Zepto Cafe temporarily shutters 44 cafes amid supply chain constraints

Zepto Cafe, the quick-service food arm of quick commerce startup Zepto, has temporarily shuttered operations of 44 newly-launched stores across seven smaller North Indian cities amid supply chain constraints.

Some newly launched stores in Agra, Chandigarh, Meerut, Mohali, and Amritsar have been temporarily held as Zepto realigns its focus to rein in high cash burn and establish an efficient supply chain. The company plans to re-operationalise these stores by the end of Q2.

According to a report by ET Now, the company has closed around 44 outlets, impacting over 400 employees.

Led by Co-founder Aadit Palicha, Zepto is now reducing in-store team sizes for Zepto Cafe from nine to seven or eight employees to streamline operations and cut payroll expenses.

However, sources close to the matter claim that fewer than 50 employees were affected, all of whom have been reassigned to other dark store operations.

The closures come amid mounting operational costs and supply chain challenges. As per Moneycontrol, Zepto’s monthly expenditure had soared to Rs 250–300 crore late last year. That figure has since declined to Rs 95 crore a month. This is down from Rs 115 to 120 crore in March and Rs 105 to 110 crore in January and February.

According to Moneycontrol, the company paid Rs 95 crore in salaries to its 3,000 employees in April.

Zepto’s high wage bills are part of a deliberate strategy to attract and retain top-tier talent in a space that is rife with heavy competition

The spending has drawn attention across the quick-commerce sector. In March, Deepinder Goyal, CEO of Eternal (formerly Zomato), claimed that companies in the space were collectively burning Rs 5,000 crore per quarter. He said Zepto alone accounted for more than half of that. Palicha, however, dismissed the claim as “verifiably untrue.”

While Zepto is best known for delivering groceries and everyday essentials, competing directly with Blinkit and Swiggy Instamart, its Zepto Cafe vertical was also aiming to grab market share from food delivery giants like Swiggy and Eternal by offering fast-moving snack items such as coffee, noodles, and pizzas. Its scale has prompted the players to launch sister offerings within their ecosystem to cater to fast-moving snack items.

Blinkit-launched Bistro in December last year, while Swiggy has been focusing on scaling its 10-min food delivery option Bolt and Snacc.