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Swiggy could shut many of its cloud kitchens, lay off over 500 workers as sales slump

Layoffs are likely to take place next month from the cloud kitchens across 10 tier 1 and tier 2 cities, which operate Swiggy-owned Homely and The Bowl Company.

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New Delhi: Online food delivery platform Swiggy is likely to shut around half of its cloud kitchens and lay off nearly 500 to 900 employees in this division who are mainly contractual workers.

A cloud kitchen is a delivery-only property that accepts orders through online ordering and offers no dine-in facility.

Cloud kitchens are said to be a good business model for food delivery apps such as Swiggy and Zomato. But due to the coronavirus outbreak, operating these kitchens have become difficult.

The layoffs are said to take place next month from the cloud kitchens across 10 tier 1 and tier 2 cities, which operate Swiggy-owned Homely and The Bowl Company.

Even though food delivery has been regarded as an essential service during the Covid-19 lockdown, many restaurants and cafes have either shut down or reduced their services. This, in turn, has impacted Swiggy’s delivery systems.

According to Entrackr, which had first reported about Swiggy’s lay-offs, 40 per cent job cuts will be done on the basis of an annual performance review.

“As the lockdown gets further extended, we are evaluating various means to stay nimble and focused on growth and profitability across our kitchens. These include 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,” the report quoted a Swiggy spokesperson as saying.

The spokesperson added: “This will, unfortunately, have an impact on a certain number of kitchen staff who will be fully supported during this transition.”


Also read: Amazon is hiring 75,000 more employees to keep up with coronavirus-induced consumer demand


No delivery in 300 cities

The Bengaluru-based food delivery startup has not considered pay cuts for the rest of its employees, according to reports, but has told staff that there won’t be any appraisals this year.

Swiggy is also not handling food delivery in close to 300 tier 3 and 4 cities due to various challenges due to the nationwide lockdown. However, it has begun delivery of grocery items and other essential services. As has its rival Zomato.

The Covid-19 lockdown in India was extended to 3 May on 14 April by Prime Minister Narendra Modi to curb the spread of Covid-19. The global pandemic has so far infected more than 19,000 people in India and claimed 600 lives.


Also read: India has 2 of Asia’s 50 best restaurants, but it’ll be a while before you can dine there


 

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