Dive Brief:

• Reef Technology CEO Ari Ojalvo told employees on Friday Reef is laying off about 5% of its global workforce, according to an internal memo first published by The Information. Reef also shared the memo with Restaurant Dive on Monday, but didn't disclose how many employees would be laid off. 
• In the memo, Ojalvo attributes these job cuts to unspecified macroeconomic challenges. Reef didn't respond to Restaurant Dive's inquiries about what specific business pressures sparked this workforce reduction, or when the layoffs will begin.
• Reef has refocused on bolstering ghost kitchen growth since the start of the year, according to the memo, but Ojalvo didn't disclose if this department would face job cuts.

Dive Insight:

While Business Insider reports Reef's layoffs follow cash flow problems at the company, Reef's ghost kitchen division, Reef Kitchens, has continued to expand. Reef signed a deal with Tony Roma's to operate an unspecified number of ghost kitchens for the casual dining brand last week before the layoffs were announced.

It is unclear how many workers the cuts will impact, but it could be between 750 to 900 workers. According to its website, the company employs 18,000 workers, but several LinkedIn job postings note that the company has 15,000 employees. 

Despite the layoffs, Ojalvo wrote in the memo the company has been dedicated to "building on the exponential growth of REEF Kitchens." That expansion clip has drawn scrutiny, however, as Reef continues to rack up a long list of regulatory infractions. This includes scores of health violations, as well as units that operated without permits.

Reef's mobile food vessel operations don't fit under existing food truck regulations in many markets. As a result, the company has endeavored to shape local regulations to accommodate its business model. In Miami, for example, Reef worked with city commissioners to design and implement a one-year pilot program that changed city law to make it easier for Reef to comply with local regulations. The pilot was first announced in April 2021. 

In January, Reef temporarily ceased operations at 95 of its "underperforming" ghost kitchens. At the time, a spokesperson for the company said most of those units — which represented nearly one-third of Reef's ghost kitchens — featured the company's in-house virtual brands and would be converted to serving food from partner companies. 

Reef has continued to expand its kitchen operations throughout the first two quarters of 2022, signing a deal in April to pilot Qdoba units in Austin, Texas; Seattle and Atlanta. During Wendy's Q4 2021 earnings call in March, Wendy's CEO Todd Penegor said his company planned to open 150 to 200 additional Reef units in 2022, building on the 30 Reef ghost kitchens it opened last year.