Any other business
Zomato's battle to be the champion of independent UK restaurants
15 min read
20 February 2015
Restaurant discovery service Zomato was founded in India, but has achieved a global footprint by expanding its reach to over 130 cities in 22 countries. With the UK a key market for the company's future growth, Real Business spoke to Zomato UK's CEO Kimberly Hurd about why the country is so important as she revealed plans to become the champion of independents and foodies.
Started in 2008, Zomato was created by two Delhi-based strategy consultants who had become jaded with working long hours and the fiddly process involved with ordering food, which struck them as equally tiresome – but this isn’t another Just Eat story.
After collating a series of menus from around the area, the file became increasing popular among peers and they realised that by using their background in engineering that there was a potential business model that could be put into place around food discovery.
Zomato was soon developed and from India the website was launched into Dubai then Southeast Asia, South Africa and Brazil, proving the model’s value to restaurants over and over again.
It was 18 months ago that Zomato came to enter the UK, and Hurd revealed to us that a lot has changed since she joined the company. First off, the website and app experiences were totally overhauled. “At the time of launch, we were a restaurant discovery website and we had launched an app that was a miniaturised version of the website,” she said. “However, we wanted to start looking into more competitive markets with a lot of existing players and very quickly realised the UK is a very competitive marketplace but there’s no-one doing what we want to do really well, which is to provide the most comprehensive breadth and depth of information to discover exactly what it is you need.”
Over the past year, the app has been enhanced more than ever before to become more interactive and user-friendly with multiple filters, improving the customer’s search and chances of discovering a venue they truly want, rather than simply being a smaller version of the website.
Interestingly, it was through chance that self-confessed foodie Hurd secured her post in the top spot of the UK division, having had a lengthy discussion about the service with one of the founders. Frequent travels prompted her to download the app, but she found it had a lack of functionality, including maps, distance and so on.
“I happened to meet the founder at an event and didn’t realise who he was, so I gave him a lot of negative, unsolicited feedback,” Hurd revealed. “I found out quickly I’d put my foot in my mouth, but ended up joining Zomato and I’ve been working with the team over the last 12 months really trying to perfect our product.”
The app will make recommendations for places to visit, while social functionality also makes things unbiased so that customers can leave reviews and communicate with each other. And with mobile generating 60 per cent of the company’s traffic, it was undeniable the channel had to be considered a priority.
Hurd explained: “What separates us from anyone else in the space is that we have a team of people that goes street by street every day talking to restaurant owners and managers, taking pictures, gathering menus and completing a questionnaire with around 57 variables – WiFi, pets, cuisine, location, cost, opening hours and more.
“The team then brings the information back and we do a quality control filter over it and we curate and put it on the site and in the app. It’s literally the most comprehensive information you can get and it’s all uniquely sortable for you.”
Tightening up the app for consumers was one thing, but as a company that also has businesses as clients, the revamp meant restaurants would also benefit.
The introduction of an chain exclusion filter was a way of supporting the smaller independent companies and also users looking for something off of the beaten track.
“We want to be the champion for independents and people who love food,” Hurd declared passionately. “In London, we’re constantly inundated by chains. No matter where you go you’ll see a Starbucks, a Pret, or an Eat, and we’ve got data to show most people end up going to them out of convenience even though they’re not satisfied by their experience.”
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As a food lover and business leader, it’s something the chief executive is unquestionably keen to change. “We created an exclude chains filter so you can avoid the noise. Around 2,000 restaurants per quarter shut down in London because most people don’t know where to go or how to find them,” she continued.
“Chains are taking over more and more because they’re the only ones that can afford the real estate, so they develop a portfolio approach. Slowly but surely it’s dumbing down our choices for food and taking away the independence and love of food, which we want to bring back – whether that’s finding a sandwich that isn’t packaged or a great flat white you don’t have to buy from Starbucks.
“I love any successful business, that’s great, but actually I think real food should assault your senses. You should feel inspired when you’re eating. So much about food and drink is about the experience and quality of ingredients but we just accept compromise every day because it’s easy. We want to help people realise it’s actually quite convenient to make a choice whether you’re spending £5 or £500 and to make sure it’s the best use of your money, time and experience.”
