Restaurant-Software Firm Toast to Cut 550 Workers

Brody Ford, Bloomberg News

An empty office space in a building in San Francisco, California, US, on Tuesday, Dec. 5, 2023. San Francisco's office vacancy rate reached a record 34% in the third quarter, according to the real estate brokerage CBRE Group. Photographer: David Paul Morris/Bloomberg , Bloomberg

(Bloomberg) -- Toast Inc., a restaurant-focused software company, will cut about 550 employees, adding to the spate of technology industry workforce reductions since the start of 2024.

The job cuts are designed to promote “operating expense efficiency,” the company said Thursday in its fourth-quarter earnings statement. Bloomberg earlier reported Toast’s plan to eliminate positions. The company will incur about $50 million in costs such as severance, it added. Affected employees were told Thursday, according to a person familiar with the cuts, who asked not to be identified because that information wasn’t public.

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Known for processing payments for restaurants, Toast went public in September 2021. Its shares have plunged 52% since then amid slowdowns in the food industry and competition from companies like Block Inc. Toast generated 2023 annual revenue of $3.87 billion, a 42% increase from a year earlier. The company employed 4,500 workers as of the end of 2022, according to regulatory filings.

The shares declined 4.7% to $19.20 on news of the workforce reduction. In extended trading, the stock jumped more than 8% on the earnings report, with Toast projecting 2024 adjusted earnings before interest, taxes, depreciation and amortization of about $210 million. Analysts, on average, estimated $170 million, according to data compiled by Bloomberg.

A new wave of job cuts at the start of the year have shown that technology companies are moving faster to dismiss workers and shift priorities. A slew of marquee names such as Microsoft Corp., Alphabet Inc.’s Google, Amazon.com Inc. and Salesforce Inc. have eliminated positions in 2024. On Wednesday, Cisco Systems Inc., the largest maker of networking equipment, said it planned to wipe out thousands of jobs. Toast rival Block, which runs the Cash App and Square payments services, also said last month it was reducing headcount, but declined to give specific details on how many employees would be affected.

(Updates with outlook in the fourth paragraph.)