Grubhub is laying off 400 employees

Grubhub is laying off 400 corporate employees, about 15% of its workforce, amid higher costs and declining orders.

"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 food delivery brand's CEO Howard Migdal said in a letter that was sent to staff this morning and posted to the Grubhub website.

"As a result, today we have made the very difficult decision to reduce headcount at Grubhub," he said. "I know it will come as a shock to you."

Affected employees are being alerted "the next several hours," Migdal wrote in the letter, which was sent out at 8 AM ET, according to the company.

Food delivery has grown in recent years, after many restaurants scrambled to stand up or enhance delivery services when dining rooms were temporarily closed because of the Covid pandemic. But costs are also up, said Migdal.

"Our business has grown since our 2019 pre-pandemic levels," Migdal, who became CEO in March of this year, said in his message to employees. But "our operating and staff costs have increased at a higher rate."

And recently, the appetite for delivery has been waning The Amsterdam-based Just Eat Takeaway.com, which acquired Grubhub in 2021, reported in April that in North America, orders fell by 17% in the first quarter of 2023 compared to the same period the year before.

Migdal pointed to "a highly competitive and constantly evolving industry," as another reason for the reduction. "We need to continually look at whether we are set up in the right way to deliver for our diners, restaurants and delivery partners."

Grubhub is competing with the likes of Uber Eats and Doordash for restaurants' delivery business. Some operators are opting to manage delivery themselves or rely on local services, rather than turning to a major player.

The announcement today makes Grubhub the latest in a number of companies reducing staff. Spotify, Tyson, Walmart, McDonald's and others have announced layoffs this year.