Hundreds of jobs are at risk at Deliveroo, the company’s founder and CEO has announced.
The takeaway delivery service saw a rapid expansion during the coronavirus pandemic as many turned to ordering food online while restrictions were in place.
However in a statement released today CEO and founder of Delivroo, Will Shu, said the company now “faces serious and unforeseen economic headwinds.”
As a result nine per cent of its workforce – around 350 roles – are at risk. However this is expected to be closer to 300 after redeployments have been offered.
The consultation process on redundancies will begin in the UK.
Mr Shu said: “I’m sorry that we have to do this. Some of our close friends and talented colleagues will leave Deliveroo as part of this and it pains me that we have to do it.
“I have been through one of these processes once before. I said then that it was the hardest thing I’d ever done, and this is just as bad.
“But however much it pains me, I know it’s nothing compared to how those impacted will be feeling. We will do everything to support you.
“The world we operate in has changed. When Deliveroo launched 10 years ago we and our competitors focused relentlessly on growth. We invested heavily with the expectation that profits would follow in the future. As we have discussed many times during the last year, that future is now.
“We are a growth company, but companies such as ours must now also demonstrate and accelerate a clear path to profits, by which I mean generating ‘free cash flow’ with our revenues exceeding all of our costs on a sustainable basis.
“We operate in a highly competitive industry, and at the same time we are also in a difficult consumer environment in most of our markets.
“We are experiencing record high inflation, rising interest rates, an energy crisis and fears of a recession in the UK. We have to run our business in the most efficient way possible to withstand these challenges, and take a hard look at our cost base.
“In recent years we grew our headcount very quickly. This was a response to unprecedented growth rates supported by Covid-related tailwinds. By contrast, we now face serious and unforeseen economic headwinds.
“We have also recently exited markets, meaning we do not require the same size workforce to support our operations. Quite bluntly, our fixed cost base is too big for our business.
“This is my responsibility. I should have had a more balanced approach to headcount growth, but I thought stronger top-line growth would continue for longer than it has. I did not anticipate so many macro headwinds arriving all at once. This is on me, and I will not be making the same mistakes going forward.
“We remain focused on delivering the best proposition for our customers, partners and riders, but we need to right size the business for the opportunities and challenges ahead. This is not about individuals. We have had to consider the best structure for the business in this new context.”