DoorDash Cuts About 1,250 Jobs, Joining Wave of Tech Layoffs
The food delivery company is eliminating roughly 6% of its workforce, including 311 positions in San Francisco, as CEO Tony Xu says pandemic-era hiring outpaced the business.
By Mei Ling ·
DoorDash has joined the growing roster of technology companies reducing headcount as economic conditions worsen. The food delivery firm is cutting about 1,250 jobs, roughly 6% of its workforce, according to a note from CEO Tony Xu to employees. Its stock rose about 5% following the news.
Xu pointed to rising costs and slowing growth, which he attributed in part to inflation. He wrote that although "the business remains strong and continues to grow," the fast pace of hiring during the pandemic had to be scaled back.
He also took responsibility for the staffing decisions. "Most of our investments are paying off, and while we've always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth. That's on me," Xu wrote.
A state filing shows the cuts include 311 employees in DoorDash's San Francisco offices. Another 75 employees based in Los Angeles will also lose their jobs.
Xu's explanation resembles those offered by leaders at Meta, Stripe, Patreon and other firms that have announced layoffs. Those companies have blamed excessive enthusiasm and optimism about pandemic-driven growth in digital businesses. With higher interest rates weighing on technology stocks and raising borrowing costs, many companies are reviewing their internal metrics and reaching similar conclusions.
According to Xu, DoorDash's growth has slowed from the peak of the pandemic, and without the reductions its expenses would keep growing faster than its revenue. Affected workers will receive 17 weeks of severance pay in addition to their stock vest scheduled for February 2023.
The layoffs come a few months after DoorDash completed its purchase of Wolt, a Finnish delivery platform, in an all-stock deal valued at about $8.1 billion.
Xu said he is confident the company has "reset the size and shape of our organization to match our strategic priorities." He added that future hiring and recruitment will be carried out "in a more rigorous way."
In its third-quarter earnings call earlier in November, DoorDash reported revenue of $1.7 billion, ahead of analyst expectations. Its net loss, however, more than doubled from a year earlier to $295 million, or 77 cents per share.
Source: The San Francisco Standard
