Zomato now wants discounts to convert demand, not create it

For years, discounts have been one of the most visible weapons in India’s food delivery battle. But as the category matures and Zomato moves deeper into profitability, the company is changing the role discounts play in its marketing playbook. Instead of using promotions to manufacture demand, Zomato increasingly wants them to convert consumers who are already looking to order.

“At Zomato, we think of discounting as a precision instrument; it's built to convert intent that already exists, rather than manufacture demand that isn't there,” Sahibjeet Singh Sawhney, marketing head, Zomato, tells Fortune India.

At the same time, Zomato continues to spend heavily on acquiring and retaining customers. Its total marketing spend stood at ₹3,350 crore in FY26, up 70%, with investments broadly divided between price promotions and creative and media. Q1FY27 spends stood at ₹945 crore, marking a 40.8% increase year-on-year from ₹671 crore and a 1% increase quarter-on-quarter. But Sawhney says the balance is evolving as the business matures, with the company increasingly leaning towards performance led acquisition while retaining brand investments around seasonal peaks.

Zomato is driving user acquisition largely via performance and keeping Zomato top-of-mind when the category sees seasonal peaks. “Increasingly, that means leaning further into performance-led acquisition, while holding our ground on brand during category peaks. This approach has worked well for us so far and we keep testing it,” he says.

The strategy is playing out against a growing food delivery market. Zomato’s food delivery business reported 20.1% year on year growth in net order value to ₹10,769 crore in Q1FY27, while adjusted revenue rose 33.1% to ₹3,537 crore. Adjusted EBITDA jumped 155% to ₹606 crore, taking the margin to 5.6% of NOV. Monthly transacting customers also increased to 27.2 million, from 22.9 million a year earlier.

At the parent level, Eternal reported ₹20,211 crore in consolidated revenue and ₹92 crore in net profit in Q1FY27. The company’s adjusted EBITDA stood at ₹555 crore.

For Zomato, the question is no longer simply how many people a campaign can bring to the platform. The marketing team is looking at how efficiently those customers are acquired, retained and converted into orders.

Sawhney says the metrics that matter include new customer additions, retention and payback. But there is another part of the equation that is harder to measure and that's whether a campaign can get consumers to stop scrolling, pay attention and eventually open the app.

“How do we get the internet to take notice, without being crude or gimmicky? And how do we translate that attention into app opens and orders?” he says.

There's no fixed playbook for this but the company keeps iterating and learning, he adds.

The new consumer

The strategy also reflects a broader change in how Zomato views Indian consumers. Sawhney says consumers remain value conscious but are increasingly unwilling to compromise on experience. “Indians are value conscious, but are willing to pay the right price for the right services,” he says, adding that younger consumers, in particular, expect best in class experiences because they are exposed to what is available globally.

That does not mean Zomato is abandoning brand building. Its creative and media spending is increasingly being used for user acquisition, largely through performance marketing, while the brand continues to be pushed during category peaks. The company also believes differentiation has to come from service quality rather than advertising alone.

“It's that voice, paired with our focus on service delivery excellence that makes Zomato stand out,” Sawhney says.

The broader online food delivery market grew around 20% year on year last quarter, with the category continuing to expand as competition increases.

“Online food delivery, where it stands today, is just over a decade old as a category in India. There's a lot of headroom to innovate and grow. With more competition entering, there's a clear signal that the pie is ever expanding,” he opines.