Pankaj Chaddah on Zomato’s next moves

Gurgaon-headquartered Zomato Media, which runs restaurant listings and reviews site Zomato, is currently in the market to raise a reported $10 million round of funding to power its expansion into overseas markets. Founded in 2008 by IIT Delhi alumni Deepinder Goyal and Pankaj Chaddah, the company (earlier known as Foodiebay) has raised $6.5 million in funding so far from Naukri.com promoter Info Edge. We chatted briefly with Chaddah on the what’s coming up for the company in the next six months. Edited excerpts:

1. Have you closed the $10 million round yet? How do you plan to use the funds?

We have not made the funding public yet. We will announce it maybe in the next 30 days. It’s close to $10 million. The funds will be used to finance our global expansion. Typically when we go into a new market there are expenses in terms of complying with local regulations and hiring (we usually hire locally). We don’t spend so much on marketing and rely more on word-of-mouth.

2. How many new markets are you targeting this year?

Probably 5-6 markets. We’ll be in the Philippines (Manila) and South Africa in the next 2-3 months. Then we will probably do Turkey and Brazil.

3. You’ve now raised funds from Info Edge over three rounds. How did you get to know them?

We actually knew them from the time that we were known as Foodiebay. They liked the team and the idea and decided to back us. They’re a fairly hands-on investor. They’ve helped strategically, for instance, with our global expansion with references and so on.

4. What are the major cost components in your operations?

The major component of our operating costs is salaries. As I said earlier, we don’t spend much on marketing and sales. This is a necessity-based product and one doesn’t need to spend so much on marketing.

5. So what is your marketing strategy? How do you stay top-of-mind?

It has been mostly word-of-mouth so far. We focus on the content, ensure that the information on the site is always updated. This has helped us retain top-of-mind recall with consumers.

6. Talk us through how you keep the information/ content on the site fresh.

We have people, field staff on the ground across cities. We also get a lot of inbound information when new restaurants are launched. They write in to us. About 4-5 per cent of the information you see on the site is through inbound channels. Our field guys go out on their bikes, makes the round of restaurants in their allotted localities, talk to the restaurants and collect information on changed telephone numbers, new menus, and things like that. I would say that 99.9 per cent of the database is updated every three months.

7. What is the current size of the team?

The current team is about 200 people. Most of these are currently in India. We’re growing the team and will add more numbers in the next few months.

8. How do you make money? Do you have plans for multiple revenue channels?

We don’t charge for the listings. Those are absolutely free. What we do is sell ad space. When you run a search or look at a review you will see a bunch of ads running on the right hand side of the screen. That’s the targeted advertising that we charge for and we’re making enough money from that channel. We don’t have plans to open up more revenue channels. We’d like to just focus on the content right now.

9. What new features, developments can we expect from Zomato in the next six months?

We’ve just introduced a photo upload feature (for the reviews). We’re getting to new overseas cities. We’ll be introducing listings of catering services. There’s a very big overlap between catering services and restaurants. Most restaurants also offer catering. The price points are higher. An average catering contract in Delhi, for instance, can cost Rs 1.5 lakh.

10. Run us through some of Zomato’s current numbers.

We’re at about 10 million users per month and present in 19 cities and five countries (UAE, Sri Lanka, United Kingdom, Qatar and India). The site covers 75,000 restaurants. In terms of pageviews on the site, one user equals eight pageviews.