Restaurant
Zomato never made profit, Domino’s never made loss
What do the following photographs tell about the two food service businesses?
A delivery person from Domino’s:
A delivery person from Zomato:
Answers:
A. Zomato is India’s bigger food service brand.
B. Domino’s has the most number of pizza QSR outlet.
C. Both are doubling down on home deliveries.
The correct answer is none of the above
Domino’s delivery person has a proper uniform and high-quality food storage unit. The motorcycle displays Domino’s branding.
Zomato’s delivery person is wearing half a uniform and a low quality (jugaad)food storage unit (he has to strap it to his shoulder for stability). His motorcycle does not display Zomato’s branding.
Following is a snapshot of their business numbers.
First, Zomato:
Q3FY22 revenue was INR 1112 crore on gross order value of INR 5500 crore
Loss was INR 66 crore (came down from 430 crore from Q2FY22)
1500+ stores in 700+ cities
Total expenses for Q3FY22 was INR 1040.23 crore
Market capitalisation has come down from INR 100,000 crore to INR 63,000 cr
Source: Business Standard
Now, Jubilant Food Works ( Master franchise of Domino’s, Dunkin, Honk’s Kitchen, Ekdum and Popeyes):
Q3FY@@ revenue was INR 1210.77 crore
Net profit was INR 133.19 crore ( up from 123.91 crore from Q2FY22)
Present in 276 cities
Total expenses for Q2FY22 was INR 1259.7 crore
Market capitalisation doubled to INR 37,000 crore approx. in 3 years
Source: Business Standard
What does it tell about the two businesses?
While Domino’s India’s parent company Jubiliant Food Works prepares, distributes and sells its food, Zomato acts as a marketplace, where it doesn’t own the food brands.
Zomato is a provider of technology. Thus, it doesn’t hire the people who prepare or distribute food. It aims to minimise the cost of distribution, as it cannot mark up the prices of the food items. Since Domino’s prepares and distributes its food, it hires full-time employees such as chefs, cooks, and delivery persons. Instead of paying less to them, it offers more value or interesting food to customers.
Zomato’s is present in more than three times the cities than Domino’s. Yet, it brings in the similar revenues. It has never made profit. Domino’s has been profitable for years.
Domino’s focusses on service. It trains and rewards its employees. For Zomato, the only service, which matters, is delivery at the lowest cost. They complain about it.
What can bootstrappers learn
We should aim to build great businesses, which sell quality products and treat their employees well. Zingerman’s founder Ari Weinzweig has built his community of businesses on the back of great service.
He shares the 12 laws to build such businesses:
“You need to give customers really compelling reasons to buy from you.”
This may seem obvious, Weinzweig says, but it’s important that business owners remind themselves that they need their customers much more than their customers need them. It’s about finding a way to be more exciting than competitors. Zingerman’s does this by offering food products that have stories behind them and offering exceptional customer service.
There is more: Pour water Link