A day after media reports claimed Zomato is shutting down it 10-minute food delivery service, the company has refuted the same and announced that it is rebranding the business.
As per earlier reports, the company had decided to scrap Zomato Instant due to struggle with its growth amid tough market conditions and challenges in achieving profitability that the company hoped for.
“Instant is not shutting down. We are working on a new menu with our partners and rebranding the business. All finishing stations remain intact, and no people are impacted by this decision," a Zomato spokesperson said.
The stock fell 14 percent intraday on January 25, 2023, which is the steepest fall since January 24, 2022 when it saw a 19 percent drop. Its shares were trading at Rs 48.05 on NSE as of 1.27 P.M down 7.6 percent compared to yesterday’s closing of Rs 52.
Zomato Instant was launched in March last year piloting across Bengaluru, Gurugram and in few areas of Delhi.
“The fulfilment of our quick delivery promise relies on finishing stations, located in close proximity to high-demand customer neighbourhoods. Sophisticated demand prediction algorithm and future-ready in-station robotics are employed to ensure the food is sterile, fresh and hot at the time it is picked up by a delivery partner." CEO Deepinder Goyal had earlier said in a blog post.
The service was offered through finishing stations, which stocked few bestselling dishes from restaurants based on demand predictions and preferences.
According to sources privy with Zomato’s plan, the company had set up only five such finishing stations and was struggling to scale it.
CEO Deepinder Goyal have also announced 800 job vacancies across five roles through a LinkedIn post with roles, including chief of staff to the CEO, generalist, growth manager, product owner and software development engineer.
This development comes at a time as Zomato has also been dealing with a string of high-profile resignations over the last year with Rahul Ganjoo, head of new initiatives resigning in November 2022 followed by Siddharth Jhawar, head of intercity legends, the company’s inter-state delivery service and more recently Gunjan Patidar, one of Zomato's original co-founders and chief technology officer who quit earlier this month.
Another major development has been the relaunch of its loyalty programme rebranded as 'Zomato Gold' replacing its earlier versions of 'Pro' and 'Pro Plus' which were likely discontinued for new subscriptions and renewals in early Q2FY23.
"The relaunch of the loyalty programme is important due to growing concerns on sequential growth in Zomato's food delivery business and the high likelihood of the company having lost some market share to Swiggy in recent quarters as the latter had continued to run its loyalty programme especially when 'Pro Plus' was absent," analysts at JM financial wrote.
The share price of Zomato has tanked 51.6 percent in the last one year.
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