Restaurant review service Yelp is laying off 1,000 employees, citing the economic toll from the coronavirus pandemic.
The company is also furloughing another 1,100 workers and reducing hours for others. Back in December, Yelp reported having 5,950 employees globally, so the staffing cuts will impact over a third of its workforce.
“It’s been an extremely difficult and painful last month,” Yelp CEO Jeremy Stoppelman wrote in an internal email the San Francisco-based company made public on Thursday. It’s been tracking the economic toll by analyzing user traffic on Yelp, which is also used to review other businesses, including hair salons, bars, and gyms.
“The impact we’ve seen on consumer behavior is staggering,” he added. “Interest in restaurants, our most popular category, has dropped 64 percent since March 10, and the nightlife category is down 81 percent. Gyms and similar businesses are down 73 percent, and salons and other beauty businesses are down 83 percent.”
On the positive side, restaurants that specialize in delivery and takeout, like pizzerias and chicken-wing shops, have seen traffic pretty much double during the pandemic. Meanwhile, interest in grocery stores has nearly tripled.
Nevertheless, the overall outlook on the service industry is bad. “All told, the millions of local businesses hit hardest by the effects of COVID-19 face the prospect of closing and laying off their employees, without knowing when, or if, they’ll be able to reopen,” Stoppelman added.
To generate revenue, Yelp relies on the same businesses to advertise on the review service. So the economic impact is forcing the company to cut down on expenses and lay off staff. “We came to this decision as a last resort only after cutting non-employee expenses where possible,” Stoppelman said.
Other cost-cutting measures include reducing server costs, and trimming salaries for the Yelp’s executives by 20 to 30 percent. “Beyond not taking a salary, I also will not vest any of my 2020 stock awards for the remainder of the year,” he added.
To help local businesses in need, Yelp has been offering free access to its advertising services on the platform. The company also tried adding a GoFundMe donation button on review pages for various businesses. However, the company later backtracked after business owners balked at the opt-out nature of the button and the request for personal information in order to get the button removed.
