Austin-based startups are not the only ones laying off employees in the Texas capital.
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Irvine, California-based Restaurant365–which has developed cloud-based software focused exclusively on the restaurant and hospitality industry–confirmed to me via email last night that the company reduced its workforce this week. The company did not specify exactly how many people were laid off or exactly where they were all located. CEO Tony Smith told me via telephone this morning that prior to this week, Restaurant365 had a total of about 400 employees, with about 140-150 of those located in its Austin office.
“We did not cut half,” he said. “But it was a big chunk.”
Smith told Crunchbase News that Restaurant365 has already seen a 75 percent decline in total year-over-year sales for its customers.
“We’re seeing a decent number of restaurants just close their doors and lay off staff for now in hopes in of being able to open back up in the future and rehire,” he said.
A source who asked not to be named told me that she was among those laid off this week from Restaurant365’s Austin office. According to that source, the company let go of some of its sales staff “and many others” in the Texas capital.
Restaurant365 Marketing Director Patti-Lynn Walker told me via email that the layoff notification to affected employees was delivered via a live video conference by Restaurant365’s human resources personnel.
“It goes without saying that the events of this week have been difficult,” Walker wrote. “The impact of COVID-19 on the restaurant industry and on Austin’s community (and the world) is unprecedented.”
Smith said he personally struggled with the method of notification but said the company had little choice under the circumstances.
The company helps restaurants with accounting, inventory, scheduling and reporting. With so many restaurants unable to offer more than takeout or delivery, it’s not surprising that demand for Restaurant365’s offering might dip.
“For years in a row, we were seeing between 80 and 100 percent growth, and were definitely built as a high-growth business,” Smith told Crunchbase News. “Right now is not the time for high growth in most vertical SaaS sectors, but especially those in the restaurant industry. Restaurants are not looking now to buy software. The future is so uncertain for them. They don’t want to have to make a lot of bold decisions at the moment, or long-term commitments. With all those factors, we realized our business at the current pace was not just going to be able to sustain the full workforce that we had.”
Restaurant365 has raised $127.5 million since its 2011 inception. Last July, the company raised an $88 million Series C led by ICONIQ Capital and included participation from Tiger Global Management and Bessemer Venture Partners. At the time, Built in Austin reported that the company worked with more than 10,000 restaurants, and was “in its third year of doubled growth.”
Illustration: Li-Anne Dias