Zepto Cafe pauses operations in 44 stores across North India due to supply and staff crunch

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Zepto has discontinued its cafe services in over seven north Indian cities as the company faces a supply crunch and some of its employees haven’t reported to work, Moneycontrol has learnt.

Zepto Cafe is the company’s unit that sells short eats like coffee, tea, puffs, pizzas and more. It is largely touted as the replacement for food that users would otherwise order from Zomato and Swiggy.

The company has close to 1,000 stores and cafe services have been discontinued in a total of 44 of its dark stores.

Zepto Cafe is unavailable in the Delhi NCR belt, Agra, Meerut, Haridwar, Gorakhpur, Mohali, Amritsar and Ghaziabad regions, sources said. “A total of 44 stores have been impacted and services should resume by Q2, during the July-September quarter,” the source added.

Regions like the Delhi NCR belt are especially crucial because they’re dominated by Zomato and Blinkit, both owned by Eternal.

A spokesperson for Zepto did not reply to Moneycontrol’s queries.

As part of the shutdown, Zepto moved most of its kitchen staff to other stores but 15 of them quit as they did not agree to relocate, company insiders said.

NDTV Profit first reported the development.

The downtime comes amid intensifying competition between Zepto, Blinkit, Zomato and Swiggy where the quick commerce players have been taking away market share from the food delivery players.

“…growth does remain below our expectations for now. Competition from quick delivery of packaged food from quick commerce (is) leading to (a) drop in (the) demand for food delivery from restaurants,” Deepinder Goyal, group CEO, Eternal, said on May 1 while announcing the food and grocery delivery company’s results.

Also read: Zepto's monthly employee costs near Rs 100 crore, reaching 80% of larger rivals Zomato and Swiggy

If Zepto scales down cafe services in other cities or the downtime increases further, it is likely that food delivery companies will claw back market share.

Zepto Cafe, CEO Aadit Palicha said, had 1 lakh orders per day and was closing in on a “$100 million annualised gross merchandise value (GMV) run-rate”. The unit has a 50 percent steady-state gross margin, he added.

Apart from the food delivery companies and Bistro by Blinkit, Zepto also competes with Swish. Swish has however been limited to Bengaluru and plans to focus on one city before scaling.