Deliveroo to cut 9% of workforce
Takeaway delivery firm Deliveroo is to cut around 350 roles, or 9% of its workforce, its founder has told staff.
The meal and food delivery firm said roles “at all levels of the company” will be impacted.
Will Shu, Deliveroo’s co-founder and chief executive, said the firm needed to “accelerate a clear path to profits.”
In a message to staff, he also admitted the company had grown too fast and had failed to anticipate the scale of a recent downturn.
Shu says:
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.
Key events
Closing post
Time for a recap…
Bank of England Governor Andrew Bailey warned that big increases in public sector pay would fuel inflation unless they were offset by tax increases.
Testifying to MPs today, Bailey acknowledged that a “wedge” has opened up between public and private sector pay. But he hinted that the BoE would have to tighten monetary policy more if pay settlements were financed by higher government borrowing.
Bailey told the Treasury Committee:
“The economics of it depends on whether you raise taxes or whether you borrow.”
Paying for higher wages in the public sector through increased borrowing would be a stimulant, Bailey added.
The governor also defended the Bank’s record on inflation, which soared to five-times over its 2% target, and pledged to get inflation back down to target.
But one policymaker, Silvana Tenreyro, warned MPs that the Bank had already raised interest rates too high. She could vote for a cut at future meetings.
Households could face more inflationary pressures this year, with Unilever, the company behind brands including Marmite and Dove soap, warning it will continue increasing prices for consumers this year.
Unilever denied it was making “windfall profits” during the cost of living crisis, though, despite hiking prices by over 11%, which knocked sale volumes down.
The UK telecoms regulator has launched an investigation into the industry-wide practice of hitting broadband and mobile customers with inflation-busting price rises of up to 17% and could bring in tougher protections against hefty mid-contract increases.
Deliveroo has become the latest tech company to announce staff cuts. The delivery group plans to cut 9% of its workforce, with CEO and founder Will Shu blaming “serious and unforeseen economic headwinds”.
Shu told staff:
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.
The publisher of the Beano and Scottish newspapers including the Press and Journal and the Courier is to cut almost a fifth of its workforce and shut almost 40 magazines as the economic downturn forces a digitally-focused “reset” of the business.
The UK’s blue-chip share index, the FTSE 100, has climbed to another alltime high this morning.
Standard Chartered led the index higher, after jumping over 10% on reports that First Abu Dhabi Bank could renew a potential takeover offer for Standard Chartered, once lock-up rules from its previous aborted bid expire.
Credit Suisse has scrapped its annual bonus for top executives after the scandal-hit Swiss bank reported its worst full-year loss since the 2008 banking crisis.
Shares in Google’s parent company, Alphabet, have tumbled after its artificial intelligence-powered chatbot gave a wrong answer in a promotional video.
Property sales and house prices continued to decline across the UK in January, while new buyer demand and fresh listings were also down, surveyors have reported.
Greenpeace is threatening to take legal action against the government as it emerged a target to lift millions of struggling households out of fuel poverty is likely to be missed.
And Rishi Sunak has been urged to funnel billions of pounds into free childcare to help get more parents into work, by the CBI.
Sunak and wife Akshata Murty have met parents, babies and toddlers during a visit to the St Austell Family Hub in Cornwall
Star Wars fan Sunak must have appreciated this outfit:
Mark Sweney
The publisher of the Beano and Scottish newspapers including the Press and Journal and the Courier is to cut almost a fifth of its workforce and shut almost 40 magazines as the economic downturn forces a digitally-focused “reset” of the business.
Dundee-based DC Thomson, which also owns businesses including the fashion title Stylist, is to cut 300 of its 1,600 workforce in a bid to shave £10m of costs.
The privately held company said that about half of the job losses will come from the complete closure of its operation in Colchester, home to subsidiary Aceville Publications, which produces about 20 to 30 magazines in sectors including gardening, health and food.
More here:
The latest inflation figures from Germany, this morning, added to hopes that price pressures are easing.
On an EU-harmonised basis, the German consumer prices index dropped to 9.2% per year in January, from 9.6% in December. That’s the lowest level in five months, with government efforts to protect households from soaring energy costs pushing inflation lower.
