Three months after succeeding Adam DeWitt as Grubhub’s CEO, Howard Migdal announced the third-largest U.S. meal delivery provider has laid off 15 percent of its corporate team, which equates to approximately 400 employees.
Migdal posted a message on Grubhub’s media site echoing what was sent to all Grubhub employees on the morning of Monday, June 12th. The message detailed the circumstances behind the layoffs and the company’s strategy going forward.
Before the reduction, Grubhub had 2,800 employees, 850 of whom were based in Chicago. The impact in its U.S. headquarters of Chicago is roughly in line with the broader impact of the 15-percent reduction in its headcount, meaning that all of those who lost their jobs weren’t at its headquarters. Impacted employees are being individually notified throughout the day. Migdal acknowledged this news is “extremely difficult” and his focus will be on “prioritizing peoples’ wellbeing and supporting them in their next steps and future success.”
A Grubhub spokesperson said the decision came “after much consideration and evaluation of our business” and will enable the company to “invest in the growth of our core business and better position the company for long-term success.”
Grubhub was purchased by Amsterdam-based JustEatTakeaway.com [JET] in June of 2020. Following months of speculation and activist investor tumult, JET announced its intent to sell Grubhub or explore a strategic partnership less than a year after completing the $7.3 billion acquisition.
According to Bloomberg Second Measure, Grubhub has approximately 9 percent of the U.S. meal delivery market, behind Uber Eats in second place with 23 percent of the market, and category leader DoorDash at 65 percent.
The spokesperson couldn’t share specific information on the positions or individuals impacted, but said “these changes only impact Grubhub corporate employees and do not include our delivery partners.” They added that Grubhub will unveil its strategy for the business and its “path to growth” very soon.
Impacted employees are being offered 16 weeks of severance or two weeks for every year of service that is greater than 16 weeks, as well as benefit support and outplacement.
Prior to becoming Grubhub’s CEO in March, Migdal had been CEO of Jet’s Canadian subsidiary, SkipTheDishes. Before that, he was the COO of SkipTheDishes, and had previously been JET’s Canadian country manager.
“We operate in a highly competitive and constantly evolving industry, and we need to continually look at whether we are set up in the right way to deliver for our diners, restaurants and delivery partners,” Migdal said in the announcement. “While our business has grown since our 2019 pre-pandemic levels, our operating and staff costs have increased at a higher rate.
Rightsizing the business for where we are now—which includes ensuring we have the right resources and organizational structure focused on the right priorities—will allow us to be more agile, make bolder bets and take advantage of all of the opportunities on our doorstep.”
Migdal thanked departing employees for their hard work and dedication to the company, adding that the news was “by no means a reflection on anyone’s efforts.” He said today’s hard decisions will enable the company to take advantage of significant opportunities ahead.
“From everything I have learned in the last 15 years in the online food industry and over the past few months at Grubhub, I have so much confidence in our ability to succeed,” Migdal said. “Grubhub is an incredible marketplace with tens of millions of customers, hundreds of thousands of restaurants and a strong logistics network operating from coast to coast.
We disrupted the restaurant industry and changed the way Americans order food forever, and that innovative, entrepreneurial and competitive spirit is part of our DNA. I’ve seen it over and over again as I’ve met with so many of you. I’m certain that with the right strategy, relentless execution and a commitment from all of you, Grubhub’s future is bright.”
At this year’s Food On Demand Conference, Grubhub COO Eric Ferguson highlighted the company’s outside partnerships, including its campus ordering and delivery efforts that have expanded in recent years—and differentiate the company from competing U.S. delivery providers.
Food On Demand will update this story as additional details become available.