Will Zomato Gold Succeed: Part 1?

Is it old wine in a new bottle?

Brands have been offering loyalty schemes since long.
Amex Card, ICICI Payback and Amazon Prime are successful loyalty schemes.

Nearbuy, an Indian startup ( Similar to Groupon) offers a similar service for food and multiple other categories.

What is it?

Zomato Gold offers two types of deals at 1200 restaurants in Delhi-NCR, Mumbai and Bengaluru.

One, a complimentary dish with every dish.

Two, two complimentary drinks with every 2 drinks.

There is no cap on days, menu items, restaurants.

How do Indians eat out?

Indian food market is INR 644000 Crore market, growing at 10%.
Only 33% of this is organised.

As per NRAI report four types of people eat out.

1. Bonding seekers:

  • Eat 2–3 times/ month.
  • Spend INR 5500/ month
  • Mostly Indian cuisine, then Chinese.

2. Fun Seekers:

  • Eat 5–6 times.
  • Spend INR 4600/ Month
  • Mostly American food & pizza.

3. Socializers:

  • Eat 4 times/ month.
  • Spend INR 6500/ month.
  • Mostly QSR & casual, then Italian, then Indian.

4. Discerning Urban consumers:

  • Eat 3–4 times/ month.
  • Spend INR 8700/ month.
  • Mostly casual dining, then Italian, then Pan Asian.

Will Zomato Gold Make More People Eat Out?

Zomato wants people to go out more often and eat more often. It’s tough to change the behaviour of people.

Discounts and coupons trigger customers. The lure of complimentary food and drink may encourage people to try new food, or visit their favourite places more than they visit now.

Zomato has curated 1200 restaurants. Users will not have to scout, as the list is already there for all types of eaters. Also, the membership makes it easier to try new places.

Is it good for restaurants?

Premium restaurants may benefit. Low cost ones may not.

Deal hunters are not premium customers. Restaurants miss out on serious customers, who value the craft, and pay premium.
It may also hamper reputation of the restaurants.

Groupon, an online discount website, sent people in droves to restaurants. It spiked the footfalls. In the long run, it was harmful for businesses .

Also, restaurants may not cope up with higher footfalls.

Will It Succeed?

Marketing academics Mark Ritson and Byron Sharp advise against running loyalty programs.
Likeability and trust leads to loyalty. Price, quality and convenience lead to purchase.

40,000 of 1.7 crore Zomato subscribers have subscribed for the membership. 
People are already calling it a hit .

Our take:

Brands grow with new users. Membership schemes like Prime are successful because, they give access to larger ecosystems ( retail, movies, music, books etc.). Zomato is just about food. It may not grow the user base or increase memberships as they may want to. — Abhishek Rai

Zomato has a competitor; Eazydiner . Celebrity journalist Vir Sanghvi is its cofounder. They offer discounts and booking service. 
For example 20% discount on food bill at Soda Bottle Openerwala will attract more people than one plus one offer by Zomato Gold.

2. Zomato is back with the Gold Offer today.