Grubhub lays off 15% of staff, citing high costs

Grubhub is laying off about 400 corporate employees, or 15% of its workforce, citing a need to cut costs and reorganize.

CEO Howard Migdal said in a company memo that the move would allow Grubhub to reinvest in its core business and set it up for long-term success after recent struggles.

“There is no doubt whatsoever that we have a solid foundation in place and an immense opportunity ahead of us,” he wrote in a memo sent to employees Monday. “But it is also clear that we need to make some tough decisions in order to maintain our competitiveness, deliver the best possible service for diners and our other partners, and be successful for the long-term.”

The company said its business has grown since 2019, but its staffing and operational costs have grown faster. The “rightsizing” will allow it to be move faster and take better advantage of opportunities, Migdal wrote.

It did not say which departments or positions were affected by the layoffs.

Grubhub has struggled relative to its third-party peers DoorDash and Uber Eats, which saw demand triple during the pandemic and have for the most part continued to grow sales quarter after quarter. Grubhub parent Just Eat Takeaway.com (JET), meanwhile, reported sales and transactions declines of 11% and 16%, respectively, last year in North America, which includes the Grubhub business.

JET bought Chicago-based Grubhub in June 2021 for $7.3 billion. Last summer, it took a $3.1 billion writedown on the company and has been exploring a sale of Grubhub since last spring.

Amsterdam-based JET has blamed much of Grubhub's woes on delivery fee caps that have hampered how much it can charge restaurants in big markets, including its key stronghold of New York City.

And yet Migdal, who took over as CEO in March, believes the company has “significant opportunity” ahead of it as one of just three U.S. delivery apps with any kind of scale.

“Grubhub is an incredible marketplace with tens of millions of customers, hundreds of thousands of restaurants and a strong logistics network operating from coast to coast,” he wrote. “I’m certain that with the right strategy, relentless execution and a commitment from all of you, Grubhub’s future is bright.”

In addition to restaurant delivery, Grubhub has recently expanded into convenience retail. 

In February 2022, Grubhub announced the national rollout of its Grubhub Goods convenience concept, which offers on-demand delivery to diners from more than 3,000 Grubhub Goods locations. The expansion followed a pilot of over a dozen Grubhub Goods sites at 7-Eleven stores in Manhattan.

Last November, Grubhub announced a delivery partnership with drug chain Rite Aid. 

Migdal moved over to Grubhub from its Canadian counterpart SkipTheDishes, also owned by JET. He replaced Adam DeWitt, who stepped down after 11 years at Grubhub, most of them as CFO.

Employees being let go were notified Monday. They’ll get 16 weeks of severance pay or two weeks for every year of service greater than 16 weeks, along with benefit support and outplacement, Grubhub said.

The company plans to unveil a new business strategy “very soon.”

This story originally appeared in WGB sister publication Winsight Grocery Business.