Deliveroo : update - a message from CEO and founder, Will Shu

Today I, unfortunately, have to make an extremely difficult announcement. We are starting a redundancy process across the company which could see around 9% of the company's workforce (approximately 350 roles) leave, although we expect this to be closer to 300 with redeployments. Roles at all levels of the company will be impacted.

I'm sorry that we have to do this. Some of our close friends and talented colleagues will leave Deliveroo as part of this and it pains me that we have to do it. I have been through one of these processes once before. I said then that it was the hardest thing I'd ever done, and this is just as bad. But however much it pains me, I know it's nothing compared to how those impacted will be feeling. We will do everything to support you.

I want to set out why we have taken this decision and what comes next.

Why have we taken this decision?

The world we operate in has changed. When Deliveroo launched 10 years ago we and our competitors focused relentlessly on growth. We invested heavily with the expectation that profits would follow in the future. As we have discussed many times during the last year, that future is now.

We are a growth company, but companies such as ours must now also demonstrate and accelerate a clear path to profits, by which I mean generating 'free cash flow' with our revenues exceeding all of our costs on a sustainable basis. You will all have seen our Q4 trading update at the end of January, which set out that we are making positive progress on our path to profitability. We are going in the right direction, but we need to go further.

We operate in a highly competitive industry, and at the same time we are also in a difficult consumer environment in most of our markets. We are experiencing record high inflation, rising interest rates, an energy crisis and fears of a recession in the UK. We have to run our business in the most efficient way possible to withstand these challenges, and take a hard look at our cost base.

In recent years we grew our headcount very quickly. This was a response to unprecedented growth rates supported by Covid-related tailwinds. By contrast, we now face serious and unforeseen economic headwinds. We have also recently exited markets, meaning we do not require the same size workforce to support our operations. Quite bluntly, our fixed cost base is too big for our business.

This is my responsibility. I should have had a more balanced approach to headcount growth, but I thought stronger top-line growth would continue for longer than it has. I did not anticipate so many macro headwinds arriving all at once. This is on me, and I will not be making the same mistakes going forward.

We remain focused on delivering the best proposition for our customers, partners and riders, but we need to right size the business for the opportunities and challenges ahead. This is not about individuals. We have had to consider the best structure for the business in this new context.

Looking ahead

The objective of today's proposed changes is to deliver a permanent shift towards increased efficiency, reduced friction in our structures and increased speed of decision-making to enable us to navigate an uncertain period and emerge in a stronger position.

Our challenge is to balance continued growth and reaching profitability, while continuing to innovate and deliver operational excellence and amazing experiences for our marketplace. Our industry remains young and there is a huge market opportunity ahead. In the coming weeks I will talk to you more about how our proposed changes and plans for 2023 will help us to take advantage of it.

What happens next?

Right now, my focus is on all those impacted by today's announcement. We will shortly share details of the process we will be following and other information. While we will all go through this together, each market will go through a different process.

In the UK we will be going through a collective consultation process on our redundancy proposals first.

I understand the strain this type of announcement will put on people, so supporting people is our number one priority. Everyone impacted will be offered enhanced redundancy packages that go above government requirements and support, for example with redeployment opportunities and outplacement, will be available. The specifics will vary by market, but everyone who leaves us will be looked after.

I know this will also impact those whose roles aren't at risk, for example by your teams changing, so I want to thank you in advance for your effort and professionalism as we go through this process.

My focus is on all of you and helping you to get through this however I can.

Will