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Restaurant aggregator and food delivery platform Zomato on Friday said it will let go 13 per cent of its workforce and will reduce salaries by up to 50 per cent for the entire organisation, as its business was severely impacted due to the nationwide lockdown put in place to curb the spread of Covid-19 pandemic.
The company is said to be currently employing about 4,000 employees.
In an internal email address to its staff, Deepinder Goyal, founder & CEO, Zomato said, " Our business has been severely affected by the Covid lockdowns. 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 per cent over the next 6-12 months."
He said the company will need to focus on preserving cash "to weather the storm if the business environment gets worse, or continues to be the same for the rest of the year or more."
"While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that to about 13 per cent of our workforce going forward," Goyal said in the internal email.
The company said that the laid-off employees will continue to get a 50 per cent salary for the next 6 months. Goyal also said the company will provide them outplacement support, health insurance for six months and previously allocated ESOPs will be continued to be vested during this period of six months.
Goyal also said,"Starting June, I am proposing a temporary reduction in pay for the entire organisation. Lower cuts are being proposed for people with lower salaries, and higher cuts (up to 50 per cent) for people with higher salaries". He added these cuts will be discontinued as soon as the economy starts getting back on track.
"All of this uncertainty inevitably needed us to re-define our business strategy. There’s no going back to the ‘normal’ – all we should focus on is building for the ‘new normal’. Considering what we know at this point, the idea is to make a complete shift towards being a transactions first company, focusing heavily on a small number of substantial market opportunities in the food value chain," he added.
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