With nationwide lockdown severely impacting the restaurant business, it was but natural that the businesses of foodtech majors like Zomato and Swiggy will face a huge brunt. Therefore it did not come as a huge surprise to anyone when Zomato on Friday announced that it will lay off nearly 13% of its workforce.
The Gurugram headquartered company had said that it will also halve 50% salary across the workforce for six months starting from next month.
Zomato’s founder and CEO Deepinder Goyal made the announcement through a note that was emailed to company employees.
In this note, Goyal said “A large number of restaurants have already shutdown permanently and we know that this is only a 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.”
“We need to make sure that we preserve as much cash as possible to whether the storm if the business environment gets worse or continue to be same for rest of the year or more,” Goyal added.
To read the complete note sent by Deepinder Goyal to his employees, click here https://www.zomato.com/blog/focused
Zomato’s competitor Swiggy likewise took layoff decision last month, after media reports suggested that the Bengaluru based company will remove nearly 500 contractual employees from its cloud kitchen unit.
While COVID-19 lockdown has surely impacted the foodtech sector adversely, the cracks on the business were visible even before the nationwide lockdown was imposed. Zomato and Swiggy’s valuation remained flat and were able to collect only small funding cheques during last three months.
The funding amount collected during this period barely exceeded beyond $150-160 Mn, a paltry amount for companies coming under the unicorn club.