Last valued at $5 billion, restaurant management platform Toast has joined the sweep of startups laying off employees due to the economic impact of the COVID-19 pandemic. Toast reduced the size of its staff by 50% through layoffs and furloughs, according to a blog post from Toast’s CEO, Chris Comparato. It also reduced executive pay across the board, froze hiring, halted bonuses and pulled back offers.
The company’s flagship product helps restaurants process payments and handle orders through a mix of hardware and software. Think handheld ordering pads, self-service kiosks and display systems for kitchens. It also connects businesses to food delivery services like Grubhub.
Toast sits on the bridge between two industries in the spotlight, for better or worse, right now: restaurants and fintech. But restaurants have been hit hard as eateries were forced to close down due to state mandates, or to simply promote social distancing. As a result, fintech companies that help restaurants work better and depend on foot traffic are seeing less transaction volume.
Comparato, in the blog post, cited how restaurant revenue broadly took a huge hit in March, which naturally trickled down to Toast’s operations.
“With limited visibility into how quickly the industry may recover, and facing slower than anticipated growth, we now find ourselves in the unenviable position of reducing our headcount,” he wrote. He noted that before the pandemic hit, Toast revenue grew 109% in 2019. In an interview with Crunchbase News in February, chief financial officer Tim Barash said that the company’s goal in the next few years is to go public.
Toast has raised over $900 million in known venture capital, according to Crunchbase. Its future plans, before COVID-19, included a $1 billion commitment to research and development to build more hardware and software for guest engagement and retention. Restaurants have always been in industry with high turnover and razor thin margins, so Toast wants to invest in tools to make the business more profitable as a whole.
The unicorn also largely focuses customer acquisition on independently-owned restaurants that need to keep up against big chains. The focus has helped with its massive adoption, but it’s also proven as a detrimental weak spot as smaller restaurants struggle from closures as people stay inside to avoid the COVID-19 pandemic.
The Toast employees laid off were offered a “severance package, benefits coverage, mental health support, and an extended window during which they can purchase vested stock options,” the blog post detailed. Toast is also developing a program to help those laid off or furloughed look for new roles, a move that mimics other efforts we’ve seen across the startup world.
Investors in Toast include TCV, Tiger Global Management, Bessemer Venture Partners and T. Rowe Price Associates.
Toast isn’t the only Boston unicorn that has faced layoffs recently. EzCater, which helps cater business meetings with local restaurants, laid off 400 people. The company was last valued at $1.25 billlion. Last week, when TechCrunch reached out to the company about layoffs they said the following:
“We’re a company that feeds meetings, and meetings are not happening in much of the country right now. We don’t have any details to share at this time, but our people would deserve to be the first to know if we did.”