Zomato finalizes the acquisition of Runnr

Zomato, the online restaurant menu and food ordering startup, is finalizing the deal to buy hyper local delivery startup Runnr in an all-stock deal. The acquisition deal will value Zomato at ~$800 million while Runnr (the merged entity of RoadRunnr and TinyOwl) is stated to be a $40 million venture. It was also in discussions with UberEATS for a potential sale, however, that didn’t materialize. The acquisition will help Zomato do the deliveries for its online orders on its own rather than depending on a third-party provider.

However, the new strategy may put further strain on the company’s cash burn since having in-house logistics lead to more control over deliveries, but higher cost. Competitors such as Swiggy and Foodpanda are going through similar issues with their monthly cash burns estimated at ~$2-3 million due to integrated value chain.

The domestic online food delivery segment has seen major shakeups in the last 1-2 years. While the smaller players have merged in a wave of consolidation, the capital has dried up leading to startups tightening their purses to stay afloat. Swiggy had also raised $80 million recently to further boost its cash reserves with an imminent competition in the space after entry of UberEATS last month.