Toast

Toast is an all-in-one restaurant management platform that provides payment processing software and hardware (point-of-sale terminals and handheld devices, tap card readers, etc), online ordering systems, payroll processing, email marketing solutions, etc. to restaurants of all sizes. Toast’s technology was used by around 29,000 customers across 48,000 restaurant locations, as of June 2021.

While the company initially launched its online ordering platform in 2014, it substantially enhanced its product offering during the first wave of the COVID-19 pandemic. With the launch of its “contactless payments suite”, the company saw a strong rebound, supported by its restaurant customers transitioning to contactless payments and digital ordering. Toast launched 1) contactless Order & Pay for indoor dining; 2) flat-fee delivery via Toast Delivery Services; and 3) curbside notifications for takeout, over April 2020–November 2020. According to the company, restaurants using its Order & Pay solution, which allows guests to order and pay in a restaurant via smartphone using a QR code, see a nearly 12% higher ticket size on average. It also claims that restaurants that use its software outperform competitors by 10-30% and are able to reduce third-party delivery commissions by up to 80%. Subsequently, it offered an additional suite of tools (launched in November 2021) to streamline restaurant operations: 1) Toast Orders Hub interface, which provides restaurants a dashboard to compare financial performance across its takeout and delivery channels; 2) Toast Tips Manager, an automated tool that calculates and transfers pooled tips to Toast Payroll and allows employees to receive and access a portion of their tips and wages via Toast Pay Card (a prepaid debit card); and 3) Toast Restaurant Card, which is claimed to be the first debit card exclusively designed for restaurants, allowing restaurant owners on-demand access to sales and restaurant-based cashback reward programs.

Restaurants have the option to purchase Toast’s digital ordering solutions separately (without the use of its POS software or hardware) at subscriptions ranging from USD 75.00/month to USD 175.00/month. The company also has bundled software and hardware options. Toast doesn’t charge commissions on orders but charges a payment processing fee. Its Toast Delivery Service (TDS) option - introduced during the height of the first wave of the pandemic in April 2020 - charges a simple, flat rate in contrast to commissions charged by third-party delivery providers. The company claims restaurants using TDS pay less than 4% per order vs. commissions of up to 30% charged by some OFD companies.

Toast added on more than 14,000 restaurant locations over June 2020 - June 2021 and processed over USD 38 billion in gross payment volumes over the period. Its revenues grew 105% YoY to USD 704 million in 1H 2021. According to the company, its Annualized Recurring Run-rate (ARR) amounted to only 3% of its addressable market opportunity of USD 15 billion, as of June 2021.

Toast made its debut on the New York Stock Exchange in September 2021, raising USD 870 million from its IPO at a valuation of USD 20 billion, well ahead of the USD 8 billion valuation it commanded in its secondary share sale in November 2020.