Startup Story Team
Zepto’s ambitious 10‑minute food delivery arm, Zepto Cafe, is undergoing significant downsizing in response to persistent supply chain bottlenecks and a shortage of trained kitchen staff. After scaling rapidly across cities since its December 2024 launch, the platform has recalibrated its operations to focus on consolidation over expansion, signaling strategic caution in today’s competitive quick‑commerce landscape.
Scale‑back of Operations:
At its peak earlier this year, Zepto Cafe reached an impressive 120,000–130,000 daily orders. However, by May–June, numbers had fallen dramatically to roughly 65,000–67,000 orders per day. Reflecting this downturn, the company shuttered 44 outlets-primarily smaller dark‑store “cafes”-impacting around 44 locations in North India.
Roots of the Slowdown:
Several interlinked challenges triggered this retrenchment:
- Supply chain constraints: Vendors reported that monthly orders dropped from roughly ₹1.4–1.5 crore to ₹40–50 lakh, highlighting declining volume and delays in order pickups.
- Staffing crunch: Zepto faced difficulties sourcing and retaining experienced kitchen personnel. Some small‑city staff declined transfers, leading to operational hurdles.
- Menu optimization: To streamline workflow, Zepto paused items requiring extensive frying, simplifying kitchen operations.
Revamping Strategy:
In response, Zepto restructured its cafe teams-reducing staff from nine to seven or eight-and paused operations in affected locations. Despite the temporary suspension, the company plans to resume services by end‑of‑quarter as it strengthens supply lines and operational protocols. The move also aligns with broader industry adjustments from competitors like Blinkit’s Bistro and Swiggy’s Snacc.
Growth Amid Challenges:
Despite recent setbacks, Zepto remains optimistic. The company noted a 700% year‑on‑year surge in Cafe volumes, over 15% monthly growth, and roughly ₹1,000 crore in annual net sales. As of February, daily orders had crossed 100,000, and Zepto anticipates continued meaningful growth throughout the year.
Financial Reset and Capital Plans:
To support its recalibration, Zepto has paused new dark‑store openings and is exploring a $500 million funding round from existing backers like General Catalyst and Avenir Growth. The capital will help fund an IPO slated for 2026, while the company focuses on taming cash burn and shoring up backend operations.
Competitive Context:
Quick‑commerce rivals have also been tempering expansion-as Blinkit and Instamart slowed new store additions, while Snacc and Bistro continue rapid rollouts. Meanwhile, Zomato exited its ultra‑fast delivery segment, reflecting broader market recalibration.
Looking Ahead:
Zepto’s strategic retreat reflects a maturing approach: focusing on operational robustness before resuming aggressive scale‑up. If it can stabilize supply chains, retain kitchen staff, and optimize cafe workflows, Zepto Cafe may well regain growth momentum. Investors are watching closely, with confidence hinging on execution and efficiency improvements ahead of its potential 2026 public listing.
