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Toast Cuts 50 Percent of Its Staff. That’s an Ominous Sign for All of Restaurant Tech

by Jennifer Marston
April 8, 2020April 8, 2020Filed under:
  • Business of Food
  • Delivery & Commerce
  • Featured
  • Restaurant Tech
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Yesterday, Toast announced it will cut 50 percent of its staff through layoffs and furloughs. In a letter posted to the Toast blog, CEO Chris Comparato said the move is the result of the ongoing COVID-19 health crisis, which he called a “massive disruption” that “hit the [restaurant] industry virtually overnight.” Understatement of the year, so far. And given Toast’s status as a true heavyweight in the world of restaurant-management tech, the move has ominous implications for other companies that built their businesses off restaurant hardware and software. 

As of February, Toast was valued at around $5 billion. The company provides software/hardware combinations to restaurants to process payments, manage orders, organize back-of-house tasks, and integrate with other third-party services for things like delivery, reservations, and analytics. Basically, Toast offers the kitchen sink and then some in terms of restaurant tech.

Which begs the question, did anyone need all of that technology in the first place?

Toast and others supply a seeming endless amount of tech solutions to restaurants — to the the point that one can’t help but wonder how many of these products are useful and how many of them are what I like to call “tech for the sake of tech.” Does a restaurant general manager trying to juggle three meal shifts and an army of staff even have time to care about real-time guest analytics, for example? Does there really need to be a system in place for customers to order and pay for their meal before they ever set foot in a restaurant? And having spent years working as a server and manager in the restaurant biz myself, I can tell you that good employees don’t need wearable tech judging their every move to do their jobs well.

The economic fallout from the COVID-19 crisis will answer many such questions for us. Those answers will frequently be “no.” Right now, restaurant sales are down 80 percent thanks to government-mandated dining room closures. Restaurants are trying to pivot to delivery and takeout models that would still require some technology to function and integrate with third-party services like DoorDash. But that transition is far from smooth, and many restaurants are more concerned with trying to grasp the off-premises lifeline than they are with adding new bells and whistles to their tech stack. Many more establishments have simply shuttered their operations entirely, citing, among other things, health concerns for their staff.

No one yet knows what the restaurant industry will look like post-pandemic and post-economic fallout. One thing we can count on, though, is a slimmer tech operation. Restaurants operate off the thinnest of margins on a good day. Throw in a recession (or possible depression), and no one’s going to be spending money on anything that isn’t absolutely necessary. Software that integrates all your online order/delivery channels, yes. Software that “streamlines” your guest reservations, no.

Which is to say, the current upheaval the restaurant industry is undergoing is going to pare down everything for the long term: staffing, menus, plate portions, and, unfortunately for Toast and others, technology that businesses may or may not have ever needed in the first place.


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Tagged:
  • front-of-house tech
  • POS
  • restaurant tech
  • Toast

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