London-based online food delivery company Deliveroo has announced that it will be cutting 10% of its global workforce, which translates to around 350 jobs, as the company faces increasing economic challenges due to the energy crisis, rising inflation, and high interest rates, as well as the threat of a potential recession.
This move by Deliveroo comes after the company experienced a rapid growth in its workforce over the past year in response to the increased demand for food delivery services, particularly amid the Covid-19 pandemic. Orders have decreased in the last quarter despite the increase in total value as prices rose. The growth was short-lived, as the company’s shares have lost nearly 40% of their value in just a year.
Deliveroo CEO and Founder Will Shu admitted that he could have strategized better to find a more balanced approach, but he assured that the company will take care of those who will be affected by the layoffs. Redundancy packages and possible redeployment opportunities will be provided to help ease the transition for the affected employees.
The news of the layoffs at Deliveroo follows the company’s recent exit from the Australian and Netherlands markets, where it struggled to penetrate the market and compete with established players such as Uber Eats and Just Eat Takeaway.
Deliveroo is not the only food delivery company facing economic challenges, as competitors like Foodpanda and Chope have also downsized in response to the economic headwinds. The food delivery industry has been under pressure as a result of the economic downturn, with many companies struggling to maintain profitability in a highly competitive and rapidly evolving market.
Despite the challenges, they remain optimistic about its future prospects and are committed to continuing its expansion into new markets. Companies like Deliveroo are having to make tough decisions to maintain their competitiveness in the face of these challenges.