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Zomato to focus on Hyperpure, expects it to be larger than food business

According to Kaushik Dutta, chairman of the company’s board of directors, Zomato, an online food delivery service, has chosen to focus on three important areas: food ordering and delivery; supplies to restaurants through “Hyperpure” and quick commerce.

The move, according to Dutta, was made as part of a goal to concentrate “only on areas that have the potential to become genuinely substantial businesses 10 years from now,” during its first annual general meeting (AGM) since going public.

Despite numerous obstacles, including disruptions brought on by the Covid-19 outbreak, macroeconomic uncertainties, rising inflation, and rising fuel prices, the food major was able to generate good top line growth in FY 2021–2022, according to Dutta.

Given the current size and scope of the organisation, it was decided in 2022 to only concentrate on areas that have the potential to grow into substantially large businesses ten years from now after thinking on the strategic priorities as a corporation.

He continued by saying that Zomato would concentrate on three key areas: food ordering and delivery, Hyperpure, and quick commerce.

Revenue from operations for Hyperpure increased 40% to ₹272.7 crore during the first quarter of the fiscal year 2022–23 (FY23) from ₹194.2 crore the previous quarter.

Adjusted revenues for Hyperpure for the entire FY22 were ₹540 crore, compared to ₹4,760 crore for Zomato’s food delivery service.

He added that food delivery in India still has a sizable growth potential and that Zomato’s core food delivery operation is steady and headed for profitability.

Although the consumption of restaurant cuisine has increased in recent years, he argued that India still has a much lower overall penetration than its counterparts throughout the world.

He added the business is already beginning to witness great adoption of its services by restaurant partners with regard to Hyperpure, Zomato’s supply platform for restaurants to buy fresh ingredients.

“We think that this business has the potential of becoming as large or even larger than our food delivery business because the addressable market here is potentially larger than food delivery,” he added.

On quick commerce, he stated that the two teams have begun to integrate after the acquisition of Blinkit was finalised this month.

As part of its aim to engage in rapid commerce businesses, Zomato announced in June that it will acquire Blink Commerce Pvt Ltd (previously known as Grofers) for ₹4,447.48 crore in a share-swap arrangement.

According to Dutta, Zomato considers quick commerce as a logical extension of its core meal delivery business and expands its target area substantially.

By maximising the use of the company’s existing customer base and hyperlocal delivery fleet, it could assist in helping the company become a more profitable business.

“With this, we now have a clear execution plan around these three businesses and our focus as a team will be to get these businesses to meaningful scale and profits,” Dutta said.

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