In 2023, Zapp embarked on a significant cost-cutting initiative to reduce its substantial financial losses.
- The company’s workforce decreased from 2,417 to 260 employees by the end of the year.
- Rapid revenue growth and strategic withdrawals from international markets contributed to improved financial health.
- Staff cost reductions were a key factor in achieving store-level profitability.
- Zapp’s measures aim to sustain operations in a challenging market landscape.
In 2023, Zapp, a London-based rapid grocery delivery startup, implemented an extensive cost-reduction strategy to curb its financial losses. This initiative included a drastic reduction in its workforce, lowering the number of employees from 2,417 in 2022 to a mere 260, affecting roles across head offices, stores, and distribution centres, as confirmed by company records.
The company’s financial turnaround was evidenced by a pre-tax loss drop to £23m in 2023, a significant recovery from the £91.9m loss recorded the previous year. A 37% revenue increase to £39.5m aided this improvement, though the primary driver was substantial spending cuts. Zapp’s focus shifted towards operational efficiency, leading to the decision to withdraw from markets in the Netherlands and France, choosing instead to concentrate on affluent areas in London.
Reductions in staffing expenses were pivotal to Zapp’s restructuring, with costs plummeting from £51m to £8.6m. These changes were part of a broader plan to navigate through an industry plagued by financial troubles, which saw competitors like Getir exit the UK market to focus on domestic operations.
Zapp’s strategy to enhance store-level profitability included offering premium products tailored for high-income customers, refining its supply chain, and overhauling its delivery network. These efforts resulted in profitability at the store level and bolstered confidence among the company’s directors for a positive full-year profit outlook.
Despite these strides, Zapp acknowledged the risk of future financial challenges, cautioning about a potential scenario requiring additional funding. The company had previously secured $200m in a Series B funding round in 2022, led by significant investors including Lightspeed and Lewis Hamilton. The startup maintains an optimistic cash flow forecast, but remains vigilant against possible downturns.
Zapp’s strategic cost-cutting measures have significantly improved its financial stability, yet the company remains cautious about future economic challenges.
