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Zomato fires 13% employees, announces 50% salary cuts due to coronavirus

Rukmini Rao     May 15, 2020


  • 13% cut in workforce, upto 50% salary reduction
  • Reducing cash burn, cash conservation to be priority going forward
  • Expects over 25-40% of restaurants to shut business due to COVID-19 lockdown

Online delivery and restaurant reservation app Zomato announced a 13 per cent reduction in its employee strength and also a wage cut of up to 50 per cent for its staff on a higher pay scale. In his message to the employees, Zomato's Founder and CEO Deepinder Goyal said the company's business was severely affected by COVID-19 lockdown and the restaurant industry itself could shrink by 25 to 40 per cent over the next 6-12 months. "All of this uncertainty inevitably needed us to redefine our business strategy. There's no going back to the 'normal' - all we should focus on is building for the 'new normal'," said Goyal.

With a significantly lower burn rate compared to pre-COVID levels, the company said it had enough capital to continue business with a healthy runway. However, cash preservation would be a focus with uncertain business environment.

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As a part of it's over call cost reduction strategy, Zomato will let go 13 per cent of its 5,000 plus employees. "Multiple aspects of our business have changed dramatically over the last couple of months and many of these changes are expected to be permanent. While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees," read the company's communication.

While some of its employees have voluntarily taken a pay cut, the company has also proposed salary cuts of up to 50 per cent. However in areas like product and engineering the company will continue to hire. The company is offering financial, outplacement and health insurance support for its employees. One of the employees, who did not wish to be named, said, "Let's see what they have to offer, but at these times getting laid off is the worst feeling."

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In its effort to further conserve capital, Zomato will make partial and full work from home a permanent feature. Teams such as sales will henceforth be offered full time work from home.

Zomato said that henceforth the focus will shift towards being a transactions-first company, focusing heavily on a small number of large market opportunities in the food value chain. Continuing its bet on Grocery delivery, the company sees a long-term potential in the segment. With contactless dining being the future, Zomato has already signed up 25,000 restaurants globally for its new product.

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