Grubhub announced Monday that it laid off 15 percent of its workforce, or roughly 400 employees due to rising costs.
Howard Migdal, who was hired as CEO a few months ago, shared the news with employees around 8 a.m. Eastern Standard Time on Monday morning. He informed workers that while Grubhub’s business has grown since 2019, operating and staff costs have increased at an even higher rate.
“We operate in a highly competitive and constantly evolving industry, and we need to continually look at whether we are set up in the right way to deliver for our diners, restaurants and delivery partners,” the CEO said in the memo.
Migdal—who rose to CEO after Adam DeWitt stepped down from the role after 11 years with the company—added that rightsizing the organization will allow everyone to be “more agile, make bolder bets and take advantage of all the opportunities on our doorstep.”
“There is no doubt whatsoever that we have a solid foundation in place and an immense opportunity ahead of us—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,” Migdal said.
The move comes more than a year after parent company Just Eat Takeaway.com revealed that it was considering selling Grubhub after acquiring it for $7.3 billion in 2021. After that announcement, it was reported by the U.K’s Sunday Times that Grubhub could sell for as little as $1.26 billion and that an acquisition may never happen. As part of its Q1 results update in April, Just Eat noted that it’s still actively exploring a partial or full sale of Grubhub, but that there’s no guarantee anything will happen.
During Q1, Just Eat’s North America segment—which includes Grubhub—brought in 74.1 million orders, down from 89.6 million in the year-ago period. Gross transaction value (the total value of orders placed on the platform), was $2.84 billion, a drop from $3.12 billion in 2022.
In April, Grubhub had 9 percent of meal delivery sales in the U.S., according to Bloomberg Second Measure. DoorDash led with 65 percent, followed by Uber Eats with 23 percent.
Grubhub is among several U.S. companies that have reported significant layoffs in the past year, including Walmart, Facebook, Disney, and Amazon. In the restaurant industry specifically, McDonald’s reportedly laid off hundreds back in April. Technology-based companies like Nextbite, Sunday, REEF, and Lunchbox all reported downsizing last year as well.
Despite the layoffs, Migdal expressed optimism about his company’s future.
“From everything I have learned in the last 15 years in the online food industry and over the past few months at Grubhub, I have so much confidence in our ability to succeed,” he said. “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.”