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DoorDash Lays Off 1,250 Employees Following Post-Pandemic Growth Stagnation

'This is the most difficult change to DoorDash that I’ve had to announce in our almost 10-year history’ CEO said

Food delivery service DoorDash will lay off 1,250 corporate employees as part of a cost-cutting initiative amid a downturn in the company’s value.

Chief Executive Office Tony Xu notified employees of the impending terminations on Nov. 30. 

This is the most difficult change to DoorDash that I’ve had to announce in our almost 10-year history,” Xu wrote. “If you are among those impacted, I am truly sorry and I apologize to have some of you wake up to this news as opposed to reading it during more normal hours.”

Xu said that although the company “remains strong and continues to grow,” hiring practices adopted during the onset of the COVID-19 pandemic lead operating expenses to grow too quickly. 

“The pandemic presented sudden and unprecedented opportunities to serve the evolving needs of merchants, consumers and Dashers. We sped up our hiring to catch up with our growth and started many new businesses in response to feedback from our audiences,” said Xu.

“Our business has been more resilient than other ecommerce companies, but we too are not immune to the external challenges and growth has tapered vs our pandemic growth rates,” he added. “While our business continues to grow fast, given how quickly we hired, our operating expenses – if left unabated – would continue to outgrow our revenue.”

According to CNBC, DoorDash’s shares are down by 60% this year to date.

Social distancing and lockdown orders made millions of people turn to DoorDash and its competitors – Postmates, Uber Eats, and Grubhub. Between April and June of 2020, DoorDash made a reported $23 million in profit. 

Documents filed ahead of the company’s initial public offering seemed to indicate that its “gangbusters growth” would drop off during 2021, reports WIRED

“While there is no great way to manage this process, we strive to treat each of you with respect and integrity,” Xu said in his message. 

Employees who were set to be terminated received an email 15 minutes after Xu’s statement was sent. DoorDash is offering those laid off 17 weeks of compensation and continued health benefits through March 31, 2023. Terminated employees will also be offered career transition support while they search for their next job. 

“We will set the termination date for March 1, 2023, giving those with visa applications (and a desire to stay in the US) as much time as possible to find a new job,” Xu told the staff.

Other companies that saw a dramatic jump in business during the pandemic have taken similar steps following the downturn that followed when pandemic-era restrictions were lifted. This includes home work out company Peloton, which offered the over 2,000 terminated employees a one-year subscription to its services.

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