20-somethings. A penchant for restaurant food. And Zomato’s loyalty programme, Gold.

These are the three ingredients that Chandni Gajaria, 29, a freelance photographer from Mumbai; Ivan Mehta, 28, a Delhi-based journalist; and Shradhha Verma, 23, from Ghaziabad, who is currently between jobs; have in common.

Their restaurant choices are now governed by loyalty programmes. Gajaria, Mehta and Verma open the Zomato app, check if a restaurant offers discounts for Zomato Gold members. Yes? Awesome. No? Go to a partner restaurant.

Gold membership guarantees diners one of two options—buy-one-get-one on food, and buy-two-get-two on drinks—at over 4,500 partner restaurants across the country. A Zomato Gold subscription can be bought in the form of a Starter Pack—Rs 300 ($4), three uses, no expiry date—or Unlimited Pack—Rs 1,050 ($15), unlimited usage for one year.

But while Mehta has renewed his membership after a year, Gajaria isn’t sure she will and Verma is sure she won’t.

Chances are you will get a similar split verdict if you talk to a larger set of Gold subscribers. Partner restaurants are no different. Many have quit Gold over the last 15 months. Zomato did not share the number of repeat subscribers or restaurant partners who decided to discontinue.

In spite of such mixed responses, Zomato Gold continues to grow. It today accounts for 10% of the company’s revenue, COO Gaurav Gupta said in an email interview with The Ken. According to a blog on Zomato’s website, its revenue rose 45% to $74 million in FY18. Zomato is, reportedly, also expecting Gold to bring in $20-25 million in revenue by the end of this year.

On 4 March, Zomato sold its food delivery business in the UAE to Germany’s Delivery Hero Group for about $172 million—according to Zomato’s second-largest shareholder Info Edge (India) Ltd—as the unicorn retreats to defend its home turf in a pitched battle against cash-rich rival Swiggy. At stake are the bragging rights in India’s relatively nascent food-tech sector.

Gold is not a part of the UAE deal though. It is increasingly becoming clear that Gold is Zomato’s crown jewel.

The company is focused on expanding Gold to new markets as well as creating depth in existing markets by introducing more features and improving restaurant assortment. But at the heart of this strategy lies the big question of customer loyalty.

Dr Loyalty and Mr Discounts

“The customer will always look for cheaper deals. So you gain them by cutting prices, but at that price point, there is no loyalty. The consumer will also go to whoever offers a better deal,” says Rahul Singh, president of the National Restaurant Association of India and founder-CEO of The Beer Café.

AUTHOR

Pradip Kumar Saha

Pradip has been a journalist for close to 12 years. In his previous stint at financial newspaper Mint, which lasted over a decade, he switched to reporting from desk and wrote on a variety of subjects, including sports, food, whiskies and all things luxury. Born and raised in Patna, Pradip has a diploma in journalism from Indian Institute of Mass Communication. He is interested in good stories across beats. When not pursuing a story, he divides his time between food, tea, whisky, watches, Ghalib and Gulzar, in no particular order. At The Ken he writes weekend features and also covers companies like Uber, OYO, Zomato and Delhivery.

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