Aman Narang says Toast's revenue fell over 90 percent during COVID before it cut 55 percent of staff

Aman Narang says Toast’s revenue dropped more than 90 percent in early COVID, then the company cut about 55 percent of its staff. That is the brutal little hinge inside this How I Built This episode: Toast had spent years convincing restaurants it was mission-critical, then discovered what happens when the mission itself gets shut down.

The neat founder myth here is that Toast was born from a universally annoying ritual, waiting too long for the dinner check. Fine. Cute. Every startup needs its apple-falling-from-the-tree moment. But the better story is uglier and more useful: Toast did not become a giant because paying at the table was annoying. It became a giant because restaurants were running on brittle, expensive, weirdly ancient systems, and because replacing those systems was so painful that owners compared it to dental surgery without the chair-side TV.

people would describe these switches as like root canals

That line is the whole business hiding in a grimace. Restaurants hated the old point-of-sale stacks, but hated changing them almost as much. Toast’s pitch was not glamour. It was, essentially, let us replace the thing you resent with a thing you might resent less, and also we will answer the phone when it breaks at 1 a.m. In one early sales meeting, Narang says a customer called the support number on Toast’s website and Narang’s own phone rang in his pocket. A beautiful startup detail. Also a customer-service horror movie.

The restaurant tech boom had a fax-machine smell

The origin story gets more persuasive when Narang talks about what restaurants actually looked like in 2013. This was not merely a market waiting for an app. It was a Frankenstein counter of payment processors, inventory software, gift cards, scheduling tools, online ordering, and hardware that could not simply crash because a line cook was having a bad Wi-Fi night.

One restaurant owner walked him through the mess: point of sale over here, payments over there, accounting somewhere else, online ordering somewhere else again. The kicker, per Narang, is almost too perfect. Online orders were still coming into the restaurant by fax machine. The future of dining was arriving on thermal paper.

none of these systems talk to each other to the point where this really shocked me

That is why the original consumer app failed in an interesting way. Toast could not just sit on top of restaurant infrastructure, because the infrastructure was the problem. Narang says the first app was buggy, not consumer-grade, and impossible to scale across a long tail of point-of-sale providers. So Toast pivoted from making checkout faster to trying to become the operating system of the restaurant. Less sexy. Much bigger.

within 20 minutes of taking the first few orders, it’s like the system is down

The first restaurant install melted down almost instantly. Orders were written on paper. Credit card numbers were taken manually. The lesson was obvious and merciless: restaurant software is not a notes app with a nicer logo. If it fails on a busy service, you are not disrupting the industry. You are holding up the line.

Then COVID stress-tested the whole theory

By Narang’s telling, Toast entered 2020 flying. The company had raised heavily, grown fast, and built itself around restaurants taking payments. Then COVID-19 turned that advantage into a trap. If your customers cannot open, they cannot swipe cards. If they cannot swipe cards, the software company built around those transactions starts bleeding too.

we had gone from this company that was growing like this to maybe revenues down over 90 because restaurants weren’t taking payments

we had to make the hard decision to cut i think it was like 55 percent of the team

The claim is credible, and not just because it sounds sufficiently awful. Toast’s business was tied to restaurant activity, and restaurant activity collapsed. The self-serving part is the bounce-back framing, because founder stories love a plague-to-productivity arc. Narang says the company went back into a basement-stage intensity and built around off-premise sales, QR-code menus, and tableside ordering. That is true enough as a business lesson, but it also gives a clean narrative to a period that involved thousands of people losing jobs and thousands of restaurants fighting to stay alive.

Still, the irony is hard to ignore in the useful way. Toast began because waiting for a check was annoying. COVID made the check, the menu, the ordering flow, and the entire dining-room ritual negotiable. Suddenly the QR code on the table was not a gimmick from a restaurant trying too hard. It was infrastructure.

Narang now says Toast serves more than 20 percent of small-business restaurants in the U.S., and that its busiest customers are a bigger share of sales volume than its restaurant count suggests. The company is pitching AI tools and expanding beyond restaurants into local retail. That is the next argument. The one this episode answers is simpler: Toast survived because it had already embedded itself deeply enough in restaurant operations that when the old model broke, the company could sell the replacement too.

If Narang’s COVID number is the stake in the table, the lesson for anyone building startups is unpleasant. Mission-critical software is a beautiful business until the mission gets canceled.