The food delivery startup Swiggy is planning to cut around 1000 jobs mostly from its cloud kitchen division. In a statement, Swiggy said they are exploring various options to survive this bad phase and focus on the growth and profitability of the kitchen. It also said that this could impact the staff of the kitchen. According to a LinkedIn survey, the company employs about 12,000 of its staff.
But Swiggy did not announce the number of people it was going to layoff, but sources say that it might be close to 1000 jobs. The company is also looking to reduce its monthly burn rate by $5 million compared to $20 million it spends on winning customers.
Swiggy has raised an overall of $1.46 billion as of now, which includes $156 million from an ongoing series fundraising this year. Swiggy competes with Zomato which is backed by ANT Financial. Zomato is also planning to raise $500 million this year by mid-May.
India’s food delivery market is currently valued at $4 billion, according to the research by RedSeer. This market has mostly become a Duopoly since Food panda and Uber couldn’t compete with these existing companies.
The lockdown which happened last month has turned out to be a difficult one for these firms with less than 1 million orders placed from these apps. Usually, it would be around 3 million orders per month. Experts also say that these companies should subsidize the cost of the items, if not most of the customers cannot afford it.
Last year both Zomato and Swiggy have explored other options to increase their revenue. Swiggy has invested a lot in the cloud kitchen which allowed the restaurants to open several branches with very little investment. Last year, it was announced that Swiggy has opened around 1000 cloud kitchens, which is more than any of its rivals. To achieve this, it has invested in more than 1 million square feet of area in 14 cities across the country in the last two years.
Currently, in the lockdown both Swiggy and Zomato, are delivering groceries and other necessary items to their customers.
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