- 21 April 2022
- Transport / Logistics Services
Restaurant delivery business DoorDash has plans to reduce its growth in new staff members to between 10-15% in the next year, a substantial slowdown by comparison to previous years. This comes as the company seeks to cut costs and to steer toward profitability.
The plans were announced by CEO Tony Xu in an internal meeting, and the company has declined to comment on the matter to the media.
Xu said that the slowdown in growth is intended not to hurt the business overall. Despite strong fourth quarter revenue growth, DoorDash’s share price has fallen by more than 50% as investors start to question the viability of such businesses, none of which have made a profit since their inception.
It saw substantial revenue growth during the pandemic as lockdowns stopped people from visiting restaurants. This has slowed considerably as people have been allowed out to socialise, and the prospects for such stellar growth again aren’t great.
At the same time, DoorDash is looking to cut down on other expenses such as cloud computing. Amongst other things, it pays USD $0.065 per transaction to Amazon Web Services to process each order and over the millions of orders made weekly this is starting to hurt the business.
With no company in this sector seeing profitability in more than five years since the market came into being, and growth not achieving the margins, businesses like DoorDash are scrabbling around looking for other ways to give their investors return on investment. We shall see what they come up with.