Chicago-based food delivery platform Grubhub will lay off about 400 corporate employees, the company said Monday.
The layoffs will affect about 15% of the company’s staff. Before the cuts, Grubhub had 2,800 employees, including about 850 based in Chicago. The company said the number of layoffs in Chicago would be roughly in line with 15%.
“These changes will enable Grubhub to invest in the growth of our core business and better position the company for long-term success,” a company spokesperson said in a statement.
In a note to employees posted online Monday, CEO Howard Migdal said the company operated in a “highly competitive and constantly evolving industry,” requiring it to “continually look at whether we are set up in the right way to deliver for our diners, restaurants and delivery partners.”
“While our business has grown since our 2019 pre-pandemic levels, our operating and staff costs have increased at a higher rate,” said Migdal, who was appointed CEO of Grubhub and executive vice president of North America for parent company Just Eat Takeaway.com in March.
Amsterdam-based Just Eat Takeaway purchased Grubhub in a $7.3 billion deal in 2021.
Numerous tech companies, many of which bulked up on labor during the pandemic, have made big staffing cuts since last fall. Companies that have made cuts include Google, Meta and Amazon.
Grubhub competitor DoorDash said in November it was laying off about 1,250 employees, or about 6% of its workforce. In a note to staff at the time, CEO Tony Xu said the San Francisco-based company had sped up hiring to catch up with business growth during the pandemic but was “not as rigorous as we should have been in managing our team growth.”
“While our business continues to grow fast, given how quickly we hired, our operating expenses — if left unabated — would continue to outgrow our revenue,” Xu wrote last fall.
Grubhub has seen its market share fall in recent years.
As of May 2022, Grubhub controlled 11% of food delivery sales, while DoorDash held 57% and Uber Eats had 31%, according to market research firm YipitData. In 2019, Grubhub had controlled nearly a third of all sales.
Last summer, Amazon announced it would give U.S. Prime members free access to Grubhub Plus, which allows customers to order without delivery fees on most orders. The company announced it would extend the partnership for another year last week.
All three online delivery leaders have been scrutinized by the city of Chicago over alleged deceptive practices during the COVID-19 pandemic.
Chicago sued Grubhub and DoorDash in 2021 for allegedly advertising delivery from restaurants without their consent and violating the city’s 15% emergency cap on food delivery commissions. Both companies have denied the allegations and litigation remains ongoing.
And in December, the city announced Uber would pay a $10 million settlement after an investigation into similar alleged misconduct, including listing restaurants on UberEats and Postmates without their consent and violating the city’s fee cap ordinance. Uber denied any wrongdoing.
The Associated Press contributed.
