Deliveroo, a platform for ordering food online, has stated it will eliminate nearly 350 positions, or 9% of its global staff.
Deliveroo’s founder and CEO Will Shu informed staff that roles across the company will be affected, however it is believed that UK employees will be the most negatively impacted by the layoffs. The UK is where the majority of the personnel are based.
In an effort to limit job losses to about 300 positions, some staff will be transferred to other departments inside the company as the redundancy process is about to start across the board.
Deliveroo’s proposed layoffs would be subject to a general consultation procedure in the UK, according to Mr. Shu, but in every market, “increased redundancy benefits that go above government regulations and support” will be offered. Market-specific details will differ, he continued.
As the COVID-era boom in takeaway orders on the platform slows down, the company chief stated that Deliveroo must “push further” to become profitable.
The business broke even in its most recent quarter, according to figures released last month, and predicted profitability for this year.
After order numbers plummeted from their peak during the epidemic, cost management efforts and higher customer fees boosted financial performance: orders fell 2%, but this was countered by higher restaurant pricing.
The job losses have been attributed to global economic conditions and competition in the delivery industry. In addition to operating in a fiercely competitive sector, Mr. Shu noted that most of his markets faced challenging consumer conditions.
The UK is suffering worries of a recession, record-high inflation, rising interest rates, and an energy crisis.
Deliveroo claimed that during the pandemic it hired quickly and is currently reducing its workforce, similar to many tech and start-up businesses. “We quickly increased our staff in recent years. This was in response to hitherto unheard-of growth rates fueled by favourable COVID-related conditions, “Mr Shu continued.
He claimed that the cuts were his fault and that he ought to have “had a more balanced approach to staff increase.”
In March 2021, Deliveroo went public by listing on the London Stock Exchange. This was dubbed the worst initial public offering in London ever as the share price fell by a quarter and destroyed £7.6 billion of the company’s stock worth.
But as Mr. Shu stated on Thursday, “Quite plainly, our fixed cost base is too big for our business,” the cost-cutting initiatives implemented during the fourth quarter of 2022, which included shutting down loss-making operations in Australia and the Netherlands, were insufficient.
Deliveroo uses gig economy workers, who are not classified as employees and are therefore exempt from the headcount reduction, to deliver takeaways.