🇩🇪GERMANY:
📉German inflation hits five-month low falling from 9.6% in December to 9.2% in January. Economists were expecting an increase to 10%. That’s a good news for the largest EU economy and for the block. pic.twitter.com/OoFdhLpTIw
— Lucas Moraes (@lucasddmoraes) February 9, 2023
The US stock market has opened higher, with the Dow Jones industrial average gaining 257 points or 0.75% to 34,206 points.
The tech-focused Nasdaq Composite has gained almost 1%.
Google’s parent company, Alphabet, though has dropped by over 3%. That adds to Wednesday’s losses, when investors were alarmed that its artificial intelligence-powered chatbot gave a wrong answer in a promotional video.
Each of Deliveroo’s market will go through a different process to handle the job cuts, Will Shu says.
In the UK, the food delivery firm will be going through a collective consultation process on its redundancy proposals first.
Deliveroo founder Will Shu says the company needs to “demonstrate and accelerate a clear path to profits”, which means it must cut its costs.
In his message to UK staff announcing 9% of jobs are being cut, Shu says:
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.
Shu adds that he takes responsibility for expanding too quickly, saying ‘macro headwinds’ had caught Deliveroo out.
He says:
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.
Deliveroo to cut 9% of workforce
Takeaway delivery firm Deliveroo is to cut around 350 roles, or 9% of its workforce, its founder has told staff.
The meal and food delivery firm said roles “at all levels of the company” will be impacted.
Will Shu, Deliveroo’s co-founder and chief executive, said the firm needed to “accelerate a clear path to profits.”
In a message to staff, he also admitted the company had grown too fast and had failed to anticipate the scale of a recent downturn.
Shu says:
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.
The pound has jumped by over a cent against the US dollar today, despite suggestions that UK interest rates are close to peaking.
Sterling has risen to $1.219, up almost 1% today.
Mizuho senior economist Colin Asher said the pound was benefitting from increased risk appetite, as stocks rose to record levels in London.
He adds:
The new high for the FTSE has likely attracted some interest from overseas buyers.
Over in the US, new claims for unemployment benefits have risen slightly but are still low by historic standards.
There were 196,000 new ‘initial claims’ for jobless support last week. That’s an increase of 13,000 from the week before.
It suggests the US labor market is still pretty strong, despite recent increases in interest rates. In January, America’s economy added over 500,000 new jobs, much more than forecast.
The still-low levels of jobless claims “indicate that either involuntary separations remain low and/or those who lose their jobs are quickly re-employed elsewhere. There is no sign of easing of labor market tightness here.” – Brean Economics pic.twitter.com/yKFEVdNbcp
— Carl Quintanilla (@carlquintanilla) February 9, 2023
The number of mortgage-holders getting into arrears increased in the final three months of 2022, according to a body representing lenders.
Across the UK, 75,170 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance in the fourth quarter of 2022, which was 1% higher than in the previous quarter, UK Finance said.
There were also 6,060 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in the fourth quarter of 2022, which was 5% higher than in the previous quarter.
It is far from certain that interest rates will go up on the 23rd of March, Professor Costas Milas of the University of Liverpool’s management school tells us.
Before deciding on the next interest rate move, MPC members will study carefully the forthcoming Bank of England Inflation Attitudes Survey which will be published on the 17th of March.
As things stand, and based on last November’s Survey, the public expects UK inflation to remain at 3.4% two years into the future. This is creating additional demand for higher wages and therefore higher inflation. The question is whether the public will believe the Bank’s latest assessment that UK inflation will be end up below 1% two years down the road.
If the public buys into that, the 17th of March Inflation Attitudes Survey will record a significant drop in public expectations of inflation which give MPC members a good excuse NOT to push with another interest rate hike!
Budget airline easyJet has seen a shareholder revolt today over its executive pay policies.
Almost 20% of votes cast at its Annual General Meeting today opposed easyJet’s remuneration report. That wasn’t enough to stop the report being approved, though.
The boss of easyJet, Johan Lundgren, was paid almost £3m in 2022, in the year when the airline made a £208m loss and cancelled thousands of flights because of staffing and other problems.
Lundgren received a £1.2m annual bonus and £925,000 in shares on top of his £833,000 fixed salary and benefits. The total package represented a pay rise of about 273% from 2021, when no bonus was paid during the Covid pandemic, as our transport correspondent Gwyn Topham reported here:
