Zomato founder-CEO Deepinder Goyal has been forced to ditch the green uniforms that were meant for his company’s latest “innovation”—a ‘pure vegetarian’ food-delivery fleet. It fetched him some harsh criticism and social media trolling, but as a business idea, it’s brilliant.
The concept of a ‘pure veg’ delivery fleet is a shrewd corporate manoeuvre in a country of diverse and often rigid diet and consumption preferences. It unlocks a potentially sizable and lucrative slice of the consumer base that demands exclusive vegetarian cuisine.
This isn’t without precedent.
Global airline meal menus offer a multitude of options even within the vegetarian spread—regular veg, Jain-veg, Hindu-veg, Asian-veg, vegan, and so on, because the demand for these is large enough. Zomato’s addition of a ‘pure veg’ option—colloquial presumably for what the airlines tend to call ‘Hindu veg’—therefore aligns seamlessly with industry practices.
Several restaurants across India use separate kitchens and even segregate the workforce, utensils and other equipment used in preparing vegetarian and non-vegetarian dishes. This is because for many in India being vegetarian has to do with strict religious mandates, not dietary preferences. (Although there is a market of those that are vegetarian by choice too.)
Zomato is smart to have rolled out a dietary option tailored to cater to this large population. As per the National Family Health Survey (2019-21), while a large number of people in the country consume non-vegetarian food in some form or the other, the “vegetarian” population dominates. The ‘pure veg’ option, in fact, could strengthen Zomato’s position in the food-delivery market, even potentially bolstering its profits significantly.
The concept of category growth through the expansion of product options is a tried and tested way of building new consumer markets. The ice cream and desserts industries, for instance, now also cater to diabetics. Upscale restaurants accommodate individual dietary preferences—low salt, less oil, no sugar, vegan, and requests for omitting specific ingredients.
This is precisely the niche that Zomato has recognized—perhaps by analysing the preferences expressed by its user base—and capitalised on for widening and deepening its market.
Remember Keziah, the fruitarian, in the Hugh Grant-Julia Roberts blockbuster Notting Hill? In one of the film’s iconic sequences, Grant asks what exactly fruitarians are. He’s told: “We believe that fruits and vegetables have feelings, so we think cooking is cruel. We only eat things that have already fallen off a tree or bush—that are, in fact, dead already.” Grant, who plays William, a bookstore owner, asks about carrots on the table. “Have been murdered, yes,” says Keziah (Emma Bernard). “Poor carrots. How beastly!” replies Grant.
Specialised, even finicky diet choices, whether out of choice or for considerations of faith, belief systems, or health, are a potential market for a company like Zomato. Add to that followers of fad diets such as Keto, Paleo, Macrobiotic, raw food, and so on and so forth. If users are willing to pay, delivery companies are bound to see opportunities in catering to special diet needs.
It may be premature to put a firm number to it, but if users who would otherwise not have ordered vegetarian food using Zomato start to do so, potentially up to 10-20% additional revenues may accrue to the company.
The announcement has in fact prompted positive responses from financial analysts, who expect the roll-out to trigger an increase in sales and profits. Bernstein has raised its target price for Zomato shares to ₹200 each from ₹180. UBS has maintained its ‘buy’ stock recommendation on the Zomato stock, setting a target price of ₹195 per share, suggesting a potential upside of 22%.
On Thursday, a day after Goyal decided to ditch the green uniforms meant for his ‘pure veg’ delivery fleet, Zomato shares hovered near their 12-month highs, before settling down to ₹169.35 per share on BSE, up by about 2%.
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