Zomato’s CAGR predicted to be 21% from FY23 to FY27, focusing on high-frequency customers
- ByStartupStory | April 10, 2023
Zomato, a food delivery service, is predicted to grow at a compound annual growth rate (CAGR) of 21% from FY23 to FY27, according to a report from brokerage firm JM Financial, which revised its prior forecast of 25%. The annual growth of investments over a given time period is referred to as CAGR. Instead of concentrating on growing the long tail of customers who order infrequently, the company led by Deepinder Goyal is now investing in customers with high order frequencies. The report dated April 6 stated that while this strategy may increase profitability in the long run, it will have an impact on the growth of monthly transacting users in the short term, which will cause it to revise its earlier growth forecast.
In order to counteract the decline in the number of food deliveries, Zomato relaunched the Gold loyalty programme in January. According to the report, the re-pricing of the membership fee and the shutdown of operations in 225 cities that were losing money should help the company reach profitability soon. Due to the much larger total addressable market that quick commerce offers than food delivery, especially as the level of competition is waning, Zomato and rival Swiggy are doubling down on it as a growth frontier. As part of their future strategies, both businesses are investing more money incrementally in quick commerce than in food delivery.
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