Once just a restaurant search site from India, Zomato has over the years successfully expanded itself into a “full stack” platform including food delivery, table reservations and restaurant POS software operating in 24 countries globally. But now, it has a curious problem on its hands—a monster hit.
On 14 November, it launched Zomato Gold, a subscription-based loyalty program that guarantees complimentary food and drinks with every meal at over 1200 restaurants in India’s top metro cities. In less than 3 days, it sold 40,000 subscriptions and brought further sales to a temporary halt, albeit with a promise to soon offer more.
Among restaurateurs, there is panic.
Earlier yesterday, The Ken reached out to a few people to talk about Zomato Gold. One of them was the owner of a Bengaluru-based café & restaurant. The owner asked not to be identified as it may damage their relationship with Zomato. But the anger was palpable.
The restaurant was pitched Zomato Gold around 8 months ago. They were told it would be part of an exclusive and premium club composed of India’s top 250 restaurants. And the customers who would walk in as Zomato Gold members? Well, they’d be the crème de la crème of diners. India’s best.
It sounded like a good idea. And a free one. Even then, they asked the Zomato staff, “What will this cost us?”
“Nothing. New customers will come in. The choicest of customers.”
So, they signed on.
And then they forgot about it. Until the day before when Indian social media blew up with news of Zomato Gold.
For amounts as low as Rs 299 ($4.5) for 3 months, or Rs 999 ($15) for a year, buyers got a free dish or two free drinks for every restaurant order. And you could visit a participating outlet as many times as you want, whenever you want. Once you are in, you simply told them you are a Zomato Gold member while placing your order, and then you go on about your business. Easy peasy.
The offer was almost comically too good to be true, as in most participating restaurants just one meal would mean more than recoup the price of the subscription. In fact, so encouraging was the response that Goyal kept increasing the number of “early bird” subscribers. From 10,000 on the first day to 20,000 on the second to 40,000 by the third.
Coming back to our restaurant. On 14th, even though Zomato Gold started becoming available publicly only between 5 and 6 p.m, the restaurant still had 3 customers who landed up demanding complimentary items with their meals that very same evening.
On day 2, they had 5.
On day 3, they had 5 just during lunch hour.
“Each member of Zomato Gold who’s eaten with us has earned back Rs 500 in just one meal.