Grubhub said that it would offer employees a severance package for 16 weeks but refused to comment on the specific positions removed.
In a message to employees on Monday, June 12, food delivery platform Grubhub stated that it plans to lay off 400 employees i.e. 15% of its corporate workforce. The company cited the reason for maintaining “competitiveness” in the current macro environment.
Also, in comparison to other market players such as Uber Eats and DoorDash, Grubhub has failed to capture the market share. The company said that it would offer employees a severance package for 16 weeks. However, Grubhub refused to comment on the specific groups or positions affected. In his memo, Grubhub CEO Howard Migdal said:
“There is no doubt whatsoever that we have a solid foundation in place and an immense opportunity ahead of us – but it is also clear that we need to make some tough decisions in order to maintain our competitiveness, deliver the best possible service for diners and our other partners, and be successful for the long-term.”
Back in 2021, Dutch multinational Just Eat Takeaway.com acquired Grubhub in an all-stock transaction at a valuation of $7.3 billion. However, it turns out that less than a year after the sale, Just Eat Takeaway said that it has been exploring the “partial or full sale” of Grubhub.
The Grubhub spokesperson hasn’t responded to whether the workforce layoffs are connected to a potential sale process.
Focusing on Future Opportunities
Around 400 people are being impacted by job cuts, highlighting the increasing troubles faced by the Chicago-based company. Grubhub, which includes subsidiaries like Seamless and Eat24, has been struggling despite the ongoing demand for takeout. Even though the pandemic boom has subsided, Grubhub has been unable to gain traction.
As of April, Grubhub and its subsidiaries accounted for only 9% of consumer spending on meal delivery in the US, according to Bloomberg Second Measure. Grubhub CEO Howard Migdal said that the company will continue to focus on future business priorities. He added:
“While our business has grown since our 2019 pre-pandemic levels, our operating and staff costs have increased at a higher rate. These changes, while difficult, will help ensure we have the right resources and structure to focus on the business priorities and opportunities ahead.”
The food delivery space is turning more competitive with every passing day, and it will be important to see how Grubhub manages to navigate through these times.