April 7, 2020
Letter From the CEO on COVID-19 Impact
This morning at Toast we shared the agonizing decision to reduce the size of our company by roughly 50 percent through layoffs and furloughs as a result of the COVID-19 health crisis. I will do my best to explain how we got here, but first, I want to reinforce how grateful we are to our impacted Toasters.
This incredibly talented and passionate bunch played an important role in building Toast into the company that it is today. We cannot begin to thank them enough for their contributions, but to start, we offered all impacted employees a severance package, benefits coverage, mental health support, and an extended window during which they can purchase vested stock options. We're also developing programs, led by our People Team, to help impacted Toasters stay connected to our Toast Community, as well as begin the search for new roles during this challenging time.
I know these efforts do not make this event hurt any less, but every 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. When that happens, I hope I will be able to welcome many of our alumni back over the coming years.
Now let me explain as best I can, why we had to make these hard decisions:
COVID-19’s impact on the restaurant community
It’s no secret that many industries and individuals have been severely impacted by COVID-19, and the restaurant industry is no exception. 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. This is a massive disruption that hit the industry virtually overnight. 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, and our passion for the industry is reflected in our employees - nearly 70 percent of whom worked for a restaurant at some point in their career. I would argue that it isn’t just our software that makes us special, it is also our culture and our passion to support the restaurant community.
When the severity of the crisis - and its impact on the restaurant industry became clear - we moved quickly to help our restaurant community navigate COVID-19. As a first step, we provided a one month credit of software fees for all Toast customers and, Toast customer or not, three months of free access to online ordering, Toast TakeOut, gift cards, and marketing tools. This represents millions in savings for restaurants, but comes at an obvious cost to Toast. We also built and launched Rally for Restaurants in 72 hours to raise awareness for the needs of the restaurant industry and generate much-needed revenue for our community through online ordering and gift card sales.
It’s important for me to share that these efforts helped us save jobs both internally and externally. We did this to keep our collective restaurant community afloat as best we could in uncertain times, because we care deeply for them, and because our ability to recover from this required early intervention.
Why we made tough decisions internally
The COVID-19 health crisis hit the industry hard and at an inopportune time for Toast. In 2019, our revenue grew 109 percent as a result of the demand for our platform and the growth in our industry. To prepare for continued growth in 2020, we staffed up throughout 2019 to make sure we would have talented Toasters in place to build new products, sell, implement, and support our growing community.
As restaurant revenue plummeted in March, we took every step we could to protect the health of our company. We froze hiring, pulled back offers, and halted merit increases. As a leadership team, we will reduce our pay across the board. But 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.
Our path forward at Toast
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. We will continue to invest in our team, our platform, and - most importantly - our customer community.
For everyone reading this letter - our employees, customers, partners, investors, and more - please join me in thanking the Toasters impacted this week for their hard work, and join us in our efforts to help them find their next roles. The past few weeks have demonstrated the strength of our community, our employees, and our ability to lift each other up through this challenging time.
Chris Comparato, CEO
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