UK-based food delivery service Deliveroo confirmed that it is cutting roughly 15 percent of its staff — a little over 350 people — and furloughing others, according to a report from The Telegraph.
Fifty employees will be furloughed in addition to the layoffs. Deliveroo did not specify which roles it was cutting or which regions.
A Deliveroo spokesperson confirmed to TechCrunch that the cuts are in response to the coronavirus pandemic, which is wrecking havoc on the restaurant industry. “This requires us to look at how we operate in order to reduce long-term costs, which sadly means some roles are at risk of redundancy and others will be put on furlough,” the spokesperson said.
While off-premises orders — delivery and takeout — were initially hailed as the one major lifeline restaurants would have during this crisis, the reality is that many restaurants have struggled with the switch to this format. Others, including major QSR chains in the UK, have shut down completely for the time being.
Deliveroo’s cuts come just days after the UK’s Competition and Markets Authority (CMA) approved Amazon’s investment in the service. The deal had been under investigation before the pandemic. In its decision, the CMA suggested the third-party delivery service could collapse without the extra funds from Amazon.
Demand for delivery has dropped in the UK, likely in response to the economic uncertainty caused by the pandemic. With more people out of work and no real idea of when the pandemic will subside, if it will resurface, and what life will look like in two, three, or nine months, people are opting to cook at home and save money.
That doesn’t bode well for the food delivery sector, which already struggles with profitability.
U.S.-based food delivery services have yet to make any major cuts like this, though it’s not out of the realm of possibility if things remain as they are economically or psychologically.