Toast, a provider of point-of-sale software to the restaurant industry, announced on Tuesday that it's cutting about 50% of its staff as the coronavirus forces businesses across the country to close. That amounts to about 1,300 employees.
"During the month of March, as a result of necessary social distancing and government-mandated closures, restaurant sales declined by 80 percent in most cities," CEO Chris Comparato wrote in a blog post. "This is a massive disruption that hit the industry virtually overnight. Many restaurants that have temporarily closed may never reopen."
Coming into 2020, Toast was riding high, raising $400 million in February at a valuation of almost $5 billion after revenue more than doubled last year. But as cities from San Francisco to New York imposed shelter-in-place orders last month, restaurants were only able to serve food via delivery and takeout.
While Toast provides technology to help restaurants pivot from dine-in to takeout establishments, the company took a huge revenue hit from customers that closed and opted to give away its delivery and takeout package for three months.
Toast, which is based in Boston, joins a growing list of start-ups that are being forced to dramatically downsize as the economy remains shut across much of the country and jobless claims rise to a record. Fitness start-up ClassPass told employees last week it was laying off or furloughing about half its roughly 700 workers. Luggage company Away is also furloughing about half its employees and laying off another 10%.
Toast, founded eight years ago, had been a big beneficiary of the booming economy, helping new and upscale restaurants modernize their technology to meet customer demand. The market shifted in a hurry.
A number of staffers posted on LinkedIn on Tuesday that they're in the market for a new job. An international student here on a visa wrote that "losing my job at a critical time like this could mean effectively ending my career in the US," and a graphic designer said, "I'm not sure what is next but if you are aware of any open design positions in Boston or remote, I would greatly appreciate you sending them my way."
Toast is fortunate to have padded its balance sheet just before the crisis hits. Now it has to hope there's an industry still big enough to support its business when we get to the other side.
"There is no playbook for navigating a global pandemic, but at Toast we will double-down on our effort to support our community and become the leading platform for restaurants of all sizes," Comparato wrote on Tuesday. "We will continue to invest in our team, our platform, and — most importantly — our customer community."