Gig Economy Slump: Doordash Lays off 1,250 Employees

Food delivery service and gig economy darling DoorDash is laying off 1,250 of its employees in what the CEO says is part of a broader cost-cutting initiative.

DoorDash CEO Tony Xu told employees in a statement on Wednesday that “Today, we are reducing our corporate headcount by approximately 1250 people and saying goodbye to many talented teammates.”

A DoorDash delivery man is seen in Manhattan. (STRF/STAR MAX/IPx 2021 via AP)

“I did not take this decision lightly,” Xu insisted. “We have and will continue to reduce our non-headcount operating expenses, but that alone wouldn’t close the gap. This hard reality ultimately led me to make this painful decision to reduce our team size.”

The move to lay off employees was driven by tapering growth and previous overhiring, the CEO said, noting that “prior to COVID-19, DoorDash was actually undersized as a company.”

“The pandemic presented sudden and unprecedented opportunities to serve the evolving needs of merchants, consumers and Dashers,” Xu said. “We sped up our hiring to catch up with our growth and started many new businesses in response to feedback from our audiences.”

The DoorDash CEO went on to say that while “most of our investments are paying off,” the company was “not as rigorous as we should have been in managing our team growth.”

“That’s on me,” Xu said. “As a result, operating expenses grew quickly.”

Employees impacted by this decision will receive 17 weeks of severance, and all health benefits will continue through March 31, 2023, the CEO noted. As for overseas or visa-sponsored employees who have been terminated, they will be laid off on March 1 in order to give those with visa applications “as much time as possible to find a new job.”

DoorDash is just the latest among a slew of tech companies that have recently laid off employees. The company joins Amazon, Facebook, Twitter, Lyft, and HP in job slashing.

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