DoorDash cuts 1,250 jobs to control ballooning costs

DoorDash Inc said on Wednesday it was cutting about 1,250 jobs, or 6% of its total workforce, as the food-delivery company looks to keep a lid on costs to cope with a slowdown in demand.DoorDash, went on a hiring spree to cater to a flood of orders from people stuck at home during the height of the pandemic, but a sudden drop in demand from inflation-wary customers has left the company grappling with ballooning costs.

“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,” Chief Executive Tony Xu said in a memo to employees that was posted on the company’s website.

“Given how quickly we hired, our operating expenses – if left unabated – would continue to outgrow our revenue.”

The company’s shares, which have fallen about 64% this year, were up about 5% in morning trade.

DoorDash, which has delivery partnerships with Walgreens Boots Alliance and Shake Shack, has about 20,000 employees.

“Greater emphasis on its cost structure is a welcoming sign, especially given the potential for consumer spending to deteriorate faster than expected,” said Angelo Zino, analyst at CFRA Research.

Earlier this month, DoorDash reported a bigger-than-expected quarterly net loss of $295 million, raising questions about the growth prospect of delivery firms as economies reopen.

British food delivery company Deliveroo said in late October that sales growth would be at the lower end of its previous forecast.

DoorDash joins a list of multinational American firms, including Inc, Meta Platforms Inc and Twitter Inc, that have laid off thousands of employees in recent weeks as they brace for a potential economic downturn.

While DoorDash’s Xu reiterated that the business has been more resilient compared with other e-commerce companies, he said reducing non-headcount operating expenses “wouldn’t close the gap.”


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