Grubhub is cutting 400 jobs or 15 percent of its workforce to reduce costs and stay competitive.
CEO Howard Migdal announced the layoffs on Monday, June 12, with affected employees notified throughout the day.
Migdal said while Grubhub’s business has grown since pre-pandemic levels in 2019, operational and staff expenses have increased significantly.Â
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Currently employing roughly 2,800 workers, Grubhub is owned by Dutch food-delivery company Just Eat Takeaway.com.
It appointed Migdal as the CEO in March.
In an effort to cut costs and adapt to changing priorities in a potentially slowing economy, numerous companies from various industries have announced layoffs this year.
Initially focused on technology firms, the trend has expanded to include retailers, manufacturers, and consumer companies.
While food-delivery companies experienced a surge in sales during the early stages of the Covid-19 pandemic, growth has since leveled off as customers increasingly return to dining out at restaurants.Â
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Some establishments have observed declining delivery growth as consumers become more cautious with spending.
The cost of on-demand food delivery for couriers is typically higher than for diners to pick up meals or eat at restaurants.
Grubhub, estimated by market research firms to be the third-largest food-delivery company in the US, following DoorDash and Uber Eats, has been striving to maintain its competitive position.
Last year, Grubhub partnered with Amazon, integrating part of its food-ordering service with the e-commerce giant’s Prime program.Â
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The extension of this agreement was announced last week.
Just Eat has expressed interest in finding a strategic partner for Grubhub or potentially engaging in a partial or full sale of the business.
The company has also advocated for cities, particularly New York City, to remove pandemic-related fee caps on the services, delivery companies offer to restaurants.
DoorDash, Grubhub’s rival, announced a reduction of approximately 6 percent of its workforce, totaling around 1,250 employees, last year.
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On the other hand, Uber said earlier this year that it did not have plans for companywide cuts and highlighted that previous cost-cutting measures had prepared them for potential economic downturns.
Migdal, who previously worked for Just Eat’s Canadian business, said he spent months engaging with restaurants and customers to understand their expectations and the challenges of using Grubhub’s services.
He emphasized that while the company has a strong foundation, difficult decisions must be made to enhance its service and achieve success.
Migdal added: “The hard decisions we are making now will enable us to take advantage of the significant opportunity ahead of us.”
