Sriharsha Majety, the food delivery company's co-founder and CEO, said that the COVID 19 pandemic forced food delivery unicorn Swiggy to scale down three-fourths of its cloud kitchen footprint because of the food delivery company's co-founder and CEO, Sriharsha Majety.
Majety said at the sixth edition of the ASCENT Foundation e-conclave, the decision to expand the cloud kitchen business looked like one of his worst investment decisions'', in an interview with Harsh Mariwala, chairperson of Marico.
In the cloud kitchen business where we were both working with restaurants to expand their infrastructure and try out some brands on our own, the expansion was fast and there were several headwinds with respect to the assumptions behind the business. We had just completed the roll out of the 120th kitchen, these things take a fair amount of capex, and bang smack, we were in the middle of COVID 19. He said that looked like the worst decision in investment history in start-ups.
He said that the cloud kitchen business is now picking up.
Swiggy and Zomato had tried their hands at running their own cloud kitchen brands, but deprioritised it after a period of trial and error.
Swiggy's first cloud kitchen vertical Swiggy Access offered plug-and- play kitchens for partner restaurants to expand to new localities and cities. A new brand called BrandWorks was rolled out later in the day, which partnered with fine dining restaurants to create delivery-only brands and menus. The company had to shut down many of its cloud kitchens and make multiple rounds of layoffs because of the Pandemic forced lockdowns across the country.
In 2018, Zomato had shut down its cloud-kitchen program Zomato Infrastructure Services ZIS and instead invested in the Bengaluru-based cloud kitchen company Loyal Hospitality for an exclusive partnership. Within two years, Zomato left the company.
Majety said hiring too fast and not keeping up with the increasing process complexities were his two biggest mistakes while building the company.
Those were the times when we were stress tested and our talent density was being tested in terms of the exact deliberate fit you may want to fit. In 2018 - 19 we hired too fast, and we had to figure out how to make our process stronger to make sure the talent density comes back again, he said.
Majety saw a huge breakdown of communication as the organisation did not account for the increasing process complexities.
When things are small and everything gets done through tribal knowledge and relationships people build informally, you just believe that whatever worked for 500 works for 4000 people is a good job. One of the things I reminded myself is to keep taking a step back and be the chief complexity reduction officer. I have to take that role very seriously now, he said.