Zomato, an India-headquartered food delivery startup, is cutting 13% of its workforce as it looks to reduce cost and tide the coronavirus crises that has made many cautious about ordering food online.
The 11-year-old firm did not disclose the exact number of people it was letting go, but the number is above 500. A Zomato spokesperson told TechCrunch that the startup employs about 4,000 people and the layoff impacts its workforce globally.
Zomato, which laid off about 540 employees from its customer team in September last year, said it would provide those affected with half of their salaries for six months or until they find a job elsewhere — whichever happens first.
Deepinder Goyal, co-founder and chief executive of Gurgaon-based firm, said Zomato has been “severely affected by the COVID lockdowns.” India issued a nationwide lockdown in late March, which is still in place, to prevent the outbreak of the infectious disease.
“A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg. I expect the number of restaurants to shrink by 25-40% over the next 6-12 months. What actually happens, for better or worse, is anybody’s guess,” he wrote in a blog post.
Goyal also proposed a salary cut across the company. “Starting June, I am proposing a temporary reduction in pay for the entire organisation. Lower cuts are being proposed for people with lower salaries, and higher cuts (up to 50%) for people with higher salaries,” he said, adding that several people had already volunteered to forego their entire salary for six months.
Today’s announcement follows a similar move by Swiggy, India’s largest food delivery startup, which cut about 1,000 jobs last month. Both the startups are currently processing fewer than a million orders on their platforms, down from nearly 3 million they were handling before the outbreak.
To make up for the loss, both of them have also expanded their businesses. Zomato, which recently started to deliver grocery items, said it is now serving this category in 185 cities in India and plans to launch this offering in UAE and Lebanon.
Zomato, which raised $150 million from Ant Financial, in January, has been in talks to raise an additional $350 million. In an earlier email exchange with TechCrunch, Goyal said he expected the round to close by mid-May. Uber sold its Indian food delivery business to Zomato earlier this year.