Zomato To Lay Off Staff, Cut Salaries As It Sees Up To 40% Indian Restaurants Shutting Down
Zomato will axe up to 13 percent jobs and cut salaries by up to half for the rest of its employees as the food ordering service said it’s preparing for the worst as the Covid-19 lockdown has stalled operations.
The people affected by the layoffs, however, will get half of their salaries along with health insurance for the next six months or till they find their next job, whichever is earlier, Deepinder Goyal, founder of the food delivery application, said in a letter that was shared on Zomato’s blog.
That’s because Zomato expects the number of restaurants in India to shrink by 25-40 percent over 6-12 months as the lockdown has severely impacted businesses.
“A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg,” Goyal said. “What actually happens, for better or worse, is anybody’s guess.”
Goyal said the uncertainty around the business forced them to redefine their strategy. While Zomato’s financial runway looks solid, Goyal said, they’re preparing for the worst. “Lower cuts are being proposed for people with lower salaries, and higher cuts (up to 50 percent) for people with higher salaries,” he said. Employees facing a pay cut will be compensated in the form of the company’s stock options of twice its value, he said.
Zomato has also decided to make work from home a permanent feature—partially or entirely—based on its recent experience. Goyal said real estate is one of the its highest recurring expenses today, apart from payroll. The firm has more than 150 offices globally, most of which are spaces for sales and logistics teams.
“We need to make sure we preserve as much cash as possible to weather the storm if the business environment gets worse or continues to be the same for the rest of the year or more,” Goyal said.0