Restaurant search platform, Zomato is planning for a massive lay-off that will reduce 300 of its workforce. This is 10% of the total employees which currently somewhere around 3000 employees.
The move is prompted by a strategy shift with increased focussed into revenue generating areas like reservations. The lay-off impact will fall mostly on the US-based staffs, with the content teams among some of the most affected.
Zomato, with net worth of over a billion dollars is extensively operating in over 22 countries. The decision is particularly significant because these Content Teams were once at the center of Zomato’s original “feet on the street” business model and were responsible for collecting first hand data about listed restaurants. This was what set Zomato apart from its competitors and was responsible for the early success of the company.
With the current move the startup will be focussed towards more subtle strategy. According to the company’s new approach, all regions of operation will now be divided into “Full-Stack” and “Enterprise”. Deepinder Goyal, CEO and co-founder, described the nuances of the division as follows,
Full Stack are the four regions where all of the following are true:
- Large markets
- Growing very fast
- Zomato is the strongest player in its space.
These four regions are India, the Middle East, South East Asia (the Philippines and Indonesia), and ANZ (Australia and New Zealand).
- Enterprise regions are the ones where any of the following is true:
relatively small markets
- Slow growth economies
- Zomato is not the dominant player
While Enterprise is how Zomato labelled the places, where it is not the top gun at the moment. All the remaining markets belong to this category.
So the driving force behind this move the situation in both the regions, and the way to deal with it. While the “Full Stack” markets will continue to receive the full spectrum of Zomato services including live content collection and ad sales, the “Enterprise” markets will see the company lay increased stress on transactional businesses, including the Zomato Book reservations engine, with “on-the-ground community building and marketing activities,” shifted to the background, hence the lay-offs.
According to the statement,
“Most of the people in our teams in these regions should be sales people, to help us put Zomato Book in as many restaurants as possible. This means that in these regions, our operations will need fewer people to run the show compared to the past. This will also help bring our burn rate down and, as we go along, make our businesses in these countries much stronger.”
So, this brings bad news for the content team, which includes the people involved with “on-the-ground community building and marketing activities”. Or in other words, people who physically visit restaurants to collect data such as timings, menus etc. for the massive Zomato database.
Also, brushing aside rumours about this move is anything to do with the latest acquisition, the spokesperson of Zomato said, “The cuts are not a result of Zomato’s acquisitions, Most of these people were hired after the completion of the acquisitions. However, over the last few months, we have been working hard to make sure that we prioritize our efforts, and the recent cuts are a step towards that direction.”
Instead, the cuts will be global with more emphasis laid upon areas with a larger number of restaurants. US, with its 700,000 of the total 1.4 million restaurants listed on Zomato platform, is likely to make it to the top of the layoffs list.
According to data from Zomato, only 40% of the restaurants on it’s platform are responsible for almost 92% of its traffic, making all the work that goes into live data acquisition from the other 60%, not really worth the effort it takes.
Deepinder Goyal, CEO summed it up in his memo,
“We are also going to have to make important changes to our business and make sure we put every dollar and every Zoman behind the things that matter the most.”
He added, “The next few months are going to be hard for all of us. But sticking together, hustling, and not spending time overthinking or being unnecessarily creative should get us to where we want to be.”