Online food delivery platform Swiggy will lay off 1,100 of its employees, spanning across grades and functions across cities and its head office over the next few days, the firm’s CEO Sriharsha Majety wrote in an email to the staff on Monday. Swiggy’s decision comes close on the heels of its Gurugram-based rival Zomato asking over 500 of its employees to start looking for new jobs, as the restaurant industry stares at deep uncertainty in the aftermath of Covid19.
“The core food delivery business has been severely impacted and will stay impacted over the short term, but is expected to start growing again after that. We need to hence prepare to come out stronger on the other side by continuing to build on capabilities that will help us make the most of the opportunity when things are better again. While we are very fortunate to have raised capital just before Covid hit and have sufficient runway today, it is incredibly important to prepare for worse scenarios in the macro environment and make sure we are protected,” the Swiggy co-founder wrote in the email.
“We are choosing to scale down or shut down adjacent businesses that are either going to be highly volatile or will not be highly relevant for the next 18 months. The biggest impact here is on the cloud kitchens business, with many unknowns about volumes through the year,” he noted, adding that the company had already begun the process of shutting down its kitchen facilities temporarily and was already operating at significantly lower levels of staff and physical infrastructure than its earlier footprint.
The primary pain point for online delivery platforms is the poor health of the restaurants, from which these apps make most of their revenues. The restaurants, too, have been raising red-flags over their survivability, with some of the smaller eateries across the country having shut shop. “…we are staring at large scale close down of businesses and massive loss of employment in the sector. As stated by the Hon’ble FM (Nirmala Sitharaman) in her Press Conference, F&B (food and beveragegs) Industry is a big consumer of the farming products. With imminent closure of many F&B Establishments, this will certainly cause a long-term impact on the farming sector,” said Anurag Katriar, President, National Restaurants Association of India. In a mail to its employees, Zomato’s CEO Deepinder Goyal had pegged that 25-40% of the restaurants could shut shop over the next 6-12 months.
Majety wrote in his email, which followed a town hall meeting with the staffers, that while Covid19 “might have long-term tailwinds for the delivery business and digital commerce when things settle eventually, nobody knows how long the uncertainty will last”. “We therefore need to be prepared to see through this winter, to emerge stronger on the other side,” he noted.
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