Zomato Layoffs: Tough Days Ahead For Food Delivery Startups?

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The latest news of Zomotao layoffs shouldn’t surprise many as the writing was on the wall.

The food delivery startups in India are going through a tough phase as the lockdown situation appears to enter into the 4th phase amid the rising number of +ve Coronavirus cases and increasing death toll. Sensing the tough market conditions which are far from over soon, Zomato has decided to let go its 13% of its total workforce.

Besides laying off over 500 employees, Zomato has also decided to introduce up to 50% of salary cut of rest all employees. The pay cut, however, is going to be a temporary arrangement until the market does show a sign of improvement.

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Citing the fast-changing market conditions that appear to stay permanently, Dipender Goyal, CEO – Zomato, has said that the layoff was inevitable.

“Multiple aspects of our business have changed dramatically over the last couple of months and many of these changes are expected to be permanent. While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees.” Goyal said in an email sent to all employees.

However, to make the transition smooth and less troublesome for outgoing employees, Zomato is taking all the measures, including finding a new job and financial support. The company has formed a separate team to help these outgoing employees.

Goyal blamed the global outbreak that led to an unprecedented shutdown of restaurants across the nation for the layoffs. He informed that nearly for over two months almost 95% of restaurants remained closed and 30%-40% of those would have been closed permanently. Due to the uncertainty and ongoing changes that could stay for a very long period various aspects of Zomato business have been impacted.

Goyal believes that this is just the tip of the iceberg, hinting that the testing time could continue for a very long time due to the spread of novel Coronavirus.

Zomato is neither the first startup nor the first food delivery startup in India that is laying off its employees due to Coroniosvirus outbreak. Just last month Swiggy also decided to lay off 1,000 employees as the demand plunged by 60%, especially after the incident of Pizza delivery boy who was found infected with novel Coronavirus. This caused over 72 families who got Pizza delivered by him to go under quarantine. But the news shook people across the country who was relying on food delivery during the lockdown. Within just 3 days, the number of food delivery orders plunged by 50% and many delivery boys found themselves with no customer to serve.

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