After laying off 3,700 employees last week, Uber is now laying off another 3,000 employees. Between these two rounds of layoffs, the company has let go of 25% of its staff. It is also closing 45 offices and rethinking its approach in areas like freight and autonomous vehicle technology, TechCrunch reported.
“Given the dramatic impact of the pandemic, and the unpredictable nature of any eventual recovery, we are concentrating our efforts on our core mobility and delivery platforms and resizing our company to match the realities of our business,” CEO Dara Khosrowshahi said in the SEC filing. “We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding, and innovating,” Khosrowshahi said in an email to employees, according to the TechCrunch report.
In addition to the $35-40 million incurred in the last round of layoffs, Uber will spend $110-$140 million on severance and termination benefits, and up to $80 million to shut down offices, it told the SEC. Uber has cut costs by laying off staff, and has offloaded its scooter and bike sharing division Jump. It has also exited 8 unprofitable Uber Eats markets, and divested its Uber Eats business in India to Zomato. Uber’s estimates all these measures will save it at least $1 billion in costs annually.
Placing bets on delivery
Anticipating long-term social distancing measures and low demand for rides, the company is now placing its bets on food and grocery delivery. While Uber’s rides bookings fell by 80% in April (over March), its food delivery business, Uber Eats, grew 54% YoY in the March 2020 quarter, and grew 89% YoY only in April, driven by Europe, Middle East, and Africa (EMEA), and by Latin America.
The company is making a opportunistic attempt — it’s reportedly in talks with US food delivery service GrubHub. If the deal goes through, it will give Uber Eats 55% share of the American food delivery market, since it will onboard 24 million active users, according to Forbes. Eats drivers are also making grocery deliveries, and it has acquired Latin American grocery player Cornershop.
As for rides, during its earnings release earlier this month, the company said it was expecting to see recovery in some markets, but a retreat in others. Hong Kong, for instance, was back to 70% of pre-crisis gross bookings.
In India, the company is expected to now restart services as state governments release their respective guidelines on what relaxations are allowed. The company will require drivers in India to wear masks and to periodically take a selfie to verify that they are wearing a mask.