DoorDash is eliminating more than 1,200 corporate jobs, saying it hired too many people when delivery demand surged during the COVID-19 pandemic.
CEO Tony Xu said in a message to employees Wednesday that DoorDash was undersized before the pandemic and sped up hiring to catch up with its growth. It is cutting approximately 1,250 people.
“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. That’s on me. As a result, operating expenses grew quickly," he said.
Xu said DoorDash will still work on lowering operating costs not related to headcount, but that measures like that weren't going to be enough to close the gap.
“This hard reality ultimately led me to make this painful decision to reduce our team size," he said.
Impacted employees will receive 17 weeks of compensation and their February 2023 stock vest. All health benefits will continue through March 31, 2023.
“Today’s announcement that 1,250 jobs are to be cut is a recognition that the business needs to take action to rein in costs. This is especially important as the consumer outlook remains uncertain and coming quarters could see households retrench on both meal spending and their use of delivery services," said Neil Saunders, managing director of GlobalData.
DoorDash is among several companies to announce job cuts recently. Others include Twitter, Amazon, Facebook parent company Meta and H&M.
DoorDash's announcement comes just a few weeks after the San Francisco company posted solid quarterly results, saying its orders jumped 27% in the third quarter as it expanded overseas and added new grocery and retail offerings.