India's Zomato to lay off over 500 employees due to COVID-19 crisis

BENGALURU (Reuters) - Indian food delivery startup Zomato said on Friday it will lay off 13% of its workforce, or about 520 employees, as a weeks-long coronavirus lockdown cripples the restaurant industry as well as hits demand for online ordering.

A worker drinks tea during lunch break inside a restaurant at an industrial area in Mumbai September 12, 2012. REUTERS/Danish Siddiqui /Files

There would be temporary paycuts for all employees, with up to 50% cuts for those earning more, founder and Chief Executive Officer Deepinder Goyal said, adding those being laid off would be paid 50% of their salaries for six months.

India has been under a more than 50-day lockdown which has forced public places such as restaurants to remain shut to curb the spread of the novel coronavirus. As of Friday, the number of infections neared 82,000.

“A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg,” Goyal said in a note to employees.

“There’s no going back to the ‘normal’”.

Zomato, one of India’s most prominent startups, is one of many which are laying off workers or reinventing parts of their business as the COVID-19 pandemic hits revenues.

The company has already diversified into grocery deliveries - a service classified as “essential” in India, and therefore allowed to run - as a way to sustain its business. It has also targeted a push into alcohol deliveries, Reuters reported earlier this month.

Goyal said Zomato’s food-order volumes had fallen and the company saw “long term potential” in grocery deliveries.

The company has reduced its monthly cash burn and has a “very generous amount” of financial runway in the bank, he added.

Backed by Ant Financial - an affiliate of Chinese e-commerce giant Alibaba Group Holding - Zomato bought Uber’s Indian food delivery business in January.

Zomato’s main rival, Swiggy, has also laid off a number of employees, it said last month.

Zomato had about 4,000 employees, excluding contracted delivery workers or “riders”, a spokeswoman told Reuters on Friday.

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Reporting by Sachin Ravikumar; Editing by Shinjini Ganguli