With money in mind and a clear determination to support small businesses and entrepreneurs, the subject turned to how lucrative the anti-chain approach has been and the response independents have had about the newfound support. On the next page, she also details how tequila was a great way to help drive customers into one restaurant and what how the UK operation will be built up.
Hurd assured listing is completely free, noting that the ambition is to be completely comprehensive and adding that advertising is the company’s largest revenue generator, with banners sold on the website and in-app. Meanwhile, a suite of subscription deals are on offer which allow clients to upload promotions that can be pushed to customers, an area that will continue to be expanded, according to Hurd.
She said: “We update data quarterly, so the team will go back to the same areas each quarter. The real challenge is that owning a restaurant is a risky business and there are 23,000 restaurants in London alone. We found out that people try a new restaurant two to three times a year because they just go to places they know, which is a real shame because there’s such a colourful tapestry of restaurants here in London.”
Zomato also has a wider presence across the UK, having launched in Manchester, Birmingham, Edinburgh and Glasgow, working out along the way that each location has a distinctly different vibe and adoption rate, thus the company is observing what works and what doesn’t before branching out further.
As such, the UK will act as the European hub for Zomato operations, as Hurd, said: “It’s a brilliant market to prove yourself because there’s just so many apps. Every day I hear about a new food tech startup, a new app to download, both from lifestyle to food perspectives, but we want to be one source for restaurant discovery and that’s how we plan to be different in this market. Equally, London is a very international city – as an American I’ve lived here for ten years and you can access a broad range of people in here. It’s central and easy to get to.”
The company started the year off by acquiring American rival Urbanspoon, and there’s every chance that UK operations stand to be purchased too. “We’re actively looking for acquisitions and partners, but there’s nothing cemented at present. We do have a lot of opportunities in the pipeline that we’re exploring in the west, so not just the US, but all over Europe,” Hurd revealed.
“Urbanspoon is based in the States but they have a significant number of users in the UK, and we will be integrating communities together in the next three or four months to brand them as Zomato’s. We’ll only ever acquire a company if they’re going to provide additional technological capability, expand our suite or if it’s going to give us entry into a new country or significant traction.”
With a strategy for the UK to become integral to continental development, Hurd plans to scale the 40 employee-strong office, which is up from six team members when she joined a year ago, to 100 people by the end of 2015. Roles will be in the content division, a main focus for the company, and also the sales team.
“From a sales perspective we need more relationship managers and people to get out, especially as we continue to expand our merchant suite. Both of those teams will expand quite rapidly,” Hurd detailed. “We provide a personalised service, so relationship managers work directly with clients to understand their needs to then pair solutions to them. Not every restaurant has the same need.”
She drew upon experience with a Mexican restaurant client, which was seeing busy mornings and evenings on weekdays, but quiet evenings and weekends. After tracking feedback from customers through a campaign, it came to light that customers wanted a brunch option, so one solution was to run a tequila-fuelled dining option to fill the morning and lunch void on a Sunday which turned out to be a success.
“Everything we do on the site is transparent from click-throughs to performance, clients can choose the options and take operational feedback,” said Hurd.
Support can span adverts on the site or app and tracking the results, while pop-ups and street food providers often want instant access to services to upload new menus daily. Alternatively, restaurants that are expecting a slow day or night can send alerts to promote free bottles to users in order to encourage trade.
In terms of the candidates that can help achieve growth across the UK, they’re likely to be young, as the average age of the team members is just 24. Backgrounds vary though, with some fresh out of education while others fancy a career change and have abandoned large corporate companies and banks.
Describing what she’s looking for in her team, Hurd explained: “The first thing is people who literally want to build something and prove the market wrong – they should really want to do something that’s never been done before and you can see that fire very quickly in people. With the right optimism and ambition, anything is possible, so we really try to cultivate a team of people who are really inspired to deliver that.
“There’s a lot of beautiful, romantic stories about startups, but this is a battle. We’re in a fight against the really big guys and don’t have their budgets. The average Series D round in the States is $150m – yes we’ve raised $100m, but over 22 geographies that doesn’t go very far. And if an average round is $150m and we’ve done that over a couple of rounds, it doesn’t give much room to spend money on sponsorships and marketing like a lot of the big guys like Opentable and Bookatable do.
“But we also can’t compete at the real startup level, because we are an established company even though we feel very much like a startup. It means we need hard-working diligent people who are ready to go into battle with us.”