Under new leadership, GrubHub announced it would lay off about 15% of its workforce, or 400 employees. New GrubHub CEO Howard Migdal made the decision after meeting with GrubHub leadership, teams, restaurants and diners to see what challenges they faced. Migdal notified employees in a June 12, 2023 email that was also posted to the GrubHub newsroom.

“There is no doubt whatsoever that we have a solid foundation in place and an immense opportunity ahead of us – but it is also clear that we need to make some tough decisions in order to maintain our competitiveness, deliver the best possible service for diners and our other partners, and be successful for the long-term,” Migdal wrote.

Affected employees will receive a minimum of 16 weeks’ severance, according to CNBC.

Time to rightsize

Migdal further explained that the company continues to grow beyond 2019 levels, but operating and staff costs have also increased. They are also working in a very competitive marketplace with companies like Uber and DoorDash. To be more agile and poised to meet challenges, the company needs to rightsize, maximize resources, and reexamine priorities, Migdal said.

“The hard decisions we are making now will enable us to take advantage of the significant opportunity ahead of us,” Migdal added. “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. 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.”

Migdal joined GrubHub as executive vice president and CEO in March, replacing CEO Adam DeWitt. Migdal was previously the CEO of SkipTheDishes, a Canadian subsidiary of Just Eat Takeaway.com. Just Eat Takeaway.com, a Dutch multinational corporation, acquired GrubHub in 2021 for approximately $7.3 billion.

At the time of Migdal’s promotion, Jitse Groen, CEO of Just Eat Takeaway.com, said, “He has a proven track record as a leader with a deep understanding of our business, and we are confident in his ability to lead and grow the business into the future.”

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“I am honored to take on the role leading our North America business and becoming the CEO of Grubhub,” said Migdal in a March 13 news release. “Grubhub is an incredible brand and has tremendous scale through its restaurant and delivery networks. I am excited to build on the foundation built by Adam and the team.”

As of March, GrubHub had 365,000 restaurant partners in more than 4,000 US cities. According to Statista, in 2023, GrubHub has about 9% of the online meal delivery market share.

Some have speculated that the new leadership and layoffs may be part of a planned sale or divestiture of GrubHub. In April 2022, CNBC reported that “prominent shareholders” of Just Eat Takeaway.com wanted the company to maximize the company’s potential which could include a future sale. At the time, the company’s shares had dropped significantly, and investors wanted to see a turnaround.

Grubhub+ premium subscription

Grubhub has a premium subscription service, GrubHub+. For $9.99 a month, after a free trial, subscribers get $0 delivery fees on orders of $12 or more, perks, donation matches and more. Subscribers save an average of $230 per year in delivery fees and promotions with GrubHub+. GrubHub has a partnership with Amazon Prime where Prime members can get a free one-year subscription to GrubHub+.

Insider Take

The pandemic giveth and the pandemic taketh away. While companies like GrubHub did extremely well during the pandemic, those companies also had to scale up operations to meet demand. Now, they’re having to rightsize to staffing levels that are affordable and make sense. In December, DoorDash cut 6% of its staff, or 1,250 employees. Uber has cut hundreds of jobs this year, according to the Wall Street Journal, mostly in its freight division and in Uber Eats overseas. Additional job cuts are coming this week from its recruiting team. Will these layoffs help GrubHub become nimbler and more sustainable? Is it the company trimming costs only to be sold later? Inquiring minds want to know.

Copyright © 2023 Authority Media Network, LLC. All rights reserved. Reproduction without permission is prohibited.