Exclusive: Fraazo Lays Off Over 150 Employees, Shuts 50 Dark Stores To Cut Costs

Mumbai-based fresh vegetables delivery startup Fraazo has laid off over 150 full-time employees across operations, tech, product, procurement, HR store managers, planning & growth teams, among others, to cut expenses amidst a fund crunch.

The number of laid off employees would be much higher if we also include off role employees, sources said.

Besides, Fraazo has also shut over 50 dark stores across the country over the past few weeks.

Last year, the startup said that it had set up around 250 dark stores across the country. However, the sources told Inc42 that Fraazo has set up only 150 to 200 dark stores so far. As per its website, Fraazo is operational in Delhi-NCR, Mumbai, Pune, Hyderabad, and Bengaluru. 

The startup completely shut its operations in the Delhi-NCR region last weekend, the sources said, adding that the management has decided to wind up the operations in the region.

Fraazo was in process of shutting down its stores in Gurugram, Noida, and Delhi for some time, the source added. 

“Unable to secure funding was the reason given to us for the layoffs. We were told Fraazo is further scaling down its operations,” one of the sources from startup’s Mumbai headquarter said. 

The employees were informed about the layoffs on July 9 during a meeting. Multiple sources confirmed to Inc42 that the startup will pay a month’s salary as a severance package, mostly based on the notice period of the employees.

Mail and messages sent to Fraazo’s cofounders seeking comments remained unanswered till the time of publishing the story. 

The startup will also be closing some of its dark stores in Hyderabad and Bengaluru in the coming weeks, the sources said. This is likely to result in further layoffs.

Currently, Fraazo has around 16 dark stores in Bengaluru and 10 in Hyderabad. The number of operational dark stores will come down to 10 in Bengaluru and 5 in Hyderabad, the sources added. “There is also a high possibility that the startup would completely shut its operations in Hyderabad or Bengaluru,” sources told us.

The startup, which was struggling with a fund crunch, also had to deal with riders’ strike last month after it changed the wage policy. Earlier, Fraazo used to pay INR 500 per day to delivery riders along with some incentives. However, last month, it introduced a new pay regime, under which riders would be paid INR 45 on delivery of an order. 

Following this, riders, who were mostly off role employees, went on strike, further hitting the sales of the cash-starved startup.

Founded in 2019 by Atul Kumar, Vikas Dosala, Sumit Rai, and Aashish Krishnatre, Fraazo claims to serve fresh vegetables and fruits to its customers after procuring it from the farm.

In October last year, the startup had raised $50 Mn in its Series B round of funding. The round, which was a mix of debt and equity, was led by WestBridge, Sixth Sense Ventures, Equanimity Investments, Apar Group among others. The startup has raised close to $63 Mn to date. 

Back then, the startup said it intended to utilise the investment to strengthen its fulfilment networks and create a network of more than 500 dark stores across 15 major cities. 

In FY21, Fraazo incurred a loss of INR 15.8 Cr, a 57% jump from INR 10 Cr in FY20 as its expenses jumped to INR 37.09 Cr from INR 25.9 Cr in FY20. Its total revenue stood at INR 20.96 Cr in FY21 compared to INR 15.6 Cr in FY20.

As per sources, the startup had around 40-50 stores in Hyderabad and Mumbai when it raised $15 Mn Series A in 2021. Since then, the startup has forayed into Bengaluru, Pune, and Delhi NCR region and hired extensively.

According to LinkedIn, the startup had around 100 employees in July 2021, and later, the number increased by over 550%, further explaining that the startup had hired aggressively for its expansion plans. At present, the startup has 700+ employees as per LinkedIn. 

11,000+ Employees Laid Off By Indian Startups

Since the onset of 2022, Indian startups have been making headlines for all the wrong reasons. It started with a Mumbai-based edtech startup Lido Learning which was on the brink of collapse and laid off the majority of the workforce to survive. Soon later, news reports of unicorn startups such as Meesho, Unacademy, Vedantu, Ola, BYJU’S following the suit of Lido surfaced.

Most of these startups had to let go of their employees to cut expenses and improve their financial health. In some situations, unfortunately, layoffs took place as the startup failed to raise capital that it was earlier promised mostly due to the economic slowdown. 

As per Inc42 layoff tracker, Indian startups have laid off 11,248+ employees in 2022. This layoff count also includes around 800 employees who were asked to resign at WhiteHat Jr.