With the daily food orders plummeting due to the global healthcare crisis, online food delivery major Swiggy said it would have to let go of parts of its private label kitchen business team and discontinue operations at a few locations.
“As COVID-19 disrupts daily life across the country, the hospitality industry has come under severe pressure,” a Swiggy spokesperson told KrASIA. He further said that the company is “renegotiating contracts with landlords, relocation of certain kitchens to more optimal locations and discontinuing operations at a few kitchens that have been severely impacted since the lockdown came into effect.”
Quoting industry sources, a local media Entrackr said around 900 staff members from the Bengaluru-based food delivery company would be laid off by next month.
“The employees that are expected to be asked to leave are going to be across teams in their cloud kitchen division,” one of the persons told Entrackr, requesting anonymity. The company is also renegotiating rent with the landowners of its kitchen.
As the coronavirus cases remain on an upward trend in India, the government extended the lockdown till May 3 forcing the majority of the restaurants to remain shut except a few that are open only for takeaway orders.
“As the lockdown gets further extended, we are evaluating various means to stay nimble and focused on growth and profitability across our kitchens,” Swiggy spokesperson said. “This will, unfortunately, have an impact on a certain number of kitchen staff who will be fully supported during this transition.”
The company, backed by both Naspers and Tencent, has been quite bullish on its private label initiative under four food brands including The Bowl Company, Homely, Goodness Kitchen, and Breakfast Express. Last year it put in INR 250 crore (USD 32.6 million) to expand its cloud kitchen platform Swiggy Access. In fact, earlier this year it launched a new cloud kitchen brand called BrandWorks and had partnered with 95 fine-dining restaurants.
Swiggy recently raised USD 43 million as part of its Series I funding round from a bunch of South Korean VCs and conglomerates including Ark Impact, Korea Investment Partners, Samsung Ventures, Mirae Asset Capital Markets, and China’s Tencent.