Zomato Expects Loss Amid Slowed Food Delivery Demand

njahan

Official Verified Account

posted on 2 days ago — updated on 1 second ago

Zomato expects to operate at a loss next year due to slowed food delivery demand and investments in 2,000 stores by 2025. Discover more here.

Zomato Expects Loss Amid Slowed Food Delivery Demand

Food delivery giant Zomato is bracing for a bumpy ride in the next year as it projects operating at a loss for the foreseeable future. According to Deepinder Goyal, the company's CEO, a demand slowdown in food delivery services has put a strain on operations, despite their ambitious expansion plans.

On a quarter-over-quarter basis, Zomato reported a 14% decline in consolidated Adjusted EBITDA, amounting to Rs 45 crore, despite improvements in food delivery margins. Another primary factor behind the dip is the accelerated investment in Zomato's quick commerce store network, which has contributed to a significant increase in quarterly losses — up by Rs 95 crore compared to the previous quarter, the company said in its quarterly exchange filing.

Zomato's share price dropped by 3.14% today after the company announced its results, closing at Rs 240.95 apiece on the BSE. The shares had hit an intraday low of Rs 228.80.

Goyal, however, remained optimistic about the long-term vision, and said that that the company is still on track to meet its target of 2,000 stores by December 2025, a year earlier than initially projected. Zomato's focus on expanding its store network is expected to result in near-term challenges, including under-utilised stores that could drag down profits in the coming quarters.

Akshant Goyal, the company’s CFO, highlighted that the investment in quick commerce stores, while costly now, will eventually pay off. He stressed that while the company will likely face a loss for the next one or two quarters, the aggressive expansion will lead to meaningful GOV (Gross Order Value) growth in FY25 and FY26, well above the 100% mark.

"As we continue to bring forward store expansion, our networks may have to carry a greater load of under-utilized stores which will impact near-term profits in the next one or two quarters. These investments will however also likely result in GOV growth remaining meaningfully above 100%, at least for FY25 and FY26," he said.

"Once we come out from this period of expansion, the business is likely to turn sharply from being loss making to becoming meaningfully profitable as a larger part of our business starts comprising mature stores compared to newly added ones," the CFO added.

njahan
Official Verified Account

A passionate and dedicated news writer with a keen interest in delivering timely, accurate, and engaging stories to a wide audience. With a background in journalism, I specialize in crafting compelling articles that inform, educate, and entertain. Whether it's breaking news, in-depth reports, or feature stories, I strive to provide insightful perspectives while keeping the integrity of the facts intact.