Ritual lays off 16 percent of staff to “prepare for a recession”

As prospect of recession looms amid rising inflation, Ritual has laid off 23 employees.

Toronto-based food ordering and mobile pickup app Ritual has laid off 23 employees to “prepare for a recession.”

The staff cuts, which impact about 16 percent of Ritual’s 148-person team, were announced yesterday by Ritual co-founder and CEO Ray Reddy in an all-hands meeting and then published via a LinkedIn post. Reddy did not disclose which Ritual teams were impacted by the layoffs.

The Ritual CEO described the layoffs as a “difficult” but necessary step for the startup as the prospect of a recession looms amid rising inflation. According to Reddy, the staff cuts come as part of a restructuring that will see Ritual concentrate its resources on “fewer products and services,” but he did not specify which products and services.

“We have been through many recessions and because of that, we understand that consumer discretionary spending will go down and restaurants will be looking to cut costs to keep prices competitive,” wrote Reddy in a letter to employees. “To succeed in this environment, we need to continue to offer value to our customers by focusing on the fewer, more impactful products and keeping our prices low and we can only do that by keeping our operating costs low too.”

It has been a tough few years for Ritual, which previously laid off half of its team and reduced its operations during the early days of the pandemic, pointing to the “devastating impact” COVID-19 had on the restaurant industry.

Founded in 2014, Ritual had cumulatively raised more than $143 million CAD prior to the pandemic. Following those early pandemic layoffs, Ritual reportedly raised about $30 million CAD from existing investors.

“The word ‘unpredictable’ summarizes the challenges our business has faced over the last two years,” wrote Reddy. “With no playbooks on how to navigate a global pandemic, we saw major shifts in our business, first losing a significant portion of revenue from office closures, then seeing our residential business grow as we went in and out of lockdowns.”

According to Reddy, over the last few months, downtown cores have rebounded, “but a new challenge is emerging as we prepare for a recession.”

With the layoffs, Ritual joins a growing list of Canadian tech startups to lay off staff in an effort to reduce their operating costs and extend their runway amid the market downturn. This group includes Toronto FinTech firm Wealthsimple and commerce tech startup Bonsai. Earlier today, BetaKit broke news that Ottawa e-commerce giant Shopify plans to slow down its hiring efforts.

Reddy stressed that “the [Ritual] roles that were eliminated were a function of us focusing our investments and not a reflection of the performance of those individuals or teams.”

According to the CEO, affected Ritual employees will receive a three-month extension of the company’s full health and dental benefits, severance packages based on employee tenure, hardware assistance programs that will enable employees to keep company equipment, reference letters, interview coaching, and resume reviews. Reddy said Ritual’s investors have also offered to connect employees to opportunities at their other portfolio companies.

Josh Scott

Josh Scott

Josh Scott is a BetaKit reporter focused on telling in-depth Canadian tech stories and breaking news. His coverage is more complete than his moustache.

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