Zomato is gearing up to lay off about 13 percent of its workforce over a span of the next six months, according to a note to employees by CEO Deepinder Goyal. Now published in a note titled 'A more focused Zomato', Goyal's note states that the number of restaurants are roughly expected to shrink by 25 to 40 percent, over the next one year. As a result, while Goyal claims that Zomato has good cash reserves and is financially stable, the company will be undertaking operational revisions, which include reducing real estate costs, inflicting six-month temporary pay cuts for the employees that remain, and laying off about 13 percent of all Zomato workers over the next six months.
In the note to employees, Goyal states, "Multiple aspects of our business have changed dramatically over the last couple of months and many of these changes are expected to be permanent. While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that to ~13% of our workforce going forward."
Goyal has further stated four steps in which Zomato will attempt to support the laid off employees over the next six months. These steps include payment of 50 percent of salary for the next six months, or until the employee finds a new job. He further adds, "During this time, outside of the handover period of 1-2 weeks, we expect these folks to spend 100% of their time and energy towards looking for jobs outside of Zomato." For outsourced, contractual employees, Zomato will offer two months of severance pay through the third party agencies.
Zomato has also stated that it will offer 'outplacement' support to help the laid off employees find new jobs, and also respect employee stock options that were previously allocated. The laid off employees, who will be informed about their job status before the end of today, May 15, will also get to avail health insurance options over the next six months.
"Covid-19 has been a black swan event for the world economy; and we do not yet know if we have hit the global minima in this journey with the virus. What we have seen so far might just be the local minima, and the worst might be around the corner. Therefore, we need to make sure that we preserve as much cash as possible to weather the storm if the business environment gets worse, or continues to be the same for the rest of the year or more," added Goyal in his note to employees.
Zomato's move comes nearly one month after Swiggy, Zomato's prime industry rival, reportedly announced layoffs that reduced its workforce by almost 1,000 employees. Going forward, Zomato has been attempting to strongly advocate 'contactless dining', urging restaurants to reopen with the new, contactless package as the ailing restaurant industry attempts to make a recovery.