Flipkart-backed on-demand logistics service provider Shadowfax has decided to cut back on its cloud kitchen’s expansion plans. As a result, it has let go about 50 employees who were deployed to set up facilities in smaller cities.
While the company co-founder and CEO Abhishek Bansal emphasised that there are no layoffs, on Monday TechCircle reported on job cuts citing an internal email. The company may ask more employees to go in the coming weeks, it added.
Shifting focus from expanding the cloud kitchen vertical is quite natural for Shadowfax as the food business has been severely hit by the Covid-19 pandemic. Swiggy too planned to shut down about half of its cloud-kitchens and lay off up to 900 employees and Entrackr had exclusively reported the development last month.
Shadowfax had launched its cloud kitchen vertical in December starting from Pune with around 20 restaurant brands on board. The company was also set to hive-off cloud kitchen business and raise separate funds. However, the plans have been placed on the backburner for now.
“We have scrapped those plans in the cloud kitchen business after evaluating the priorities in the current situation,” added Bansal. When asked about the overall business, “E-commerce and food volume have certainly been down massively, but a spike of orders in pharmacy and grocery has been compensating,” he said.
Entrackr had exclusively reported Shadowfax’s foray into the cloud kitchen business.
Besides Swiggy and Shadowfax, the poster boys of the segment – Rebel Foods and Box8 – have also been weighing options to shut down some kitchens. According to Entrackr sources, they are likely to announce cost-cutting measures soon and layoffs could be one of those options.
Hospitality, food and restaurant businesses are highly impacted due to the spread of the coronavirus. They have been unable to operate as people across the globe have been avoiding venturing out or ordering food from restaurants.
Travis Kalanick’s new gig – CloudKitchens – has been severely hit by the pandemic. Several media reports outlined that key employees are leaving the cloud kitchen firm in several geographies.