Zepto Cafe halts ops in 44 stores in these North Indian cities amid supply, staffing issues

Zepto has shut down its cafe services across more than seven cities in North India, with 44 of its dark stores impacted, as the company battles a supply crunch and employee no-shows, according to reports.

The affected cities include Delhi NCR, Agra, Meerut, Haridwar, Gorakhpur, Mohali, Amritsar, and Ghaziabad, sources told Moneycontrol. “A total of 44 stores have been impacted and services should resume by Q2, during the July–September quarter,” one of them said.

Zepto Cafe, the quick commerce firm’s in-house unit for hot eats like coffee, puffs, pizzas, and tea, was pitched as an alternative to food delivery giants like Zomato and Swiggy. With close to 1,000 stores, Zepto’s cafe arm was delivering nearly 1 lakh orders a day and heading towards a $100 million annualised GMV run rate, CEO Aadit Palicha had said earlier. He also claimed the unit maintained a steady 50 per cent gross margin.

But the recent disruption has raised questions about whether the unit can maintain that momentum. “As part of the shutdown, Zepto moved most of its kitchen staff to other store,s but 15 of them quit as they did not agree to relocate,” insiders revealed. The development was first reported by NDTV Profit.

This temporary scale-back comes at a time when the food delivery and quick commerce space is intensely competitive. In the Delhi NCR region, one of the most affected by the cafe pause, Zepto’s rivals Zomato and Blinkit (both owned by Eternal) have a stronghold.

On May 1, Deepinder Goyal, group CEO at Eternal, acknowledged the pressure from quick commerce players. “...growth does remain below our expectations for now. Competition from quick delivery of packaged food from quick commerce is leading to a drop in the demand for food delivery from restaurants,” he said.

If Zepto’s cafe downtime extends or expands to other regions, analysts believe traditional food delivery players could claw back market share. Apart from Zomato, Blinkit, and Swiggy, Zepto also competes with Swish, which is currently active only in Bengaluru.