Zomato Lays Off 500+ Employees

Zomato, one of India’s most popular food apps, is downsizing its workforce by 13 percent and cutting pay for its remaining employees due to the ripple effect of COVID-19.

Zomato did not disclose how many workers are being laid off, but the company reportedly has about 4,000 employees, which would put the number of job cuts at around 520.

Founded in 2009, Zomato describes itself as a provider of restaurant reviews and food delivery service for more than 1.5 million restaurants in two dozen countries. Based in Gurgaon, India, it services more than 70 million users monthly. 

The latest cuts follow about 540 employees who were laid off last fall. 

In announcing the news to employees on the company’s blog, Deepinder Goyal, CEO and co-founder, wrote that Zomato has been hurt by the impact of the virus.

“Our business has been severely affected by the COVID lockdowns,” he wrote. “A large number of restaurants have already shut down permanently, and we know this is just the tip of the iceberg. I expect the number of restaurants to shrink by 25-40 percent over the next six to 12 months. What actually happens, for better or worse, is anybody’s guess.”

As part of its money savings initiative, Goyal wrote that since real estate is the second biggest expense after payroll, with more than 150 offices globally, working from home will become a permanent feature of working for the company.

“All of this uncertainty inevitably needed us to re-define our business strategy,” Goyal wrote. “There’s no going back to the normal. All we should focus on is building for the new normal. Considering what we know at this point, the idea is to make a complete shift toward being a transactions-first company, focusing heavily on a small number of large market opportunities in the food value chain.” 

Goyal has proposed salary cuts of up to 50 percent that would commence next month. He said several executives have already volunteered to forego their pay for six months.

None of the food delivery services have been immune from the coronavirus. Swiggy, India’s largest food delivery startup, cut about 1,000 jobs last month, the news service reported. Both companies say they are processing fewer than one million orders, down from nearly three million months ago.

In March, PYMNTS reported that Uber sold its food delivery operation in India to Zomato for $206 million. Swiggy is India’s No. 1 food delivery business, but both companies have struggled amid the pandemic as customers have been cautious about ordering food online.