Swiggy seeks rent waiver from its landlord Embassy

Online food delivery startupSwiggyhas sought rent relief fromEmbassy Groupfor a property that houses its headquarters inBengaluru, people in the know told ET.

Swiggy, which saw a significant drop in business because of the coronavirus-led lockdown, is in talks to cut rental and is even exploring giving up space at its headquarter inEmbassy Tech Village, the persons cited earlier said.

An email query sent to Swiggy remained unanswered till as of press time.

The company pays a rent of Rs 78 per sq ft for over 300,000 sq ft of space it occupies under the name Bundle Technologies in Embassy Tech Village. The lease for this property was signed in May 2019 and has a lock-in period till May 2025, with rental escalation of 15% annually.

Swiggy had earlier said that it is cutting down on every single indirect cost, including hubs and office infrastructure.

Sriharsha Majety, the company’s CEO, had earlier written to employees saying, "While we will come back to share more information on this, it is one of the areas where we feel the cut is most prudent, given it doesn’t affect customer or employee experience. We’ve all done some of the greatest work of our time at Swiggy over the last few weeks working remotely, and that’s reason enough to believe this can be done."

Many startups have started laying off staff and some have initiated salary cuts to conserve cash. They are also invoking ‘force majeure’ clauses and renegotiating rentals after severe business loss due to the Covid-19 outbreak and the resultant government-ordered lockdown across the country.

The firm has decided to scale down or shut down adjacent businesses including cloud kitchen that are either going to be highly volatile or will not be highly relevant for the next 18 months."Since the onset of Covid, we have already begun the process of scaling down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile," the letter mentioned.

The core food delivery business has been severely impacted and is expected to remain impacted over the short term. Food-delivery volumes have dropped by around 70-80 percent in the past two months compared to before thepandemic, as many restaurants remain shut and consumers keep away from ordering Food online.

Source: https://realty.economictimes.indiatimes.com/news/commercial/swiggy-seeks-rent-waiver-from-its-landlord-embassy/75889626

May 22, 2020

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