Zomato Gold has 1 million subscribers, but for investors it's not a feast

Topics Zomato | zomato ads

The country’s oldest food tech and online restaurant discovery and food delivery portal Zomato’s premium subscription service, Gold, seems to be in trouble with its investors. 

According to sources in the know, major investors have indicated that Gold should either go through a major brand revamp or its operations should be gradually shut down.

Sources suggested that the investors want Gold to be exclusive invite only service, as originally envisioned, since it was targeted at high-end restaurants serving those who might already be their patrons. In its present form, they believe Gold is just being used by deal seekers and is not a way to get client stickability. 

“Investors believe there are issues with Gold. When it was presented to investors, Zomato promised it to be a niche service that would not lead to any significant cash burn and would bring in a new set of loyal customers, benefitting high-end restaurants as well as the firm. But when almost all kinds of restaurants and customers started getting added, investors thought that it was not getting the required results,” said a source close to the company. 

According to Zomato, Gold subscriptions have grown almost 100 per cent in the past eight months. Since the last fundraising of over $200 million in 2018, Zomato has not been able to raise any significant funds. The company is in the midst of a bruising battle with its biggest rival Swiggy and needs funds to take on the company that has been launching a host of new services.

Sources said that Zomato has been told by investors that it has to make a host of internal changes, including doing a complete revamp of Gold before its next funding round.

“Swiggy has launched services like grocery. Zomato needs to focus in the right direction and not just on discounting food and services. Next round of funding would depend on lot of the changes, the company makes over the next few months,” said the source. While the service found a lot of takers, many of the affiliated restaurants have, over the last one year, backed out. Recently over 300 restaurants in Gurugram affiliated to National Restaurant Association of India (NRAI) observed a #Logout campaign.

In reply to a detailed questionnaire asking Zomato if it would consider revamping Gold, the company said that as of now, less than 1 per cent of the restaurant partner base of Gold has supported the challenges raised by the NRAI.

“The evolution of our dine-out offerings has always been driven by the objective of driving growth of the restaurant industry. As Indians, we do not dine-out as much as our global peers and Gold was launched to push the dining-out experience. Zomato is as much in it as the restaurants that saw merit in this solution and signed up to change consumer behaviour towards 'eating-out'. The initial response and its growth in the past 18 months are a testament to its success,” the company said.

The firm said that they are constantly in touch with the industry to discuss their feedback and address any issues they may be facing, including a discussion that happened with respect to its new product, Infinity Dining, last week between Zomato leadership and NRAI managing committee members.

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