Zomato has confirmed that they are laying off 300 employees, or roughly 10% of their workforce, in order to concentrate more on profit-making niches. Severely hit would be their content teams, which are responsible for live data collection, part of their ‘feet on the street’ business model.

Zomato founder Deepinder Goyal has sent out a memo to all 3000 employees, announcing the need of this layoff, and their future plans to make the company more formidable. We have reproduced the memo at the end of this post.

He said, “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.”

‘Zomans’, as described by Deepinder, are an internal nomenclature at Zomato; used for describing members of content teams who visit various restaurants and collect live data from them. This data is then inserted into Zomato’s database to make them fresh with information. This live content feed from all listed restaurants makes Zomato different from other popular portals like Yelp, which is dependent on user generated feedbacks and ratings.

Zomans do play an important part of their operations; and they are not exactly eliminating them per se. But they are reducing their numbers, so as to focus only on few core-locations where they are experiencing more revenues.

As per the memo, these core locations are: India, the Middle East, South East Asia (the Philippines and Indonesia), and ANZ (Australia and New Zealand).

Zomans from other locations like USA and Europe would be reduced.

Interestingly, Zomato has highest number of listings from USA, as information about 700,000 restaurants is now available on their platform. Comparably, India only has 70,000 listings, Australia has 60,000 and the UK has 20,000 listings. In total, Zomato boasts of 1.4 million listings of restaurants, globally.

The New Structure

As per Deepinder, Zomato will now split all countries into two groups: Full Stack and Enterprise.

Full stack would be those countries, where they are receiving maximum traction: India, the Middle East, South East Asia (the Philippines and Indonesia), and ANZ (Australia and New Zealand).

Enterprise segment has been defined as ‘emerging markets’ for Zomato, where growth is slower, revenues lesser but momentum is on. All regions except Full Stack, are now classified under Enterprise, which includes US and Europe.

Considering that US has maximum number of restaurant listings, it is now confirmed that majority of content teams (Zomans) would be fired from US itself. Operations in India, Middle East, South East Asia and Australia-New Zealand would be largely unaffected.

One spokesperson said, “The cuts in other countries will be not be a large number given the size of those markets, and have already happened or will happen early next week. The U.S. will see a higher impact because the number of restaurants there is larger than in other countries.”

As mentioned in the memo, 40% of all restaurants bring in about 92% of overall traffic to Zomato; which is actually driving these mass layoffs in the company.

Recently, Bengaluru based food tech startup Dazo shut down, which sent tremors down this industry, which was expecting more new ventures coming up. Although Zomato’s layoffs aren’t affecting India, but still, its part of this niche and laying off 300 or 10% of its employees may signal that startups are actually looking for profits now.

Here is the memo sent by Deepinder Goyal to all employees: