In response to the coronavirus outbreak, crowd-sourced review site Yelp announced they will layoff 1000 workers, and furlough an additional 1100; all together accounting for ~35% of the company’s total staff.
“It’s been an extremely difficult and painful last month: the world is facing a global health crisis none of us have ever witnessed in our lifetimes,” Yelp CEO Jeremy Stoppelman said. “It has disrupted daily life for nearly everyone — from businesses that rely on foot traffic or human contact, to workers who have no visibility into when they will earn their next paycheck; and parents, including many of us here at Yelp, who are trying to juggle childcare with job responsibilities.”
Stoppelman added that the difficult decision came as a last resort only after cutting non-employee expenses; including a reduction in server costs. Employees on furlough (who are technically considered on unpaid leave) should expect to receive two weeks of pay and also retain benefits. Yelp is expected to spend $8-10 million on severance and furlough costs. Executives will be taking a 30% pay cut, with their CEO Stoppelman suspending his yearly salary.
Since the majority of the country has issued their shelter in place orders, small businesses have been forced to close their doors, which has badly hurt yelp given the company is a service focused platform. According to Stoppelman, Yelp has seen a dramatic decrease in traffic throughout its services category; the companies bread and butter when its comes to revenue generated from advertising revenue and additional services to small businesses.
“Yelp connects people with these great local businesses, and as their worlds have been turned upside down, these businesses are understandably forced to pause or reduce spending on the products and services that Yelp provides,” CEO Stoppelman wrote in a company email Thursday. “To help Yelp get through this period of great uncertainty, we have had to make some incredibly hard decisions to reduce our operating costs.”
Shares in the company dropped more than 6 percent following the news.