Zomato shuts down intercity legends service amid operational challenges and strategic shifts

Zomato has decided to discontinue its Intercity Legends service, which allowed customers in metro cities to order iconic dishes from renowned eateries in smaller towns. The decision comes after two years of significant operational and financial difficulties, as the company struggled to make the service sustainable.

Launched in 2022, Intercity Legends was designed to bridge India’s culinary diversity by offering famous regional dishes from ten major cities, such as Hyderabad’s biryani and Kolkata’s sweets, to customers across the country. The service, which used a combination of air courier and Zomato’s on-ground delivery network, aimed to bring the flavors of home to those living far from their birthplaces. However, despite multiple launches and relaunches, including its most recent revival in July, the service never fully overcame the logistical and financial challenges it faced.

Initially, the service was offered without a minimum order requirement, an effort to attract a wide customer base by making regional delicacies accessible to anyone willing to pay for the premium service. But the complexity of preserving and delivering food over long distances, combined with the high costs involved, quickly made this model untenable. In an attempt to reduce financial losses, Zomato later introduced a minimum order value of ₹5,000. This change aimed to ensure that each order would cover the costs of preservation and delivery. However, even with this adjustment, the service continued to struggle, ultimately failing to meet profitability targets. The ongoing challenges of maintaining food quality over extended distances and the associated high operational costs proved too difficult to surmount.

Zomato’s co-founder and group CEO, Deepinder Goyal, announced the shutdown of Intercity Legends via a tweet on X (formerly Twitter). “After two years of trying and not finding product-market fit, we have decided to shut down the service with immediate effect,” he stated.

The decision to end Intercity Legends comes as Zomato is actively exploring new avenues for growth. The company recently made a significant move into the entertainment sector by acquiring Paytm’s entertainment and ticketing businesses for ₹2,048 crore. This acquisition includes Orbgen Technologies Pvt Ltd and Wasteland Entertainment Pvt Ltd, operators of the TicketNew and Insider platforms, respectively. The move marks a strategic shift for Zomato, positioning it to tap into the growing demand for event and entertainment bookings. Additionally, Zomato is preparing to launch a new app, ‘District,’ which will integrate these ticketing services, providing users with a comprehensive platform for booking movies, live events, and other performances.

Zomato’s latest quarterly results for June 2024 reflect strong financial performance, with a net profit of ₹253 crore, a significant increase from the ₹2 crore profit reported in the same quarter the previous year. This growth was largely driven by the success of its core food delivery and quick commerce businesses. Blinkit, Zomato’s quick commerce division, posted a 130% surge in gross order value, while the food delivery segment saw a 27% increase.

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