In what the company is calling a correction to overhiring when demand was higher, DoorDash Inc. announced Wednesday it was cutting about 6% of its workforce, or 1,250 jobs.
DoorDash had gone on a hiring spree to help with an influx of business due to people being stuck at home with the COVID-19 pandemic raging on.
However, the industry has seen a drop in business due to customers easing back with inflation at a decade's high.
Tony Xu, a chief executive with DoorDash, shared in a memo to employees shared on the company’s website that they had made a mistake in their hiring.
"Most of our investments are paying off, and 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," Xu wrote. "That's on me. As a result, operating expenses grew quickly."
He continued saying that if things were left as is, operating expenses would soon outgrow the company’s revenue.
The jobs being cut are at the company’s corporate level. The company, in total, has a staff of close to 20,000.
Several other companies have also announced they are cutting jobs, with Amazon, Meta, and Twitter all dialing back their staff for a variety of reasons, but mainly due to high costs and a drop in profit.
DoorDash reported a quarterly net loss of $295 million last month, which was more than the company had previously expected.
Xu said in his memo that even though the company has been resilient when compared to others in the industry, they have still struggled. Overall, he said that reducing non-headcount operating expenses "wouldn't close the gap," leading to the hard decision.
"This hard reality ultimately led me to make this painful decision to reduce our team size," Xu said.
Those who have their positions eliminated will receive 17 weeks of compensation as well as their February 2023 stock vest, the company shared.
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