The quick-service food arm of Zepto, the Indian instant-delivery startup, has temporarily stopped operations at around 200 of its Zepto Cafe outlets due to muted customer demand in those locations. YourStory.com+2Tech in Asia+2
- The cafes in question are part of a network of “over 600” outlets.
- The closures are focused in markets where demand is inconsistent; the company plans to redeploy staff from the affected cafes into its core “dark-store” operations (used for its main quick-commerce business).
Why it matters
- It highlights how even well-funded quick-commerce startups are facing execution and demand-generation challenges when branching into adjacent verticals such as in-store cafes.
- For Zepto, the move signals a re-focus on its core business (instant grocery/quick commerce) rather than extending into foodservice where the economics may be tougher or the model unproven.
- It raises questions about how scalable the “10-minute/instant cafe” model is across diverse geographies and consumer segments in India, especially when the base business is already under pressure to show profitability or sustainable growth.
Key details
- The 200-store number is an approximate – sources say “about 200”.
- The company previously took a similar step in June of this year when around 44 cafes (in smaller North Indian cities) were paused. Around 80 % of those reportedly resumed operations.
- Employees from the affected cafes (typically 2-3 operators per cafe) are being shifted to dark-store roles (picker/packer) in surrounding stores, rather than being laid off.
- The move is described as a “course correction” rather than a complete withdrawal from the cafe business. Zepto’s spokesperson is quoted as saying they remain committed to the vertical.
Context/background
- Zepto is primarily known for its quick commerce model (10-minute grocery delivery) in India.
- The cafe vertical (Zepto Cafe) was an extension into “ready-to-eat” or “instant food/snack” format leveraging the company’s delivery network and dark-store infrastructure.
- The instant food/delivery space is becoming increasingly competitive in India, with players like Blinkit (with its Bistro concept) and Snacc (by Swiggy) expanding. YourStory.com
- Operational challenges such as supply chain, staffing, store-economics, demand forecasting, and location viability are often more acute in food service vs. pick-and-pack grocery models.
Implications & what to watch
- For Zepto: They will need to show that the reallocation of resources boosts margins and efficiency in their core business. If the cafe model continues to underperform, they might reconsider the scale or expansion strategy of that vertical.
- For the cafe/instant-food segment: This case may serve as a cautionary tale for other startups assuming symmetric business models across cities or formats. Store-by-store economics matter a lot.
- For investors and market watchers: With Zepto being IPO-bound (as per previous rounds/fundraising) and in a high-burn model, demonstrating discipline in scaling non-core or lower-margins verticals is becoming even more critical.
- For employees/staff: The redeployment rather than outright layoffs is a positive; however, staying alert to whether the café pause becomes permanent in certain geographies is prudent.
Summary
In short: Zepto Cafe has paused operations at about 200 of its roughly 600 stores because demand in those locations did not meet expectations. The company is shifting focus back to its core quick commerce business by moving resources and workforce to dark-store operations. This move reflects the tougher-than-expected dynamics of scaling a food-service/instant-cafe model within a quick-commerce startup.
