Travis Kalanick’s $15 billion food-tech company cuts employees globally in profitability push

  • City Storage Systems’ restaurant-tech arm cut staff this week, including more than 80 in the US.
  • Otter, which runs several software and hardware businesses, is seeking profitability.
  • An executive said Otter had $80 million in annual recurring revenue and was continuing to grow.

Six months after layoffs at the food-technology company City Storage Systems, another round of cuts hit teams globally, according to leaked audio obtained by Business Insider.

More than 80 US employees were cut at Otter, the company’s restaurant-tech arm, a source familiar with the people laid off said. Layoffs also affected teams in Canada and Latin America, among other regions.

The head of Otter, Guido Gabrielli, told staff in an all-hands meeting on Thursday that Otter made the cuts because the company was “trying to get profitable as soon as possible,” according to the leaked audio. He said leaders would “try our best” to avoid future layoffs.

The total number of staff affected wasn’t immediately apparent. CSS employs about 3,300 people — down from about 4,300 in November, before the last significant layoffs.

A representative for CSS didn’t immediately respond to a request for comment sent outside normal business hours.

In fall 2021, CEO Travis Kalanick raised $850 million for CSS from investors including Microsoft, at a $15 billion valuation. Since then, the company has faced similar headwinds to the rest of the tech and real-estate industries, including higher interest rates and slower customer-demand growth than during the pandemic boom.

Through CSS, Kalanick wants to reinvent the business of food, just as he upended transportation by cofounding Uber. CSS’s other big unit is CloudKitchens, which renovates warehouses into ghost-kitchen facilities for mom-and-pop restaurateurs and big companies such as Chick-fil-A.

Otter is still growing

At Thursday’s all-hands, Gabrielli said the company had notched $80 million in annual recurring revenue and had 100,000 restaurants paying for at least one service.

“Growth is not something very common today in the SaaS world and in the tech world, and we still have it,” Gabrielli said, referring to software as a service.

Otter’s business includes order management for platforms such as DoorDash, a virtual-menu arm, a revenue-recapture business that claws back money owed to restaurants, and a newer point-of-sale system.

Gabrielli said Otter had about 500 McDonald’s customers for its revenue-recapture business. He added that the product faced increased competition and slowing growth.

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Otter’s point-of-sale system “is doing fantastic” for its small size, he said, with about half a million dollars in revenue annually.

Gabrielli said Otter’s leaders had also talked with tech companies that were trying to raise money. Some companies that notched billion-dollar valuations two years ago — at the height of zero-interest-rate-catalyzed investor enthusiasm — were now struggling with a year of no growth, he said.

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