Swiggy, one of India’s largest food delivery services, says it plans to cut about 1,000 jobs as the COVID-19 pandemic continues to wreck havoc on the global economy, according to Indian news outlet Entrackr. The layoffs are set to happen next month and will mostly impact the company’s ghost kitchen division.
The announcement comes just weeks after Swiggy announced a $43 million fundraise as part of an ongoing Series I round. The company is currently valued at $1.42 billion.
But unicorn status is no match for a pandemic, which has put India’s population of 1.3 billion on lockdown and gravely impacted businesses. Swiggy as well as its chief rival Zomato have both seen a drop in the number of daily orders they fulfill. Some cities in India — namely Telangana — have outright banned food delivery for the time in order to prevent further spread of the coronavirus. Entracker also noted that the Indian government is advising ghost kitchens to operate with half their workforce.
A Swiggy spokesperson said measures to deal with all these factors include renegotiating contracts with landlords, relocating some kitchens, and shutting down others. “As the lockdown gets further extended, we are evaluating various means to stay nimble and focused on growth and profitability across our kitchens.”
Delivery services, restaurant tech companies, and restaurants themselves are all feeling the economic strain imposed by country-wide lockdowns, and layoffs are becoming more commonplace each week. In the last week alone, Yelp laid off 1,000 staff and furloughed others, Sweetgreen cut 10 percent of its HQ staff, and restaurants left and right have laid off or furloughed employees as dining rooms remain closed all over the world.
You would think ghost kitchens, which cater specifically to off-premises orders, would be a booming business right now. But Swiggy’s layoffs also underscore an important point: that ghost kitchens are superfluous to operations unless you have the customer demand to justify them. At last check, Swiggy had ghost kitchens in 14 cities across India.
The company is currently in the process of shutting down around half its ghost kitchens. Meanwhile, the company expects more layoffs — possibly up to 40 percent of staff — in this division to follow in the future.