In March 2023, Just Eat Takeaway, a major player in the food delivery industry, announced significant layoffs. The company plans to let go of 1,700 delivery drivers and 170 operations staff. This move is part of a broader cost-cutting strategy in response to declining demand. We'll explore what led to these layoffs and their potential future impact.
The layoffs at Just Eat were driven by a combination of economic pressures, shifts in industry demands, and internal restructurings. The company experienced a significant slowdown in demand for food delivery services, with UK orders dropping by 10% and global orders falling by 9% in 2022. This decline in demand was partly due to the return to "normalcy" post-pandemic, which saw fewer people relying on food delivery services. Additionally, Just Eat faced substantial financial losses, including a $5.7 billion euro loss attributed to impairments on acquisitions and a book loss on the sale of its stake in iFood.
In response to these challenges, Just Eat decided to transition towards using more self-employed 'gig' workers to cut costs and improve efficiency. This shift away from the traditional worker model for couriers is part of a broader reorganization aimed at simplifying its delivery operations. A Just Eat spokesman emphasized that the reorganization is designed to support impacted employees and couriers while enhancing operational efficiency. CEO Jitse Groen reiterated the company's ambition to create a highly profitable food delivery business, despite the current setbacks.
Industry analysts have noted that Just Eat's decision to not provide transaction value forecasts for 2023, unlike its competitor Delivery Hero, reflects the uncertainty and competitive pressures within the food delivery market. The industry is increasingly moving towards more flexible, gig-based employment models, which Just Eat is now adopting. These layoffs and strategic shifts are indicative of the broader economic challenges and evolving consumer behaviors affecting the food delivery sector.
Just Eat's recent layoffs are expected to yield significant cost savings by transitioning to a gig economy model. This shift aims to reduce expenses associated with traditional employment, such as benefits and fixed salaries. In the short term, the layoffs have already positively impacted Just Eat's financial health, evidenced by a 3.5% increase in share price. Long-term, the company aims to enhance efficiency and profitability, aligning with its broader ambition to create a highly profitable food delivery business.
Strategically, Just Eat is focusing on reorganizing its delivery operations to streamline processes and cut costs. This reorganization is designed to maintain service quality for partners and customers while supporting impacted employees and couriers. By concentrating on operational efficiency, Just Eat is positioning itself to navigate the competitive food delivery market successfully.
Just Eat's layoffs are poised to reshape the food delivery industry. By transitioning to a gig economy model, Just Eat is setting a precedent that other companies may follow to cut costs. This shift could lead to increased competition among gig workers, potentially driving down wages and altering employment standards. Additionally, the move may prompt other food delivery services to reassess their operational models, leading to further industry-wide layoffs and restructuring. As companies strive for profitability, the focus will likely shift towards efficiency and flexibility, impacting both employees and service quality.
Just Eat's layoffs stem from economic pressures, declining demand, and a shift to gig workers. These changes aim to cut costs and improve efficiency, boosting short-term financial health and long-term profitability. The move sets a precedent for the industry, potentially lowering wages and altering employment standards. Just Eat's future likely involves further operational streamlining and competitive positioning, impacting both employees and service quality in the food delivery market.
