DoorDash cuts 1,250 workers

DoorDash has announced it will slash its workforce by some 1,250 employees. 

In a public company note, Tony Xu, CEO and co-founder of the San Francisco-based online food ordering and food delivery platform, said that, though the company’s business remains strong and continues to grow, DoorDash has not been effectively managing operations.

In tracing the factors that led to the dismissals, Xu pointed to the COVID-19 pandemic, saying that DoorDash was undersized and that the pandemic “presented sudden and unprecedented opportunities to serve the evolving needs of merchants, consumers and Dashers…Most of our investments are paying off, and while we’ve always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth. As a result, operating expenses grew quickly.”

DoorDash, which had more than 8,600 employees at the end of last year, has been more resilient than other ecommerce companies, Xu said, adding that DoorDash will continue to reduce its non-headcount operating expenses, “but that alone wouldn’t close the gap.” 

In its 10-K filing for fiscal year ending Dec. 31, 2021, the company, which began business in 2013, noted that it has a limited operating history in an evolving industry, “which makes it difficult to evaluate our future prospects and may increase the risk we will not be successful.” 

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DoorDash has also occurred net losses each year since its founding, with net losses of $667 million, $461 million, and $468 million, respectively, for its last three fiscal years with revenues reaching $885 million, $2.9 billion, and $4.9 billion, per year. 

Despite the financial situation and workforce cutbacks, Xu said he is optimistic about the future. He noted that DoorDash has not changed its strategy and its business fundamentals remain strong. 

But he added that the company will have to tailor some of its tactics and “what got us here won’t necessarily bring us to the next stage.”

Xu also said DoorDash plans to continue to hire and add back recruiting capacity “in a more targeted and rigorous way.”

“The runway ahead is massive, and we’ve built tremendous momentum,” he said. “If we can achieve our mission to grow and empower local economies around the world, not only will we prosper as a business, but I also believe much good will be achieved as we create a world where millions of merchants can thrive, bringing out the best of our neighborhoods’ ethos and personalities.”