Zomato, one of India’s largest third-party food delivery services, is cutting 13 percent of its workforce and requiring the rest of its employees to take a pay cut, according to the Economic Times. Not surprisingly, the moves are in response to the ongoing pandemic and its effect on the food delivery industry in that country.
Those affected by the layoffs will receive their health benefits as well as half their salary for six months or until they find their next job. In June, the rest of the company will take a temporary pay cut to preserve as much cash as possible. The cuts are expected to be for at least six months.
In an email sent to staff, Zomato founder and CEO Deepinder Goyal wrote that the company is preparing for “things getting worse” in terms of COVID-19 and the simultaneous collapse of the restaurant industry as we know it. He noted that many restaurants in India have already shut down permanently. “I expect the number of restaurants to shrink by 25-40% over the next 6-12 months,” Goyal wrote.
Zomato’s news comes just after Swiggy, it’s chief rival in India, announced layoffs of its own, also in response to COVID-19. Swiggy cut about 1,000 jobs at the end of April, mostly in its ghost kitchen division. This came just weeks after it announced a $43 million Series I fundraise.
It’s not just India, either. Worldwide, third-party delivery services have been making cuts as business gets drastically and negatively impacted by the pandemic and country-wide lockdowns. Deliveroo cut 15 percent of its staff at the end of April. Uber has made layoffs that affect some Eats employees. The company also recently exited eight markets.
Zomato actually bought Uber’s Eats business in India for $206 million at the beginning of March, before the country went into lockdown. Goyal didn’t mention the deal in his letter, which was much more focused on outlining ways in which the company is going to save cash and prepare for things to get way worse before they get better. Seems like the rest of the food delivery industry should do the same.