slowdown in demand but maintained its long-term guidance of 20% YoY (year-on-year) growth…We believe Zomato may have lost some share in food delivery in Q3 FY25 as competitors scaled 10-15-minute delivery faster,” ICICI Securities said.

This is in contrast with what Zomato executives said in the post-earnings analyst call on Monday (January 20). Zomato CFO Akshant Goyal downplayed the impact of the 15-minute delivery rivals, saying that the quick offering had no impact on Zomato’s food delivery business in Q3 FY25. 

“I don’t think any of this has so far had a material impact on Zomato restaurant aggregation food business…any form of 10-minute delivery is at a very early stage and will not move the needle at all even if you put it together,” said Goyal. 

Recently, Zomato began offering 15-minute food delivery service on its main app, while its quick commerce vertical Blinkit launched a new app, Bistro, to offer 10-minute food deliveries.  

Zomato’s rival Swiggy has two offerings, Bolt and SNACC, in the sub-15 minute delivery space, while Zepto has Cafe that offers a similar offering. Additionally, new entrants like Accel-backed Swish, Zing, Magicpin and Ola too have been battling it out in the 15-minute delivery space. 

The report comes a day after Zomato released its subdued financial numbers for the quarter ended December 2024. Even as all of its B2C businesses posted year-on-year (YoY) revenue growth in excess of 90%, the core food delivery segment was the sole exception and could manage an adjusted revenue of INR 2,413 Cr in Q3 FY25, up a mere 17% YoY. 

The trend continued in terms of gross order value (GOV) of the segment as well, as the metric grew a mere 17% YoY to INR 9,913 Cr during the quarter under review as against the company’s expectation of 20%+ YoY GOV growth.

As if this was not enough, Zomato also saw a sequential decline in the number of monthly transacting customers in Q3 FY25 to 20.3 Mn versus 20.5 Mn in Q2 FY25. 

Nevertheless, Zomato has set its eyes on scaling up its quick food delivery business over time. In a letter to the shareholders published alongside Q3 FY25 numbers, Zomato founder and CEO Deepinder Goyal said that data shows that bringing down delivery time creates incremental demand for restaurant food and leads to “meaningful expansion” of demand on the platform. 

“We launched Bistro targeting the large in-office market wanting quick access to snacks, meals, and beverages within 10-15 minutes. This market is currently addressed by on-site vendors/ vending machines and is not catered to evenly across geographies by the existing food delivery options,” he added.

Meanwhile, markets reacted sharply to Zomato’s Q3 numbers as the stock fell as much as 12.78% to INR 210.15 during the intraday trading on the BSE on January 21. Subsequently, shares of the foodtech major closed the day 10.92% lower at INR 214.65 on the BSE. 

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