Grubhub is undergoing a workforce reduction, laying off approximately 400 corporate employees, which accounts for about 15% of its total workforce. The move is aimed at cutting costs and reorganizing the company to position it for long-term success following recent challenges.
In a memo to employees, CEO Howard Migdal stated that the decision to downsize would enable Grubhub to reinvest in its core business and enhance its competitiveness. Migdal emphasized the company’s solid foundation and vast potential but acknowledged the need to make tough choices to deliver the best service and achieve success in the long run.
The specific departments or positions affected by the layoffs were not disclosed by the company.
While Grubhub experienced growth in its business since 2019, its staffing and operational costs have outpaced that growth. The restructuring is intended to allow the company to be more agile and capitalize on opportunities.
Grubhub has faced challenges compared to its competitors in the third-party delivery space, such as DoorDash and Uber Eats, which saw significant demand increases during the pandemic and continued sales growth quarter after quarter. Just Eat Takeaway.com (JET), Grubhub’s parent company, reported declines in sales and transactions for its North America business, which includes Grubhub.
JET acquired Grubhub in June 2021 for $7.3 billion but later took a $3.1 billion writedown on the company and has been exploring the possibility of selling Grubhub since last spring. JET attributed many of Grubhub’s difficulties to delivery fee caps that have limited the amount the company can charge restaurants, particularly in major markets like New York City.
Despite the challenges, Migdal, who assumed the CEO position in March, believes that Grubhub has significant opportunities as one of the few U.S. delivery apps with substantial scale. He expressed confidence in Grubhub’s future, highlighting its large customer base, extensive restaurant network, and robust logistics infrastructure.
The affected employees were notified on Monday and will receive severance pay equivalent to 16 weeks or two weeks for each year of service beyond 16 weeks. Grubhub will also provide benefit support and outplacement services to assist the impacted employees.