Uber's chief executive told employees Monday that the ride-hailing service will lay off an additional 3,000 employees and close 45 offices globally. The move comes just days after the company announced it wouldin its customer service and recruiting departments.
With the email to workers.slamming ridership, Uber's leadership "had to take tough action to resize our company to the new reality of our business," CEO Dara Khosrowshahi said in an
"We began 2020 on an accelerated path to total company profitability," he added. "Then the coronavirus hit us with a once-in-a-generation public health and economic crisis. People are rightfully staying home and our rides business, our main profit generator, is down around 80%."
Khosrowshahi didn't specify which departments within Uber would be affected nor offer details on severance benefits. Uber plans to shrink its physical footprint in San Francisco and Singapore.
Along with layoffs, Uber also has instituted a hiring freeze and slashed its marketing budget, while Khosrowshahi waived the rest of his 2020 salary. The company's board members have also waived their cash retainer for 2020, according to a regulatory filing posted Monday.
Uber drivers are not considered company employees and won't be subject to layoffs. Ride-share drivers have seen a decline in customers as many Americans remain indoors under state stay-at-home orders.
The pandemic has pushed Uber deeper into the red financially. The company has racked up three straight years of multibillion-dollar operating losses, according to its annual report, including an $8.6 billion loss for 2019. For its most recent quarter, Uber reported that it . Revenue was $3.5 billion, up 14% from the year-ago period, but rides were down 3% from the first quarter of 2019.
One bright spot has been Uber Eats. With more Americans eating at home, the company's food delivery segment recorded profits of $148 million in the last quarter. Yet Khosrowshahi said in the email "that while Eats growth is accelerating, the business today doesn't come close to covering our expenses."
Uber is reportedly trying toin a move that would make Uber the biggest name in food delivery.
Uber rival Lyft laid off nearly 1,000 employees, or 17% of its workforce, in April. Lyft also furloughed roughly 300 employees and reduced the salaries for its vice presidents and executives by 20% and 30%, respectively. One analyst believes it could take before riders are fully comfortable hiring a car.