Last week, Block, the parent company of the widely used Square POS system, announced that it was laying off 40% of its workforce, with plans to run more of its business with AI going forward.
Square’s food and beverage division, which works with about 450,000 small restaurants, was apparently hit hard by the cuts. Ming-Tai Huh, Square’s head of food and beverage, was let go, along with many of his colleagues, Huh said in a LinkedIn post earlier this week.
The full extent of the impact on Square’s restaurant team wasn’t clear, nor was it clear who would be leading the group in Huh’s place.
In a statement, Nick Molnar, Block's head of global sales and marketing, said its commitment to the restaurant community is as strong as ever.
“Square will continue to invest in and deliver products and services that help restaurants streamline operations, deepen customer relationships, and grow revenue - from robust point-of-sale systems and flexible payments to online ordering and integrated data insights,” he said. “Our focus remains on empowering restaurateurs with solutions that strengthen their businesses and support their growth.”
Restaurants and retailers that use Square, meanwhile, were left wondering what might change for them now that their POS provider is smaller and potentially more AI-centric.
“I’m feeling pretty uneasy,” one business owner wrote on the company’s community forum last week. “I’m all for innovation, but as someone who has already struggled with Square support in the past, I’m worried that we’re losing the human safety net that small businesses actually need.”
The person wondered if customer service will be replaced by AI bots, for instance, and who will handle “boring” stuff, like tech bugs.
“40% is a massive cut, and it feels like the sellers are the ones who might pay the price for this ‘efficiency,’” they wrote.
Gary Thomas, CEO of smoothie chain Keva, said there’s been no disruption in his Square service since the layoffs were announced a week ago.
“The people that are there to make sure merchants like myself are taken care of, that piece of it has not gone away at all,” he said.
But he said the team behind Square Champions, a community of Square customers that tests new products and helps support other business owners, was laid off.
Thomas was an early adopter of Square and became a Square Champion because he's a big believer in the technology. He said the company’s innovation in software and payments has allowed small chains like Keva to compete with heavyweights like Starbucks and Dutch Bros. He hopes it will be able to keep up that pace with a smaller staff.
“That's the piece that kept me up at night is like, OK, is the innovation going to continue, or is it going to stall?” he said. “And that's the piece that I don't know.”
Donnie McClanahan, who operates several cafes and vending machines in Knoxville, Tennessee, is also a Square Champion product tester and also noted that his contacts there are gone.
“I've been told that it’s going to probably change a little bit, to where you're going to have more of the developers directly interacting with operators,” McClanahan said. “From my point of view, that’s not a bad thing.”
Indeed, despite some of the current uncertainty, he feels the emphasis on AI will be good for Square and its customers in the long run.
“I'm not worried about the direction of Square now,” he said. “I ultimately think it's going to accelerate some of the tools and changes that we need on the operations side to use it to make software more competitive.”
In a post on X announcing the layoffs, Block CEO Jack Dorsey said that customers would feel the shift, but that the company would “help them navigate it.” He added that in the future, businesses will be able to use Block to build their own features, “composed of our capabilities and served through our interfaces.”
Some have questioned Dorsey’s justification for the layoffs. In an essay for the New York Times, former Block executive Aaron Zamost noted that the company’s workforce tripled in recent years. He argued that the job cuts are standard corporate downsizing disguised as AI transformation for the purpose of pleasing investors.
“Wall Street rewarded Block handsomely, sending the company’s stock up 24 percent after the announcement,” he wrote. “That incentivizes the rest of corporate America to follow Block’s lead and announce traditional layoffs while playing the A.I. card.”
Dorsey has rejected that notion. In another X post, he acknowledged that the company overhired during the pandemic, but said “We have and do run an efficient company... better than most.”
Square’s restaurant business was thriving prior to the layoffs. In a letter to shareholders last week, the company said food and beverage was its strongest segment in the fourth quarter, with a 16% increase in sales volume on the platform.
The company made a major investment in restaurants last year, unveiling a host of new products including its first handheld POS device, an AI assistant and a restaurant ordering network within Cash App.
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