Network effects under strain: Zomato’s platform model and the tech-driven quest for profitability

Abstract

This case study explores Zomato’s strategic pivot in 2025 from growth-led expansion to profitability-centric operations, a shift that sparked resistance from two foundational pillars of its platform ecosystem: restaurants and delivery agents. Against India’s hyperlocal commerce boom, the case opens with a dramatic double disruption—restaurant partners in Namakkal cutting ties over commission opacity and delivery agents protesting wage suppression under the “Select to Go” model. As Zomato tightened payout timelines, increased long-distance fees, and implemented new visibility-based charges, it risked undermining the network effects that once propelled its rise. The company’s rationale, however, was not unfounded. Facing intensifying competition, and mounting infrastructure investments—especially in Blinkit’s rapid expansion and the District vertical—Zomato had to ensure sustainable economics across verticals. Yet, its monetization choices created friction across the supply side, weakening partner trust and triggering platform strain. This case invites students to critically examine the strategic trade-offs embedded in platform profitability models, the delicate balance between stakeholder alignment and cost optimization, and the recalibration of network dynamics in a maturing digital ecosystem.