Toast's big bet on doing it all

The payments and POS company has filed its IPO paperwork

Restaurants want simple, streamlined technology, not handfuls of disparate systems. And given that restaurants have historically lagged behind other industries in tech adoption, there’s a big opportunity for the right company to step in and take over. That’s according to restaurant point of sale and payments processing company Toast, which recently filed paperwork for an initial public offering. In fact, Toast knows its future success depends on restaurants not just adopting, but also growing on its do-it-all platform. 

Since its debut in 2013, Toast has seen incredible growth. In July 2018, the company reached so-called “unicorn status” with a valuation over $1 billion. In February, the Wall Street Journal said the company could be worth $20 billion in its IPO.

Toast processed $23.4 billion in payments to restaurants in the first half of the year. It makes money by processing those payments, and also by selling subscriptions for its products — it’s point of sale system, its kitchen display systems, and other back office software. It also sells hardware, like those European-style handhelds you’ve probably seen pop up over the past few years, and offers services like marketing tools and data analytics. 

The company’s goal, through all of these offerings, is to get more restaurant customers — something Toast says takes substantial time, effort, and money. 48,000 U.S. restaurant locations are using Toast — just 6 percent of an estimated 860,000 restaurants in the country. This leaves Toast confident there’s a huge addressable market for its all-in-one solution. It’s also projecting that restaurants will increase their tech spend. In 2019, according to Toast’s filing, restaurants spent $25 billion on technology. They expect this to more than double by 2024 to $55 billion. 

So far, the company’s proof is in its past growth. The number of restaurant locations using Toast more than doubled since 2019. Between June 2019 and June 2020, Toast added about 13,000 additional locations — a timeframe that included some of the darkest months of the pandemic. 

That’s not to say Toast was immune to Covid’s ill effects — the company laid off about half of its staff in April 2020, but was able to hire many of them back. But the pandemic also forced Toast to speed up the release of a few products and add a few more. It introduced delivery (both with a restaurant-managed fleet and through logistics partners), a suite of online marketing tools, and, in direct response to the Covid-era fears of shared surfaces, contactless payment options, bolstering its technical capabilities at a time when customers were turning to technology out of necessity and safety. 

Despite its growth, it’s not all rainbows and unicorns for Toast. When a company files paperwork ahead of an IPO, it has to lay its financial status, business model, and strategy bare. Essentially, anything a potential investor would need to know is fair game, including everything that could go wrong. 

(If you, too, are excited by reading S1 filings , you’re looking for the “risk factors” section.) 

In Toast’s case, some of its biggest risks involve keeping current customers engaged and attracting new ones. Small and medium-sized businesses make up most of Toast’s customers, and they can be “more difficult and costly to retain,” the filing says. (It hopes to attract bigger businesses as it grows.) The worldwide semiconductor chip shortage could hurt Toast’s hardware operation (it relies on third parties to actually build the devices). And payment processing services are such a vital part of Toast’s financial success, any major disruption — including people not spending money at restaurants — could cause serious trouble. 

It’s also unfair to say that Toast does absolutely everything technical for a restaurant. Its system also works with a huge number of tech partners. In an interview last November, Toast co-founder Aman Narang told me, “At Toast we’re not going to specialize in something that’s not core to our business if there’s someone else who does it better.” 

Still, Toast believes its complete offering built specifically for the restaurant industry is what will set it apart from its many competitors. A note in the filing from the company’s founders sums up the problem they intend to solve: “We realized the reason restaurants couldn’t innovate was because of the limitations of their technology and the lack of a true partner who understood them,” they wrote. 

What else is happening?

Grubhub leaned into its status as a Chicago-born company in an op-ed published last week in the Chicago Tribune. The piece is a public rebuttal to some claims in the city of Chicago’s lawsuit against the delivery company. (The practice of adding restaurants to its platform without consent isn’t illegal in Chicago or Illinois, the company wrote, and is an essential part of how many delivery services operate — like it or not.) 

“Are we perfect as a company? Not at all. But Grubhub and our 1,300 employees who live in the Chicago area are strongly committed to serving our hometown restaurants and diners, and the facts speak for themselves,” the company wrote before inviting Chicago’s mayor and members of the Tribune’s own editorial board — who also wrote in support of the City’s lawsuit — to visit its office any time. 

In yet another blow, new data shows that Grubhub is losing ground in U.S. citiesNew data indicates Grubhub’s position continues to slip in major urban areas even as its new CEO told investors they’d be a big focus for Growth. (Wondering, again, why Grubhub’s new parent Just Eat Takeaway is sunsetting Seamless, the most recognizable brand in New York City food delivery for decades.)

The Feds are investigating why you can never get an ice cream cone. Anyone who frequents McDonalds is probably aware that one of the chain’s signature items, the McFlurry, is frequently unavailable. That is, because its ice cream machines are broken — seemingly more often than not. The issue is so widespread that there’s a website devoted to tracking the broken machines around the country. Now, following complaints from franchisees, the Feds are looking into this issue; this comes as the government investigates whether manufacturers have been preventing owners from fixing broken appliances themselves.

-Danielle Hyams

More fee transparency: As third-party delivery services weather pushback from governments and restaurants, a California Assemblywoman  — Lorena Gonzalez, the same Assemblywoman who proposed several other delivery-related initiatives — submitted a bill that would require delivery companies to provide both customers and restaurants with itemized cost breakdowns of their fees and commissions on each transaction. The bill would also guarantee delivery workers receive the full amount of tips and gratuities after completing a delivery. 


Dozens of DoorDash employees protested outside of the home of company co-founder and CEO Tony Xu, demanding 120% of minimum wage — roughly $17 per hour — and more tip transparency, as well as free PPE and increased compensation for car and equipment sanitizing. This comes weeks after Prop 22 — which passed last year, leaving gig employees classified as independent contractors — was overturned by a superior court judge as mentioned last week. 


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