Zomato’s CEO Deepinder Goyal has cited a mix of macroeconomic and competitive pressures for the recent slowdown in the company’s food delivery segment, with YoY growth well below the 20% guidance. According to Goyal, three primary reasons are responsible for the subdued growth: sluggish discretionary spending, a temporary shortage of delivery partners due to the surge in quick commerce, and stiff competition from ultra-fast delivery of packaged food.
Yes, growth does remain below our expectations for now. We think there are three key reasons behind the current slowdown in food delivery –
1. The sluggish demand environment (especially on discretionary spends)
2. Shortage (temporary) of delivery partners due to high demand of delivery partners in quick commerce given the rapid expansion of the industry in the last few months
3. Competition from quick delivery of packaged food from quick commerce leading to drop in demand for food delivery from restaurants
Interestingly, Goyal specifically pointed to the rise of quick commerce players delivering packaged food — a trend reshaping customer behaviour. He said this shift is leading to a drop in restaurant-based food ordering as platforms have quickly scaled up to fulfil impulse snacking and ready-to-eat demands with near-instant delivery.
Adding to the pressure, Zomato delisted approximately 19,000 restaurants during the quarter for hygiene issues, brand mimicry, and listing manipulation. The decision, although necessary for maintaining trust, also contributed to a decline in order volume. Additionally, the quarter had one less day than the previous year due to the leap year effect.
Despite this, Goyal reiterated confidence in long-term fundamentals, citing low penetration of restaurant food and rising urbanisation in India as structural tailwinds for the sector.
