Food delivery company Swiggy said on Monday it is laying off 1,100 employees as the coronavirus pandemic and a nationwide lockdown that has shut restaurants for over two months has severely impacted its business.
The 1,100 employees span across grades and functions in the cities and head office, Swiggy co-founder and CEO Sriharsha Majety said in an email to employees. The company will also look to cut office costs and other expenses, he said.
Swiggy joins main rival Zomato Media Pvt. Ltd in laying off employees amid the lockdown. Zomato said last week it will let go 13% of its workforce, or about 520 people, and slash the salaries of all its employees. Swiggy's layoffs affect about 14% of its 8,000 employees.
India imposed the lockdown starting March 25, and extended it on Sunday for a third time until May 31 as the number of coronavirus cases has risen to more than 96,000 with over 3,000 dead.
The lockdown led to the shutdown of most factories, offices, restaurants and other shops. And even though the government is now gradually reopening the economy, restaurants are likely to be among the last to be opened up.
Majety said Swiggy will also scale down or shut down adjacent businesses that are either going to be highly volatile or will not be highly relevant for the next 18 months. “The biggest impact here is on the cloud kitchens business, with many unknowns about volumes through the year.”
The CEO said that Swiggy’s core food delivery business has been “severely impacted” and will stay impacted over the short term, but is likely to grow again after that. On the other hand, Swiggy will grocery delivery business as more and more people shop online due to the lockdown and as consumer sentiment turns against offline stores.
“…We are now at an inflection point for the penetration of digital commerce and home delivery in India. This offers us opportunities to continue investing our efforts in grocery and other service offerings that we think will continue to do well,” he said.
Majety also said that Swiggy had raised capital just before the pandemic hit and that it has “sufficient runway”.
Indeed, Swiggy had raised funding from Chinese technology giant Tencent and a few other investors in April. That funding round came just weeks after Swiggy had raised around $112 million led by its existing investor and South African technology conglomerate Naspers in February. Swiggy previously raised $1 billion at a valuation of $3.3 billion in December 2018.
Still, Majety said, it was important to “prepare for worse scenarios” in the macro environment and “make sure we are protected”.