Swiggy to lay off 1,100 employees amid dipping food delivery volumes

In an email to employees on Monday, Swiggy said that it would be laying off 1,100 people over the next few days as its core food delivery business suffers severe impacts from the Covid-19 pandemic.

Photo credit: Swiggy

The food delivery startup will be providing affected individuals with at least three months of their salary, continued healthcare and wellness benefits until the end of the year, as well as relocation and career transition support, Swiggy CEO and co-founder Sriharsha Majety wrote.

The development comes as the company prepares for “worse scenarios” by cutting down on spending, which also includes reducing every single indirect cost like hubs and office infrastructure.

In addition, Swiggy will also be scaling down or shutting down adjacent businesses that it expects to be highly volatile or irrelevant for the next 18 months.

“The biggest impact here is on the cloud kitchens business, with many unknowns about volumes through the year,” Majety said. Last month, it was reported that the Bengaluru-based startup was letting go of around 1,000 staff across teams in its cloud kitchen division.

“We are already operating at significantly lower levels on our staffing and physical infra than our earlier footprint and will continue to optimize before we get more clarity on order volumes for food delivery,” the CEO said.

Recently, Swiggy’s rival Zomato also announced that it would be slashing about 13% of its workforce to save cash.

“A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg,” Zomato founder and CEO Deepinder Goyal wrote in a blog post. Goyal also said he expects the number of restaurants to shrink by 25% to 40% over the next six to 12 months, limiting providers on food delivery and restaurant discovery platforms.

Amid the downsizing, however, Swiggy managed to secure additional funding from existing backer Samsung Ventures Investment. According to a report by Entrackr, a regulatory filing shows that the South Korean VC firm has picked up roughly US$1.9 million worth of Swiggy’s series I shares. This pushes the startup’s total capital raised in the round to about US$42.4 million.

Swiggy has also passed a special resolution to appoint Tencent Investment managing director Daniel Joram Brody as a non-executive nominee director in the company’s board, according to the report.

Update (May 20, 11:20 am): This article was updated to include new details about Samsung Venture Investment’s reported investment into Swiggy.