DoorDash lays off corporate staff

Jared Maloney and Caryl Anne Francia

DoorDash Inc. announced it will lay off about 1,250 employees as part of a large corporate restructuring, following other technology companies in cutting their staff after their last earnings quarter.

This mass layoff represents approximately 7% of the company’s entire workforce, according to a filing to the Securities and Exchange Commission. The company employed 8,600 workers on the corporate level as of Dec. 31, 2021.

“I am truly sorry and I apologize to have some of you wake up to this news as opposed to reading it during more normal hours,” DoorDash CEO Tony Xu said in a letter to staff, which was shared in a press release.

Xu said this move is being enacted to correct the over-hiring that took place during the COVID-19 pandemic.

The food delivery company was undersized on the corporate level before the pandemic. The company also filed for an initial public offering with the SEC on Feb. 27, 2020.

The shutdown of restaurants and orders for people to stay home during the onset of the pandemic led to increased demand for delivery and economic growth for DoorDash.

As the company grew, it finally went public on Dec. 9, 2020. By its first quarter in 2021, DoorDash generated $1.07 billion, increasing 69% year over year. Consumers placed 329 million orders, up 219% year over year.

In its third quarter this year, DoorDash reported $1.7 billion in revenue, rising 33%. But the company also reported $296 million in losses, which is almost three times the amount from the same time last year.

“Most of our investments are paying off,” Xu said in the company letter. “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.”

He added that DoorDash’s operating expenses would have outgrown its revenue, and cost-saving actions besides layoffs would not be enough to close the gap.

DoorDash is not the only technology company to announce massive layoffs for corporate workers following the previous quarter.

Meta Platforms Inc. laid off more than 11,000 employees, who make up 13% of its workforce.

Twitter Inc. laid off half of the nearly 7,500 corporate workers it employed prior to business mogul Elon Musk’s takeover of the social media platform.

“We too are not immune to the external challenges and growth has tapered vs our pandemic growth rates,” Xu said.

DoorDash will provide laid off workers with 17 weeks worth of financial compensation, a stock vest for February 2023. They will also retain healthcare benefits until March 31, 2023.

The company will stop providing immigration support to employees with visa applications on March 1, 2023, so that they have ample time to find a new job that will sponsor their residency in the United States. DoorDash will provide a system for companies hiring new workers to recruit laid-off staff.

“While today’s news is painful, I continue to be very optimistic about our future and convinced of the importance of the role we can play in the world,” Xu said, adding that he will spend time thanking laid-off employees.