BENGALURU: Foodtech company Swiggy lays off 380 employees as part of its restructuring exercise. It will also be shutting down its Meat marketplace.
In an internal note to employees on Friday, CEO Sriharsha Majety said that the growth rate for food delivery has slowed down versus its projections.
"This meant that we needed to revisit our overall indirect costs to hit our profitability goals.. While we’d already initiated actions on other indirect costs like infrastructure, office/facilities, etc, we needed to right-size our overall personnel costs also in line with the projections for the future. Our overhiring is a case of poor judgement, and I should’ve done better here," he said.
In 2021, driven by a surge in demand during the second wave, Swiggy's food delivery business grew strongly. Also, the company found early success with Instamart. Looking at these, the company invested into building its teams to be able to cater to the needs of the categories.
However, in 2022, due to challenging macroeconomic conditions, companies around the world are adjusting to the new normal, with refreshed investment horizons and accelerated timelines for profitability, he said.
Over the last year, the company has also identified many areas for improvement in its pace of execution.
"Due to the iterative build-up of the different orgs, there have been some extra layers created in pockets. This definitely increased our communication overhead, and compromised our agility. This meant that instead of doing more with less, we were doing less with more in these cases," the CEO said.
He added that operating in multiple hyper-competitive categories means that the company has very little room to slow down and that they wanted to arrive at a more deliberate organisation design to be more nimble, effective, and efficient at the same time.
Talking about its existing new verticals, Swiggy's CEO said that they will be shutting down Meat marketplace as the company couldn't hit product market fit. But it will continue to offer meat delivery through Instamart.
The impacted employees will be given cash payout between three and six months based on their tenure and also medical insurance cover. In November last year, the food delivery platform shut down The Bowl Company, the cloud kitchen brand in the Delhi-NCR region.
In FY22, Swiggy's losses more than doubled at Rs 3,629 crore compared to Rs 1,612 crore in FY21. According to its filings with the Ministry of Corporate Affairs, Swiggy's revenues spiked to Rs 6,120 crore from Rs 2,675.9 crore in the previous fiscal. Its revenues in FY 20 stood at Rs 3,727.7 crore.
In January last year, Swiggy raised USD 700 million in new funding led by Invesco, and it turned a decacorn as valuation crossed over USD 10.7 billion.