Zepto Cafe Scaling Down Operations Amid Supply Chain Issues: Report

Zepto is reportedly scaling down its 10-minute food delivery service, Zepto Café, as it battles supply chain issues and shortage of trained staff to run kitchens.

Zepto Café’s growth and expansion slowdown coincides with the startup’s efforts to control its cash burn, an ET report said, citing sources familiar with the matter.

Sources also told the publication that Zepto has slowed the launch of its dark stores.

Responding to Inc42’s queries, Zepto spokesperson said, “Zepto Café order volume has grown by 700% year-on-year, and 15%+ month-on-month with 1,000 crores of annual net sales. We are continuing to double down on Café and expect it to continue growing meaningfully this year.”

However, the company did not comment on the specifics of cities planned for scaling its cafe business.

This comes nearly two months after the quick food delivery arm of Zepto temporarily shut operations in about 44 cafes, impacting over 400 employees, across most states in the northern part of India.

Besides, reports then said that Zepto decided to cut the workforce at many of its cafes.

Meanwhile, brokerage and analyst reports from the past few weeks have highlighted how Blinkit and Instamart are grabbing market share even as investments in dark store expansion and other operational capacity have reduced.

Eternal-owned Blinkit and Instamart gained market share as per a report by ICICI Securities, with the former said to have seen a 25% growth in gross order value, compared to Instamart’s 22% QoQ growth in Q1 FY26. This is against a sector-wide 20% increase in GOV, indicating that the two listed players have managed to capitalise in the past quarter.

The numbers also shadowed that Zepto lost some market share or did not see as much growth as it had a hold over previously.

In February, cofounder and CEO Aadit Palicha claimed that Zepto Cafe hit 1 Lakh orders per day, back then. In a post on LinkedIn, Palicha said that Zepto Cafe is close to achieving $100 Mn annualised gross merchandise value (GMV) run-rate with a near 50% steady-state gross margin.

He further said that Zepto Cafe’s steady-state gross margin is already 10% higher than the scale of some of the “top” QSR chains in India.

On the financial front, Zepto’s consolidated revenue more than doubled to INR 4,454.52 Cr in the fiscal year 2023-24 (FY24), jumping 120% from INR 2,025.70 Cr in FY23. The quick commerce unicorn’s net loss saw a marginal decline of 2% to INR 1,248.64 Cr in FY24 compared to INR 1,271.84 Cr from a year earlier.

The post Zepto Cafe Scaling Down Operations Amid Supply Chain Issues: Report appeared first on Inc42 Media.