Zomato on Friday said it will let go of nearly 13% of its global workforce and undertake across-the-board temporary pay cuts for the remainder of the staff starting June. The Gurgaon-based food delivery firm expects the reduction in salaries to be implemented for about six months.

Lower cuts are being proposed for people with lower salaries, and higher cuts (up to 50%) for people with higher salaries, said founder and CEO Deepinder Goyal in a note to employees.

For the employees who have lost their jobs, Zomato said it will retain them at 50% salary for the next six months besides extending other company benefits to them like health insurance cover and outplacement support. Some impacted employees, however, work with the firm through manpower agencies and are not directly on its payroll, Zomato clarified. The company will help the agencies support these employees with two months of severance.

“Previously allocated ESOPs will continue to vest during this period of six months, as all these people will remain on our payroll with reduced pay,” Goyal said. All benefits from Zomato will lapse as soon as the impacted employees find another job, or after six months, whichever is earlier, the firm said.

The coronavirus pandemic has dealt a severe blow to the online food delivery business, as consumers massively cut down on intake of outside food and opted for home-cooked meals. Current order volumes for Zomato are at merely 30%-35% of what it used to be during pre-Covid times. While a shift in consumer preference for hygiene over convenience contributed towards the crushing volumes, Corporate India’s move to work from home also hammered businesses.

Office-goers form a major chunk of food aggregators’ customer base. Operational restrictions in various cities further added to the woes. Zomato is present in 24 markets but India is its primary food delivery market, accounting for over 90% of the business.

Zomato which also derives a substantial chunk of its business from restaurant discovery said it has been severely affected by the Covid lockdowns.

“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 (across markets) to shrink by 25-40% over the next 6-12 months,” Goyal said. “We need to make sure that we preserve as much cash as 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,” Goyal added.

In an interview to FE earlier this week, Mohit Sardana, COO, food delivery at Zomato, said the company will make sustainable investments to fuel the growth of grocery delivery. The grocery segment already makes up nearly 15% of the order volumes generated by the firm’s delivery business and is expected to “grow very rapidly.

The strategy going forward would be to focus on building the “new normal”. “The idea is to make a complete shift towards being a transactions first company, focusing heavily on a small number of large market opportunities in the food value chain,” Goyal said.

Zomato said it has decided to make partial or full work from home a permanent feature of “our lives.”