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Growing pains of Zomato: From raising cash to dealing with criticism

ET Online|
Sliding in popularity
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Sliding in popularity

Things are not hunky dory with food delivery platform Zomato. After winning praise from some quarters for refusing to resolve a customer's complaint about being assigned a Muslim delivery executive for his food order, it also received flak about serving 'halal' meat. People left one-star reviews for it on Google Play Store and removed the app from their mobiles.

AP
Protest by delivery executives
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Protest by delivery executives

On Monday, a few hundred delivery executives of Zomato in north Howrah, have gone on strike and demanded a pay revision and the right to refuse delivery of pork and beef packets. This received support from two Trinamool ministers on Sunday. The delivery executives were initially claiming that a delivery trip that fetched them Rs 80 was revised to Rs 25 a trip, but it soon assumed religious tones with the Hindu and Muslim delivery executives raising their voice for being made to deliver beef, or pork, respectively. Nearly 200 delivery executives in north Howrah were participating in the protests.

BCCL
Investment issues
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Investment issues

Meanwhile, Zomato's key stakeholder, Ant Financial, is likely to have a critical say in the food delivery platform's plans to raise around $500 million in a new funding round, and may even push it to forge a closer working relationship with Paytm. The financial affiliate of Chinese internet giant Alibaba, exercised veto rights on all matters when it invested in the restaurant recommendation platform in October last year.

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Partnerships that didn't work
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Partnerships that didn't work

Zomato had raised $210 million last year when it signed an agreement with Ant Financial, which made it an Ant Financial ecosystem company along with the Vijay Shekhar Sharma founded Paytm. Ant Financial, therefore, is likely to demand that the interests of Paytm be taken into consideration. This will end up restricting Zomato's flexibility to operate in or take decisions on payments. There are provisions in Zomato's bye-laws which protect the interests of Paytm. Earlier this year, the Gurgaon-based firm had integrated itself into the Paytm app, but the partnership was dissolved a few months ago.

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Unhappy restaurant owners
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Unhappy restaurant owners

Zomato is also facing resistance from restaurants over its all-you-can-eat dine-in programme, re-igniting an ongoing battle with food aggregators. Infinity Dining, which launched in July, allows Zomato Gold customers to walk in to a restaurant and order unlimited meals for a fixed price, via the app. Restaurants say loyalty programme has led to food wastage, while earnings have hardly improved. Several restaurants have taken to Twitter to complain about Zomato Gold and Infinity Dining. Restaurant associations, too, say they're receiving more than the usual number of complaints from members, who are seeking their intervention.

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Handing the pink slip
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Handing the pink slip

Last week, Zomato laid off around 60 employees from its customer support team in Gurugram, dubbing it a correction carried out due to improvement in service quality over the last few months. "The percentage of orders requiring support have come down creating a small number of redundancies for 1.2% of our workforce," a company spokesperson said.

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