Swiggy on Friday said it has laid off 380 employees, as the Indian food and grocery delivery company tries to put a lid on rising costs amid a drop in food delivery growth rate.
In a townhall on Friday, chief executive Harsha Majety said, “Over the last year, under challenging macroeconomic conditions, companies around the world (public and private ) are adjusting to the new normal, with refreshed investment horizons and accelerated timelines for profitability. We’re no exception here and have already advanced our own timelines for profitability on food delivery and Instamart.”
This comes weeks after the SoftBank-backed company reported that annual losses more than doubled during the financial year 2022, hurt by higher expenses.
In an attempt to fend off competition from Zomato and grow its Instamart business, Swiggy’s cost of product procurement rose to Rs 2,268 crore in FY22 from Rs 570 crore in FY21. Its advertising and promotional expenses jumped to Rs 1,848.7 crore, a 4x rise from FY21.
Majety also said that the growth rate for food delivery has slowed down versus our projections (along with many peer companies globally).”
The Indian food delivery industry, which is expected to breach the $10-billion GMV mark by 2025, is dominated by two players — Swiggy and Zomato — constantly vying for a bigger share of the market.
According to industry estimates, Swiggy and Zomato process around 1.5 million orders daily. However, these numbers do not translate to profits, leading to both companies experimenting in other areas, including grocery delivery, which has players such as Zepto, Dunzo, and Zomato-owned Blinkit.
“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 inline with the projections for the future. Our overhiring is a case of poor judgment, and I should’ve done better here,” Majety said.
Earlier this year, Swiggy raised $700 million led by Invesco at a $10.7-billion valuation.
Majety also said the company will be shutting down its Meat marketplace.