Zomato to lay off 13% of its staff as Covid-19 severely impacts food ordering business

Online food delivery major Zomato said it will let go of 520 people or 13% of its workforce and undertake up to a 50% pay cut for the remainder of the organisation as Covid-19 has severely impacted its business.

Instead of a direct severance package, the people affected by the layoffs will get half of their salaries along with health insurance for the next six months or till they find their next job, whichever is earlier. The company will help with outplacement.

This is the second time Zomato has laid off staff in the last one year. In September 2019, the company had sacked 540 employees from its customer support team or 10% of its workforce at the time.

In an email addressed to all Zomato employees, its founder & CEO, Deepinder Goyal, said, “A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg. I expect the number of restaurants to shrink by 25-40% over the next 6-12 months. What actually happens, for better or worse, is anybody’s guess,” he said.

Goyal further added that starting June, the entire organisation will undertake a temporary reduction in pay. “Lower cuts are being proposed for people with lower salaries, and higher cuts (up to 50%) for people with higher salaries,” Goyal said in an official post. This temporary reduction in pay will also be eligible for 2X employee stock grants.

“We need to make sure that we preserve as much cash as possible to weather the storm if the business environment gets worse, or continues to be the same for the rest of the year or more,” said Goyal.

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Over the past few months, Zomato and its rival Swiggy have forayed into grocery delivery with rapid expansion, and also held talks with state governments for home delivery of alcohol.

On Thursday, ET reported that Zomato is preparing to launch consumer-facing pick up and drop service, mirroring rival Swiggy’s Genie service. The food delivery app is also exploring opportunities to expand its logistics services to businesses outside its platforms

Last month, rival Swiggy said it will be laying off a part of its private brand kitchen team, while discontinuing operations at a few of its centres on the back of the Covid-19 pandemic. This affected at least 1,000 jobs in Swiggy’s private brands business, sources said.

A larger downsizing drive at the company may result in more job cuts going forward. Multiple internet businesses—including Oyo, Curefit, Udaan, BlackBuck, Treebo, Acko, Fab Hotels, Meesho, Shuttl, Capillary,, and Fareportal—have cut their workforce, including temporary staff, in the past few months.


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