Zomato plans to layoff 520 employees or a workforce of 13% and temporarily a salary cut for the rest of them. The company’s founder Deepinder Goyal shares an internal email on Friday, as the Covid-19 has impacted a hit to the business throughout the nation.
Employees who are relieved will be given health insurance for the next six months along with their 50% salaries or till the time they are able to find a job, whichever is earlier adds the CEO Deepinder Goyal.
The staff hired on a contract basis will be given a salary of two months as an early termination of their contract. The Esops (Employees stock ownership plans), that are earlier assigned will, however, continue to invest in this tenure.
Almost a number of 4000 people is employed by Zomato. People hired across the vertical of events, content , marketing, among rest are likely to be hit the most by these layoffs adds a person known to us.
A permanent number of restaurants have been shut so far and we are aware that this is just the start of it. The number of restaurants that I expect to shrink is about 25-40% in the upcoming 6-12 months. Can someone actually guess, is it going to be better or worst? Adds the CEO.
The previous month, the competitor Swiggy said it will release from its private brand kitchen team by stopping the operations at a few other centers. A minimum of 1000 jobs was affected in their private brans says a known source
Other than the layoffs and salary cuts, Zomato has finalized to make a permanent policy of work from home (WFM) fully or partially applicable. After payroll, the firm with its HO in Gurgaon has the 2nd highest expense reoccurring expense on real estate and has more than 150 offices worldwide. “There is no going back to the ‘normal’ – all we should focus on is building for the ‘new normal’,” says the CEO.
Covid19 has been a black swan event for worldwide. Therefore we should make sure that we preserve as much as a liquid reserve that is possible to weather the storm. If the business environment gets worse or continues to be the same for the rest of the year or more then the one in the current scenario Mr.Goyal says in this email to the employees
Mr.Goyal further adds by saying the cut-down and reduction in salaries
( half on the salary in several cases) is focused at maintaining cash amid unpredictability, adding that the company had enough cash supply and had brought down monthly cash burn remarkably.
The volume of food delivery has dropped down drastically by 60-70% in the last two months as compared to the time before covid 19, as many restaurants remain closed and consumers avoid ordering food. The industry players are a expecting a permanent shut of 4 out of 10 restaurants due to the current prevailing crises
“Considering what we know at this point, the idea is to make a complete shift towards being a transaction first company, focusing heavily on a small number of large market opportunities in the food value chain,” CEO says.
In the last few months, both the competitors Swiggy and Zomato have entered the delivery space of grocery, also held a discussion for home delivery of alcohol with the state Government.
Zomato has also launched the delivery of grocery in about 185 cities in India and have plans to spread the service to Dubai and Lebanon. The food delivery services by Zomato has also been started in Turkey and in Austria, Portugal, New Zealand for the takeaways.
“Contactless Dining is the need of the hour for the restaurant industry, and we have already signed up 25,000 restaurants globally,” Goyal adds. In 14th May’s edition Sources also adds about Zomato launch preparation of consumer-facing pickup and drop service, copying the offering of Swiggy genie. Zomato also prospects opportunities to enlarge logistics services to businesses other than its platform.
Several other businesses includes Blackbuck, Cure fit, Fab Hotels, Treebo, Oyo, Udaan, Acko, Meesho, Niki.ai, Fareportal and Shuttl- have cut back on workers including staff for temporary basis in the last few months.
