Zomato acquired food delivery startup Runnr in a $40M all stock deal. The Runnr acquisition will help Zomato to significantly improve its food delivery business and take on rivals such as Swiggy, FoodPanda etc.

Zomato founder Deepinder Goyal confirmed the acquisition in a blog post. Runnr is a B2B online service provider platform for hyperlocal logistics services.

Zomato Runnr

“We’ve been adding to our Runnr team steadily over the past week; it is already 1,500 strong, and growing by the day…Yes, that’s right, we just signed our long-rumoured acquisition of Runnr,” Goyal said in the blog post.

With the combination of Zomato and Runnr, the combined entity have everything in the stack of building a delightful food delivery service in India and UAE – end to end – listings, discovery, reviews, ordering, and now, logistics. Runnr will continue to function as an independent logistics company (owned by Zomato) offering the full stack of logistical services to players other than Zomato as well – e.g. pharma, grocery, e-commerce, etc. This will ensure that the delivery fleet capacity that Zomato build, operates on a positive unit economics level while serving the mega-peaks in the food delivery business.

Runnr is already efficiently fulfilling 300k orders a month – which is just a tad less than 10% of Zomato’s food ordering volumes. Mohit will remain the Founder and CEO of Runnr and will continue developing his vision along with the rest of the founding team – Arpit, Mukunda, Gnanesh, Vatsal, and Aravind.

Goyal said talks to acquire Runnr had started in May. Mint first reported on 15 May that Zomato was in advanced talks to acquire Runnr in a move that would help Zomato strengthen its food delivery business.

“Emotionally, the deal has been in place for a couple of months now, and both the teams have been working closely with each other quite some time now. So much so, Mohit Kumar, the Founder & CEO of Runnr, has been living in Delhi (moving from Bangalore) for about two months already.

In May, for about a month after the first time Mohit and I spoke about potentially joining forces, he worked with the Zomato team closely to gauge whether the Runnr team would get along with ours. Zomato is an amalgam of many companies (online ordering, point of sales, infrastructure services, advertising, etc.) sharing a unified mission. The independent velocities and strengths of the different teams at Zomato gave the team at Runnr the required comfort that they would have all the levers they needed to build the business the way they always wanted to – while being aligned with a larger mission.”, said Goyal in his blog post. 

The deal also hands out a lifeline to Runnr, which has struggled to raise funds. It has raised about $20-25 million since it started out in 2015 from investors such as Nexus Venture Partners, Blume Ventures and Sequoia Capital. Runnr was a product of a merger between hyperlocal delivery start-up Roadrunnr and food-ordering start-up TinyOwl.

Last month, Zomato managed to deliver 3Mn monthly orders for the first time. It took 13 months to reach the first million orders a month; the second million took 8 months, and the third million took a little over 4 months, Deepinder Goyal posted while the company achieved this new feat.

  • By platform, Android contributes ~51%, iPhone ~38% and Web ~11%
  • The share of restaurant delivered orders is ~93%
  • Very high customer retention – ~65% of newly signed up users for our food ordering business order again from Zomato in the next 12 months
  • CAC is still negligible – Zomato is still not spending money to acquire users and their listings business is still feeding the food delivery.

Prior to its buyout of Runnr, Zomato used to aggregate restaurants on its platform and works with third-party delivery partners such as Runnr and Grab to execute deliveries. In September 2015, Zomato had picked up a minority stake in Grab (Grab a Grub Services Pvt. Ltd) to bolster its food delivery business.

“On my part, whenever I see a delivery boy on the road, I slow down (or stop) to respect the right of way. After all, every meal matters,” said Goyal.