Restaurant software giant Toast announced on Thursday that it plans to lay off 550 employees, or about 10% of its workforce. The company cited increasing competition and slowing growth as the main reasons for the restructuring.

Toast now joins a growing list of tech companies implementing layoffs in 2024. Earlier this week, Cisco announced plans to cut 4,000 jobs due to declining sales and heightened client caution regarding expenditures.

Despite these challenges, transactions utilizing Toast products continue to rise. Gross payment volume reached $33.70 billion, marking a 32% increase, surpassing analysts’ consensus of $33.53 billion. The layoffs at Toast are expected to result in charges between $45 million to $55 million, primarily in the first quarter, with projected annualized savings of $100 million.

According to Bank of America analysts, Toast faces growing competition from companies like Block, Fiserv, and Shift4. This competition intensification was highlighted in December when analysts downgraded Toast’s stock rating from buy to neutral. CNBC reported.

These layoffs come shortly after Aman Narang, Toast’s co-founder and COO, assumed the role of CEO, replacing Chris Comparato. Under Comparato’s leadership, Toast faced backlash last summer for introducing a 99-cent fee for online orders exceeding $10. The company eventually removed the surcharge due to objections from consumers and restaurant owners.

Despite surpassing fourth-quarter earnings expectations on Wall Street, Toast highlighted increasing competition and sluggish growth as the main drivers for restructuring. To ensure its long-term viability, the company is streamlining its operations.

In a surprising move, Toast also announced plans for share buybacks, indicating confidence in its future despite current challenges. This decision has led to differing interpretations among analysts, with some seeing it as a sign of financial strength and commitment to shareholders, while others express concerns about its impact on employee morale and the ongoing restructuring process.

The news of these layoffs has reverberated throughout the restaurant industry, sparking discussions about the overall health of the technology sector and its support for food service establishments. It remains to be seen how Toast navigates through this challenging period and whether its restructuring efforts yield the desired outcomes.

We covered Toast back in 2021 after the Boston-based restaurant startup went public at a $16 billion valuation. Toast’s public debut came after a roller-coaster ride during the 2020 pandemic as the company saw its revenue decline by 80% as restaurants closed and cities across the country shut down. The company slashed half of its workforce in mid-2020 and took desperate measures to stay afloat.

Founded in 2011 by Aman Narang, Jonathan Grimm, and Steve Fredette, Toast, based in Boston, MA, offers a technology platform that integrates restaurant POS, front-of-house, back-of-house, and guest-facing technology with a marketplace of third-party applications. The company assists brands like José Andrés’ ThinkFoodGroup in streamlining operations, boosting revenue, and enhancing guest experiences. With this recent funding, Toast aims to significantly transform the $900B restaurant industry for the better.