On this February 27, 2020, a file photo, DoorDash app is displayed on a smartphone in New York. DoorDash is cutting more than 1,200 jobs from the company, which said it was hiring too many people as demand for its services increased during the COVID-19 pandemic.
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On this February 27, 2020, a file photo, DoorDash app is displayed on a smartphone in New York. DoorDash is cutting more than 1,200 jobs from the company, which said it was hiring too many people as demand for its services increased during the COVID-19 pandemic.
AP
DoorDash, which is eliminating about 1,250 jobs, or about 6% of its workforce, says it’s hiring too many people as demand for delivery spikes during the COVID-19 pandemic.
CEO Tony Xu said in a message to employees on Wednesday that DoorDash was undervalued before the pandemic and had accelerated hiring to keep up with its growth.
“Most of our investments have paid off, and while we’ve always been disciplined in how we manage our business and performance metrics, we haven’t been as rigorous as we should have been. must manage the development of the group,” Xu wrote. “It’s up to me. As a result, operating costs add up rapidly.”
Xu said the company is looking to reduce operating costs, but it cannot adjust spending properly without cutting jobs.
“This difficult reality ultimately led me to make this painful decision to downsize our team,” Xu said.
DoorDash and other start-ups have posted record revenue during the pandemic with millions sheltering at home. Profit, however, is another story.
DoorDash said earlier this month that revenue grew 33% to $1.7 billion in the third quarter, but expenses also skyrocketed and losses almost tripled from $101 million in the same period a year. last to $296 million by 2022.
“Simply put, businesses are currently losing about 70 cents for every order they make. This is a sharp increase from the 41 cents they lost,” said Neil Saunders, chief executive officer of GlobalData. at the beginning of this financial year”. “All the metrics are pointing in the wrong direction.”
Affected employees will receive 17 weeks of compensation and reserve jerseys by February 2023. All health benefits will continue through March 31, 2023.
DoorDash is one of many companies to announce job cuts recently. Others include Twitter, Amazon, parent company Facebook Meta, and H&M.
Shares of DoorDash Inc. was up nearly 5% on Wednesday.
