Toronto-based TouchBistro temporarily laid off 131 employees today, noting that COVID-19 has had a “devastating impact” on its core customer base, which is made up of restaurants.
The 131 employees represent 23 percent of the overall company, which prior to the staff cuts sat at 560. TouchBistro has offices around the world including the United States, Mexico, and the United Kingdom, with its headquarters in Toronto. TouchBistro noted that the furlough (or temporary layoffs) primarily impacted the Canadian team, followed by the US and the UK. Members of the Mexico team are set to have their salaries reduced and will be cut down to a four-day work week.
“None of us could have ever anticipated such an unprecedented turn of events.”
“As a company that is focused exclusively on the restaurant industry, TouchBistro has also been significantly impacted by COVID-19,” said Alex Barrotti, founder and CEO of TouchBistro, in a statement shared with BetaKit. Barrotti has also reduced his own salary to zero until such a time that the situation for the company improves.
“Most restaurants have been forced to close their doors for the unforeseeable future,” he added. “While some sadly may never reopen, others have pivoted to offer take out and delivery to their customers. The financial impact to restaurants at this time is unprecedented.”
TouchBistro sells point-of-sale (POS) software and a restaurant management platform specifically for the restaurant industry.
Barrotti noted that as restaurants closed TouchBistro shifted its focus “to ensure our customers have what they need to navigate this difficult time.” The startup worked to fast-track the development of new products to help customers improve their immediate cashflow and enable them to independently process takeout and delivery orders. TouchBistro also created a ‘Recovery Navigator’ meant to offer information, insights, and support for restaurants adapting to the new landscape. In his statement, Barrotti notes that TouchBistro offers some of these new products for free or at discounted rates.
The 131 employees that have been temporarily laid off will have their accrued vacation applied immediately, which TouchBistro said will enable them to received earned pay for the corresponding period. The employees will also continue to receive health and dental benefits, and in Canada have access to an Employee Assistance Program. TouchBistro also noted that all stock options held by impacted staff will continue to vest and they will also continue to accrue vacation days and time of service during the layoff period.
“This has been an incredibly difficult decision to make, but it is the right one to ensure the continued success of our business once the pandemic has passed and the restaurant industry begins its recovery,” said Barrotti. “While we don’t know when that will be, our hope is that restaurants are able to reopen and resume full service soon.”
In a statement to BetaKit, Barrotti connected TouchBistro’s decision to temporarily layoff staff to the company not qualifying for current federal government measures. He noted, specifically, that TouchBistro does not qualify for the 75 percent wage subsidy.
“We have spent prudently so we have sufficient reserves in the bank to ride out this storm.”
“We don’t qualify based on the way the legislation is currently written,” Barrotti said, adding that TouchBistro waited until the legislation for the wage subsidy was passed over the weekend before making the decision to cut back its staff.
Founded in 2010, Touchbistro is backed by the likes of OMERS, Barclays Bank, RBC, and BMO. The startup has strategic partnerships to provide its payment services with a number of its investors, which are some of the largest financial institutions around the world. In 2018, the company announced TouchBistro Payments powered by WePay, a JPMorgan Chase company (a return investor in TouchBistro) and last year, the startup teamed up with Barclays to provide its integrated payments in the UK and with EVO Payments for a similar deal in Mexico.
According to TouchBistro, its software is used in more than 100 countries, by over 25,000 restaurants.
“We sell globally and 80 percent of our sales are from outside of Canada but directly benefit Canadian employees,” Barrotti told BetaKit. “From what we understand, in order to qualify the revenue has to be generated in Canada. It would help tremendously if this stipulation is changed.”
TouchBistro closed a significant Series E funding round seven months ago, raising $158 million CAD from major investors including OMERS Growth Equity, Barclays Bank, RBC Ventures, and BMO Capital Partners. The round brought the startup’s total funding to date to almost $270 million.
When asked how the recent funding round played into TouchBistro’s decision to make cuts, Barrotti told BetaKit, “We have spent prudently so we have sufficient reserves in the bank to ride out this storm.”
“At the same time,” he added. “I have a fiduciary responsibility to all my shareholders, which includes all our employees, to ensure that TouchBistro will be around when the crisis subsides.”
The CEO also noted that while he cannot predict how long the current pandemic will affect TouchBistro he will continue to take zero salary until the company starts to pull out of the crisis.
“None of us could have ever anticipated such an unprecedented turn of events,” Barrotti said. “While we will have a reduced team, our commitment to the industry remains unchanged. We will continue to listen to our customers and invest in the development of products that are needed today and that will help the industry emerge from this pandemic stronger and more resilient than ever.”