DoorDash chief Tony Xu wears blame as the food delivery service trims corporate staffing by 6pc

DoorDash has laid off 1250 staff, including Australian employees, as part of a corporate restructure that has reduced the company size by 6 per cent.

Food delivery business DoorDash has cut as many 1250 roles from its corporate side. Picture: Getty Images

DoorDash will fork out $US85m ($AU124.7m) in severance payments and stock options to the 1250 staff – including Australians – the company laid off this week, a number which will see its staff headcount shrink by 8 per cent.

Tony Xu, the US food delivery business’ chief executive, on Wednesday (Thursday AEDT) apologised to staff, admitting “we were not as rigorous as we should have been in managing our team growth”.

“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. That’s on me. As a result, operating expenses grew quickly,” he said.

“We have and will continue to reduce our non-headcount operating expenses, but that alone wouldn’t close the gap.

“This hard reality ultimately led me to make this painful decision to reduce our team size.”

This is the most difficult change to DoorDash that I’ve had to announce in our almost 10-year history. Today, we are reducing our corporate headcount and saying goodbye to many talented teammates. https://t.co/xSYUVLwp17

— Tony Xu (@t_xu) November 30, 2022

The lay-offs will see DoorDash pay $US68m in severance payouts, health benefits and immigration and career transition support and a further $US17m in accelerated stock options, according to document filed to United States Securities and Exchange Commission. The company noted in the documents that most payments would be complete by March, 2023.

The lay-offs were limited to corporate staff and did “not affect any single team”, a DoorDash spokeswoman said.

“While some of the affected employees are based in Australia, this does not affect our presence in Australia overall,” she said.

Staff let go would receive a total of 17 weeks’ pay including a four-week notice period payout on top of accelerated stock options, and immigration and career transition support.

The severance amount is notable compared to the recent lay-offs reported by The Australian which found some local listed companies paid as low as four weeks to staff made redundant.

DoorDash’s cuts arrive just weeks after UK food delivery business Deliveroo and local 15-minute delivery provider Voly collapsed. Deliveroo dropped 150 staff and kicked almost 12,000 restaurants and 14,500 deliverers off its platform on November 16.

Menulog also dashed a number of local roles last week. The Australian business, which was bought out by Just Eat for $855m several years ago, has not confirmed the number of local roles cut.

The DoorDash app on an iPhone. Picture: Eric BARADAT / AFP

“To ensure we are operating as efficiently as possible, we have taken the difficult decision to reduce the number of those management and support roles,” a spokeswoman said.

Despite the job cuts, DoorDash was still advertising for several roles including a “growth executive”, marketing roles and site managers for its new “DashMart” warehouses which the company is using to take on instant delivery services like MILKRUN.