Food delivery has taken a significant hit amid lockdown announced by PM Modi in March as a majority of the restaurants have been into online deliveries even as dining-out has been worst hit.
Days after food delivery company Zomato announced downsizing operations including 13 per cent workforce layoff to survive Covid, rival Swiggy on Monday also undertook multiple measures to realign its cost base to see through the Covid winter. In a letter to employees, the company’s co-founder Sriharsha Majety hinted towards shutting down or scaling down the cloud kitchen business and other “adjacent businesses that are either going to be highly volatile or will not be highly relevant for the next 18 months,” he said. Moreover, with the core business of food delivery taking a toll, Swiggy will be betting more on the grocery business “and other service offerings that we think will continue to do well.” Majety also announced laying off 1,100 employees across grades and functions in the coming few days in order to keep operations light and steady in the coming months.
Food delivery has taken a significant hit amid lockdown announced by PM Modi in March as a majority of the restaurants have been taking online deliveries even as dining-out has been worst hit. The orders for both Swiggy and Zomato had reportedly declined by more than 50 per cent in April.
Swiggy had last year in November said that it has set-up over 1,000 cloud kitchens for its close to 1.6 lakh restaurants and has invested over Rs 175 crore. Swiggy had invested in over a million square feet space in 14 cities in a two-year period to allow restaurants to expand their presence to more locations. The company had said that it will further invest Rs 75 crore to increase the cloud kitchens count in 12 new cities by March 2020.
“Since the onset of Covid, we have already begun the process of scaling down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile. We are already operating at significantly lower levels on our staffing and physical infra than our earlier footprint, and will continue to optimize before we get more clarity on order volumes for food delivery,” said Majety. The company will look at significantly reducing “every single indirect cost like hubs, office infrastructure, etc.”
The company had expanded its grocery and household essential goods delivery to 125 cities last month to tap into the grocery spurt amid lockdown as customers switched to online deliveries due to hygiene concerns in offline purchases. It also revamped its pick and drop service Swiggy Go as ‘Genie’ in more 15 cities to deliver essentials such as over-the-counter medicines to the consumers during the lockdown period. Recently, Zomato had also launched its grocery vertical Zomato Market to leverage its last-mile logistics capabilities and ensure delivery partners are retained on the platform instead of sitting idle due to the decline in food deliveries.
The laid-off employees will get a minimum of three months of salary along with an extra month of ex-gratia for every year the employee worked at Swiggy apart from the notice period pay. Healthcare benefits including medical insurance etc along with support in placement and skill development will also be provided to the impacted workforce. In October last year, the company had reportedly planned to hire nearly 3 lakh delivery partners in the following 18 months to ramp up their total number to 5 lakh.