Zepto Cafe Halts Operations in Tier-2 Cities Amid Supply, Cost Challenges
- Zepto Cafe has temporarily shut down operations in over seven North Indian cities, affecting 44 dark stores, due to supply shortages, employee absence, and rising operational costs.
- The company has cut monthly spending to around ₹95 crore and is downsizing retail teams as part of a broader cost-efficiency drive amid intense competition from competitors.
As Zepto struggles with a shortage of supplies and employee absenteeism, Zepto Cafe has reportedly closed its cafe operations in over seven North Indian cities, affecting 44 of its dark stores.
According to sources who spoke to Moneycontrol, the impacted cities are Delhi NCR, Agra, Meerut, Haridwar, Gorakhpur, Mohali, Amritsar, and Ghaziabad. One of them stated, "Services should resume by Q2, during the July–September quarter, as a total of 44 stores have been impacted."
The closures are taking place as a result of supply chain problems and growing expenses. Late last year, Zepto was spending between ₹250 and ₹300 crore a month, according to a Business Standard article.
Spending has recently decreased to approximately ₹95 crore per month, from ₹105–110 crore in January and February, and ₹115–120 crore in March.
The major factor behind the recent store closures is Zepto’s earlier push to scale up staffing, which led to higher operational costs that are now being reevaluated as the company seeks to improve efficiency.
To reduce costs and improve efficiency, the Aadit Palicha-led company is reportedly reducing retail teams from nine employees to seven or eight.
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This brief cutback occurs during a period of fierce competition in the quick commerce and food delivery industries. Zepto's competitors, Zomato and Blinkit (both owned by Eternal), are well-established in the Delhi NCR area, which has been particularly impacted by the cafe stop.
Eternal's group CEO, Deepinder Goyal, recognized the pressure from rapid commerce players on May 1. “...growth does remain below our expectations for now," said Goyal. He stated that the demand for restaurant meal delivery is declining due to competition from rapid commerce's ability to provide packaged food quickly.
Zepto remains upbeat despite the chaotic situation. In February, the company announced surpassing 100,000 daily orders, and it anticipates that figure will increase in the upcoming year.
This development coincides with a review of speedy meal delivery tactics by major competitors. While Swiggy has expanded Swiggy Bolt to more than 500 locations, Zomato recently discontinued its meal delivery service, which took ten to fifteen minutes.
Last year in December, Zepto launched its cafe services, Zepto Cafe. Zepto's CEO and co-founder, Aadit Palicha, announced the calculated move on social media, emphasizing the company's rapid innovation and expansion.
"Café is growing quickly; we're opening more than 100 locations each month and already receiving 30,000 orders every day." Palicha said.
Edited by Harshajit Sarmah
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