Blinkit to drive growth in smaller cities, says CEO Albinder Dhindsa

Despite the decline in profits, food delivery company Zomato aims to increase the store count of its quick commerce business, especially in the smaller cities.

According to Akshant Goyal, Chief Financial Officer of Zomato, "From an economic standpoint, the smaller cities, on a payback basis i.e. ROI / ROCE basis look attractive to us. Therefore, we continue to open more stores in these cities. Looking forward over the next year, a larger portion of our new stores will be in these smaller cities compared to what we saw last year".

Goyal added that 80 percent of the company's business is still in the top 8 cities. However, they are seeing fairly healthy traction in the smaller cities.

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On the densification of new stores in the existing cities, Blinkit CEO Albinder Singh Dhindsa said that it has reduced the last mile cost for the company. He affirmed that store expansion will lead to losses in the upcoming quarter.

"If you look at the overall store network and the capacity utilization, that metric has been declining every quarter because we are adding significantly more new stores than in the previous quarter. 100% or most of our losses, if they increase from here, will be on account of that," Dhindsa added.

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Zomato's profit declined by 57 percent YoY to Rs 59 crore in Q3, weighed by Blinkit's Rs 103 crore loss.

Blinkit opened 216 dark stores in October and December 2024. The company is looking to double Blinkit’s dark stores or warehouses to about 2,000 by March 2025.

This month Zomato pumped in Rs 500 crore into Blinkit. The company also launched the Bistro app by Blinkit to facilitate 10-minute deliveries of snacks and beverages.

Zomato expects Blinkit to “turn sharply” from being loss-making to meaningfully profitable following the dark stores' expansion.