On the same day jobless claims in the U.S. surpassed 16 million, business review and recommendation mainstay Yelp announced it would be downsizing—by a lot—citing the economic downturn amid the global coronavirus pandemic.
Local restaurants, gyms, and bars that rely on foot traffic have been some of the hardest-hit over the past weeks of public gathering restrictions. Despite having little physical footprint, Yelp relies on a symbiotic financial relationship with these small businesses, which has now been turned entirely inside out.
“The physical distancing measures and shelter-in-place orders, while critical to flatten the curve, have dealt a devastating blow to the local businesses that are core to our mission,” CEO Jeremy Stoppelman wrote in an internal email on Thursday. “These businesses are understandably forced to pause or reduce spending on the products and services that Yelp provides.”
In spite of cost-cutting measures, including mothballing a variety of projects, trimming budgets, a somewhat-wanting 20-to-30-per cent salary reduction for executives, and a considerably more-galant foregoing of all pay and stock option vestiture on on Stoppelman’s part, Yelp still found it necessary to take more extreme measures.
Today’s cuts will put 1,000 Yelp employees out of a job, furlough an additional 1,100, and enforce reduced hours for an unknown number of others. A little under 6,000 people worked at the company as of last December; in total, today’s cuts will reduce Yelp by about 35 per cent of its current headcount.
“Employees affected by the layoff will be offered severance pay, and reimbursement for up to three months of health insurance coverage. Employees on furlough will be put on unpaid leave, unless otherwise noted, but will retain the bulk of their benefits during this time and receive two weeks of additional pay,” Stoppelman wrote. “Those who have hours reduced will also continue to retain their benefits.” Yelp declined to provide additional details on which departments will be bearing the brunt of these cuts.
As shelter-in-place deadlines continue to extend and some countries are seeing second waves of coronavirus outbreaks, it’s becoming harder to predict which companies will be able to survive the extreme turbulence covid-19 is already causing.