Riders for delivery platforms Zomato, Swiggy, Blinkit and Big Basket have become increasingly common on roads across India's metros. But at the same time people in smaller cities are yet to order in food at the same rate as people living the fast-paced life in Mumbai, Bengaluru or Delhi. This has forced food delivery giant Zomato to exit from 225 small cities.
Announcing its third quarter results for FY23, the startup mentioned that these cities together only contribute 0.3 per cent of its total gross order value. The reduction in footprint comes after Zomato had extended its food delivery business to 1,000 cities across India. It also maintained that while the payback period for these cities wasn't good enough, pulling out from the territories won't have any significant impact on costs.
Due to a slowdown in the food delivery sector, Zomato's adjusted revenue from the service went down in the October to December quarter, compared to the July to September quarter. The exit from small cities comes at a time when Zomato has scaled up hiring, while the tech sector is hit by layoffs globally.
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