In May 2020, Zomato, an India-based restaurant guide and food delivery startup, laid off 520 employees, accounting for 13% of its workforce. These layoffs were a result of the significant decline in food delivery activity due to the COVID-19 pandemic. In this article, we'll discuss what happened, why it happened, and the potential future impact on the company and its employees.
Zomato's decision to lay off employees was primarily driven by the economic pressures and decline in business due to the COVID-19 pandemic and subsequent lockdown measures. The company faced challenges as consumer behavior changed, leading to a decrease in food delivery activity. In response, Zomato shifted its focus to remote working and explored new business opportunities such as hyperlocal deliveries of groceries. The company aimed to become a "transaction first company" and implemented measures to adapt to the "new normal."
Founder Deepinder Goyal stated that Zomato would assist laid-off employees in finding new jobs and provide financial and emotional support for six months. The impacted employees were offered severance packages, health insurance, and assistance in finding new employment. This layoff was the second round for Zomato, with the previous one occurring in September 2019 due to the proliferation of automation. The broader industry trends observed include the shift towards remote working, increasing demand for hyperlocal deliveries of groceries, and the importance of contactless dining in compliance with new norms.
Zomato has recently streamlined its workforce, aligning with strategic initiatives aimed at strengthening its core operations. The company is refining its focus on remote work and expanding its hyperlocal grocery delivery services. This strategic shift is designed to bolster Zomato's position in the food delivery market by capitalizing on significant opportunities within the food value chain.
By intensifying efforts in these areas, Zomato is positioning itself to compete effectively with established market leaders like BigBasket and Grofers, enhancing its potential for growth and profitability.
The future impact of Zomato on the food industry may be significant as the company adapts to changing circumstances and explores new business opportunities, such as hyperlocal deliveries of groceries. This expansion beyond restaurant food delivery positions Zomato to have a broader influence on the industry. The layoffs, resulting from the COVID-19 pandemic, suggest a negative effect on the food industry, reflecting the challenges faced by businesses in the current economic climate.
Zomato's layoffs were driven by the COVID-19 pandemic's impact on food delivery activity, leading the company to shift focus towards remote working and hyperlocal grocery deliveries. The layoffs, along with temporary pay cuts, may result in cost savings for Zomato. As the company explores new business opportunities, it could potentially influence the broader food industry and compete with established players like BigBasket and Grofers. These developments may shape future strategies for Zomato and the sector as a whole.
