Zomato in Talks to Acquire Runnr to Take on Swiggy in Delivery Biz

The all-stock deal is reported to be worth $20 million.

Zomato will no longer offer online food services in four Indian cities. (Photo: Twitter/@Zomato)

It looks like consolidation is taking over the food tech space as well. India’s go-to restaurant discovery startup, Zomato, is in the advanced stages of talks to acquire delivery startup Runnr. As per a report in Mint, this move will help Zomato further strengthen its food delivery business.

If the deal goes through, it is likely to give Zomato a fleet of delivery personnel to take on its biggest rival in the food delivery space, Swiggy.

As per the Mint report, Zomato might be buying Runnr, run by Carthero Technologies, in an all-stock deal for about 20 million dollars. The final contours of the deal are yet to be finalised.

Food delivery currently contributes only about 20 percent to Zomato’s revenues. It claims to have served 2.1 million orders in the month of March. Notably, Zomato currently aggregates restaurants on its platform and works with third-party delivery partners such as Runnr and Grab to fulfill deliveries.

The company had invested an undisclosed amount for a minority stake in Grab (run by Grab a Grub Services) in September 2015 to strengthen the food delivery business.

In terms of size and revenue, Zomato is already quite ahead of rival Swiggy. Zomato recently announced that its delivery revenue grew eightfold to nine million dollars in FY17. On the other hand, Swiggy earned a revenue of about Rs 23.59 crores in FY16 - in comparison to only Rs 11.59 lakh in FY15 - but its losses also grew nearly 65-fold.

Zomato’s total revenue in 2016-17 rose 80 percent from a year ago to touch 49 million dollars due to the growth in advertisements and the food delivery business, as per the Mint report.

Runnr, earlier called Road Runnr, acquired the beleaguered TinyOwl that had shut down operations in all cities but Mumbai in June 2016. While it first started off as a B2C food delivery platform, it changed tracks eventually.

The company has managed to raise about 25 million dollars since it came into being.

Sources told Mint that Runnr significantly reduced its cash burn to 300,000-500,000 dollars per month.

“But they have less than six months’ cash left. The current market scenario is grim and it may be difficult to raise more,” the source said.

(This article was originally published in The News Minute)