Online food delivery technology company Somato has announced that it has stopped operations in 225 small towns.
Food delivery technology firm Somato, in its quarterly financial earnings report, said the company’s losses have widened and it has shut down operations in 225 smaller cities as the performance in these cities was ‘very disappointing’ and the company posted a loss of Rs 346.6 crore in the quarter ended December due to a decline in its food delivery business.
It also said, “The current slowdown in demand is unexpected and has impacted food distribution profitability growth. However, we believe we are well positioned to achieve our profitability target.”
Somato is one of the most used food delivery apps in India and has recently re-launched its subscription in an effort to boost profitability.
The company’s decision to exit 225 small towns comes as it plans to hire about 800 jobs.
It noted that ‘Somato entered food delivery service from 225 small towns in January, which contributed 0.3 per cent to its total order value in the December quarter’.
“The performance of these cities in the last few quarters has not been very encouraging and we do not feel that the payback period of our investments in these cities is acceptable.”
However, it is not clear which cities are affected by the move.
To boost its profitability, the company said, “We launched a brand-new membership scheme called Somato Gold in late January. More than 9 lakh members have joined the scheme,” the company said.
At a time when the company is laying off people to cut costs, Somato CEO Deepinder Goyal gave employees some hope by announcing on LinkedIn that Somato would be hiring about 800 workers. However, he announced to work 24 hours a day. This led to disappointment from the staff.
Later, it is noted that he had posted advertisements on Linkedin for five positions including General Officer, Development Manager, Product Owner and Software Development Engineer.