Exclusive: OYO set to layoff 50% employees in its cloud kitchen business

OYO has been downsizing the workforce significantly to control burn rate, get rid of over-hiring and explore a sustainable path this year. In the past few weeks, several media reports said that the SoftBank-backed company had fired several thousand employees in the hotel business.

The reorganisation of teams in the company has started lingering in other business as well. The company is set to layoff about 140 employees in its food-tech business, said three sources aware of the matter.

“OYO will layoff about 45-50% of the total of 300 employees in its cloud kitchen vertical,” said one of the above sources. He requested anonymity as he’s not authorised to speak to the media.

OYO launched several brands including Adraq, O Biryani under its cloud kitchen business in February last year. It leverages aggregators - Zomato, Swiggy and UberEats for distribution.

“In its reorganisation bid, the company is merging the operating teams of hotels and cloud kitchens businesses,” added the second source, requesting anonymity. 

According to him, separate managers used to manage franchise hotels, TownHouse and the cloud kitchen business. “Going forward, there would be one manager in smaller cities while the number of managers is expected to be shrunk by about two-thirds in the metros and large cities,” he asserted.

OYO did not respond to queries sent by Entrackr. We will update once they respond.

Layoffs in its dark kitchen vertical has come a day after the company’s CEO Ritesh Aggarwal wrote a letter to employees that laid emphasis on enhanced efficiency and removal of duplication of effort across businesses as well as geographies.

While the media and pundits tracking startups have a view that OYO restructuring would impact thousands of job cuts, Aggarwal wrote that there would be only some realignment of business, operations, brands and people.

“Besides hotels and the cloud kitchen vertical, similar kind of layoffs are also in the pipeline across OYO’s co-working and co-living vertical,” said the above-quoted person. The company forayed into co-working business through its own brands — PowerStation and Workflow and acquisition of Innov8. It also runs co-living business OYO Life.

Downsizing of the workforce at OYO has been in the works for a few months now after a change in the company’s top post. The company appointed Rohit Kapoor as the new CEO of India Southeast Asia taking over Aditya Ghosh who was elevated to a board position.

Restructuring at OYO is largely driven by a sharp change in the core philosophy of its largest backer — SoftBank. After the WeWork debacle, the Masayoshi Son-led investment conglomerate has been asking portfolio companies to explore a more sustainable path with a high level of corporate governance.

Following the diktat from Son, Paytm and Ola, SoftBank’s two largest bets in India, laid off over 1,500 employees at mid and junior levels at the fag end of last year.