Boston-based restaurant management platform provider Toast has laid off or furloughed roughly 50 percent of its staff as the novel coronavirus effectively shuts down much of the restaurant industry.
By Toast's own analysis, average daily sales at restaurants declined by nearly 80 percent toward the end of March. The drop comes as 43 states and Washington, D.C., have implemented stay-at-home orders; many of them, including Massachusetts, have limited restaurants to takeout and delivery orders only. The Bay State's order is currently set to expire on May 4.
"This is a massive disruption that hit the industry virtually overnight," Toast CEO Chris Comparato wrote in a letter announcing the layoffs. "Many restaurants that have temporarily closed may never reopen. Our mission is to empower the restaurant community to delight guests, do what they love, and thrive. As a restaurant management platform, our success is tightly coupled with the success of the restaurant industry."
Toast offered the impacted employees a severance package, benefits coverage, mental health support and an extended window during which they can purchase vested stock options, Comparato wrote. Toast's people operations team is also developing programs to help those who were let go find new employment.
Before making the decision to lay off and furlough workers, Toast implemented a hiring freeze and stopped merit increases for existing employees. Those on the leadership team, including Comparato, are taking pay cuts.
It was just under two months ago that Toast brought in a monster Series F round: $400 million led by Bessemer Venture Partners, TPG, Greenoaks Capital and Tiger Global Management. That funding brought Toast's valuation to nearly $5 billion at the time. Tim Brash, Toast's chief financial officer, told BostInno that Toast would use the funding to build out its restaurant management platform with new products, investments in hardware and software capabilities and new financial products.
Toast now joins a growing number of Boston-area startups that have been forced to make cuts amid the spread of the coronavirus. Another unicorn, ezCater, laid off more than 400 employees on Tuesday, facing similar constraints: With offices closed, there are no meetings for a corporate catering startup to cater.
"[E]very decision we made has been with the goal to emerge from this a healthy company, and for the remaining Toasters to play a critical role in helping our restaurant community rebuild after this global crisis subsides," Comparato wrote. "When that happens, I hope I will be able to welcome many of our alumni back over the coming years."
