The tech sector right now has become a go-big-or-go-home playground. Just as it is one of the fastest-growing industries, it has also been spitting out employees. The latest to feel the ongoing bout of tech layoffs is the online food ordering company, Grubhub.
Grubhub Lays Off 15% of Its Workforce
The company has laid off 15% or approximately 400 of its corporate employees. The decision comes from the newly appointed CEO just this May, Howard Migdal, saying that they had to make a difficult decision to make sure for the long-term success of Grubhub.
The CEO acknowledged that the online food service company has a "solid foundation in place and an immense opportunity" ahead of it, followed by stating that the workforce reduction is important to maintain competitiveness and deliver the best possible service.
According to the message posted on their website, the reason for the layoffs is the rate increase in the cost of operation and staff, which has impacted the business despite its growth since before the pandemic in 2019.
The message was sent to all Grubhub employees on June 12th, stating that the affected workers will be notified within hours of the email being sent. Those who will remain will be a part of the conversation in talking about the future of the company.
Although, there were no specifics when it came to severance, just that the company will be"prioritizing people's well-being and supporting them in their next steps and future success," followed by thanking the employees for their hard work.
Read Also: Grubhub Agrees To A $3.5 Million Settlement Over Deceptive Practices, Hidden Charges
Following in DoorDash's Footsteps
Grubhub is not the only online food service company that laid off employees. Last year in late November, DoorDash also conducted a workforce reduction that affected 1,250 corporate employees in an effort to cut company costs.
On the same premise, DoorDash CEO Tony Xu also acknowledged that the business remains strong and continues to grow, but the layoffs were an important step to make sure that the company remains profitable.
It was explained that before the pandemic, DoorDash was an undersized company, which is why it had to hire more employees in order to keep up with the significant increase in customers. This move resulted in a rise in operating expenses.
Like many other tech companies, DoorDash had to accommodate the influx of business, only to have to revert back to its original numbers as the pandemic died down, given that the situation is no longer sustainable.
The difference with Grubhub is that DoorDash was transparent about its severance plan. The affected employees will receive 17 weeks of pay for their compensation, as well as their stock vest in February 2023.
The healthcare they had during employment will still be accessible within five months. Even then the impacted will be able to choose to pay for COBRA coverage for up to 18 months. Those who had work visas were given as much time as possible to find new employment.
DoorDash created an opt-in directory so that other companies can hire the affected workers, helping them find their next job. It's unclear whether Grubhub will be giving the same benefits as it was not stated in the email sent to its employees.
Related: California Court Sides with Former Grubhub Driver Over Employment Dispute
