India-based B2B/B2C restaurant business Zomato is scaling back its physical presence in markets including the US and the UK and will take a "remote management" approach instead.
CEO and founder Deepinder Goyal on a call with analysts that Zomato is "concentrating its cash and time" on 14 countries where it has a leading position.
He said that the UK and US were not "focus markets" for the business and that it was proving expensive to reach the tipping point where their presence could be monetized. The points of sale will continue to operate but all functions will be run from its Indian HQ rather than by staff on the ground.
The same approach will also apply to Canada, Ireland, Sri Lanka, Chile and Brazil.
Zomato's main markets are India and the UAE from where 45% and 20% its revenues are generated respectively. He added that India and the UAE's share was reducing by 2% a month as its other core markets grow more quickly.
Turkey was referenced on the call as a particularly strong market, with Australia also mentioned. It bought the top slot here via the acquisition of Urbanspoon at the start of 2015.
And its learnings from Urbanspoon are informing its new remote management approach: "It became the market leader in Australia without setting foot there," Goyal said.
He used an example of Lisbon compared with Delhi as an example of the scale of the opportunity in its chosen markets.
"There are more people in Delhi than Lisbon, but people eat out more in Lisbon, and the average order value is higher, so Lisbon has the potential to be twice the size of Delhi for us."
The news came at the same time at InfoEdge, which owns a 47% stake, revealed that Zomato recorded a pretax loss of Rs492.3 crore ($73 million) for the year to end-March16, a 262% higher than the Rs136 crore ($20 million) last time.
At the same time, revenues for the year have doubled during the year to Rs185 crore ($28 million) and revenues are guided to double in the current year.
The revenues doubling, at the same time as costs come down as a result of the scaling back, gives Goyal the confidence to say that the business is "in good shape". It is not in the market for additional fundraising and has a cash balance of $35 million, a modest amount for a business which was valued at $1 billion less than a year ago.
Related reading from Tnooz:
Zomato boss responds to analyst’s battering (May 2016)
Zomato restructures, lays off more than 100 in the US (Oct 2015)
Zomato earmarks latest $60 million for new business lines (Sept 2015)