Bengaluru-based foodtech unicorn Swiggy has now announced that it is laying off around 1100 employees.
In a blog post, the company shared an email written by CEO Sriharsha Majety to all employees. Majety said that the company will let go of 1100 employees spanning across grades and functions in the cities and head office over the next few days.
The company will inform the impacted employees over the next few days. For the laid-off employees, the company is offering at least 3 months of salary irrespective of their notice period or tenure. Further, for every year in Swiggy, the company will be offering an extra month of ex-gratia in addition to their notice period pay, working out to between 3-8 months of salary depending on the tenure.
The company also said that it will be extending ESOP vesting to the nearest quarter (including the months of notice period) and waive off the 1-year cliff for those who have not completed the term.
Further, it is also offering health benefits such as medical, accident and term insurance, along with a wellness assistance programme through telemedicine till December 31, 2020. The company will also offer outplacement and skilling support over the next three months, as well as skill development training through LinkedIn.
Beyond the measures for the impacted employees, Swiggy also delved into the impact of the Covid-19 pandemic on the business.
Paring Down Cloud Kitchens; Focus On Grocery
“While Covid might have long-term tailwinds for the delivery business and digital commerce when things settle eventually, nobody knows how long the uncertainty will last. We, therefore, need to be prepared to see through this winter, to emerge stronger on the other side.” — Swiggy cofounder Majety
The company said it has sufficient runway, but the core food delivery business has been severely impacted and will stay impacted over the short term, but is expected to start growing again after that. The Swiggy CEO said as part of cutting down costs, the company will 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. Since the onset of Covid, we have already begun the process of shutting down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile,” he added.
The company said it will invest in grocery and other service offerings that will do well.
Pandemic Hits Food Delivery, Restaurant Biz
The development comes after Swiggy’s arch-rival Zomato also announced layoffs of 13% of its total workforce. The laid-off employees will receive half of their salaries along with health insurance, for the next six months or till they find their next job, whichever is earlier.
Zomato also announced company-wide pay cuts, but Swiggy hasn’t yet announced any such deductions.
The impact of Covid-19 on food industry hasn’t yet been quantified but experts reckon that there has been a major downfall and it will last for the next 3-6 months. In The Inc42 Show, POSist’s Ashish Tulsian said that among their customers, revenue has been down by 96.5%.
“The total revenue which restaurants were doing in our universe is down at an aggregate level by 96.5%. The 3.5% revenue, which is coming out from 9% customers which are open for delivery in our universe, so, 91% customers are shut down, for any kind of business,” he added.
Dineout cofounder and CEO Ankit Mehrotra said that never before has the entire restaurant industry been shut throughout the world, not even in war. He added that numbers are down massively across the board, in a lot of cases by up to 90%-95%.