CloudKitchens, the richly valued startup founded by former Uber chief Travis Kalanick, is cutting jobs as a pandemic-era boom in online food ordering subsidesand a recession looms.
The ghost kitchen operator has shed corporate recruiting employees, a move made to get closer to profitability, according to a person close to the matter.
On November 1, employees on the recruiting team were asked to attend an impromptu Zoom meeting, described as a "global update." Staff were told to give the meeting priority over other meetings, this person said.
David Tunna, head of recruiting, read from a script, according to the person, who witnessed the video call. Tunna said Kalanick's goal is for CloudKitchens to be profitable next year, and with that, the startup has to make some changes, according to the witness.
"We're going to be downsizing. If you're a part of these layoffs, you will meet with your manager and an HR VP sometime today," the source recalled Tunna saying.
After the speech, which lasted about five minutes, Tunna exited the call. About 10 minutes later, everyone who was going to be laid off that day had another Zoom meeting put on their calendar with their manager and a human resources representative.
The source estimated the layoffs impacted about 30 people in the recruiting division. Another person, a current employee of CloudKitchens, confirmed that job cuts have happened. Both people asked not to be identified discussing private matters.
CloudKitchens joins many other startups that are eliminating employees as plunging private market valuations put pressure on young businesses to cut costs. Ghost kitchen rival Reef has cut jobs. This is a far cry from just a year ago, when startups could raise money easily at lofty valuations.
CloudKitchens raised about $850 million last fall from backers, including Microsoft, in a round that valued the startup at $15 billion. The Los Angeles-based ghost kitchen company has more than 5,000 employees, and it operates kitchens in markets from London to Brazil to Korea, including about 60 properties stateside.
The downturn may have caught some people at CloudKitchens by surprise. In July, the company's newly-hired head of revenue hinted at big hiring plans. It's unclear if those plans are still in place. A spokesperson for CloudKitchens declined to comment.
Kalanick took over the startup in 2018, after his exit from Uber, and grew headcount by thousands. Business at City Storage Systems – the CloudKitchens parent company – boomed during the pandemic as diners ordered food for home delivery in record numbers.
But the company struggled last year with discontent among some employees about culture and HR policies and with tumultuous relationships with some neighbors, including in Chicago. Mom-and-pop customers also told Insider in August they're dissatisfied with the company.
In September, CloudKitchens's Otter unit ordered workers to return to the office three days a week, according to a leaked memo obtained by Insider.
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