The US restaurant POS market was valued at $4.56 billion in 2020 and is expected to grow at a 6.4% CAGR from 2021 through 2028. Analysts believe that the industry will see the growth of mobile and self-service kiosk segments as companies shift to more affordable options. Boston-based Toast (NYSE: TOST) is hoping to address this demand through product enhancements and partnerships.
 

Toast’s Financials

Toast recently reported its first-quarter earnings. Revenues grew by 90% to $535 million. ARR grew 66% to $637 million, and GPV increased 98% to $17.8 billion. Net loss was $23 million compared with $99 million a year ago. Loss per share fell from $0.20 to $0.48 for the quarter.

By segment, subscription service revenues grew 67% to $63 million, financial technology solution revenues grew 138% to $438 million, and hardware revenues grew 71% to $29 million. Professional service revenues grew 76% to $5 million.

For the second quarter, Toast forecast revenues of $635-$665 million. It expects revenues of $2.5-$2.55 billion for the current fiscal year. The market forecast revenues of $649.5 million for the quarter and $2.54 billion for the year.
 

Toast’s Growth Focus

Recently, Toast announced the renewal of its partnership with US Foods. The renewed partnership will allow both companies to create deeper relationships with restaurant owners and food service operators, provide the right technology solutions, and save the operator time while also growing revenue and improving the customer experience.

The restaurant industry is facing significant challenges, post-Covid, with labor shortages and unpredictable supply chains. Toast has released several new products aimed at addressing these issues.

For quick-service restaurants (QSR) of all sizes, Toast released Toast for Quick Service. QSRs that run on Toast will have the ability to increase sales and tips by improving their bottom line and serving guests faster with enhanced digital tools, ordering and payment workflows, and access to performance insights. With Toast for Quick Service, these restaurants can improve revenue and provide a better guest experience through tools and functionality offered using Toast’s restaurant-grade hardware, Toast Mobile Order, PayTM, and Kiosks.

These solutions help these restaurants take orders faster and more accurately, resulting in fewer comps and voids, while also increasing tips and boosting employee retention. The service is available for purchase using a solution that works for the restaurant’s budget. They can choose from starter kits with no upfront costs starting at $0/month to comprehensive plans with flexible payment options.

It also improved its offerings for other restaurants by adding several enhancements to its mobile ordering, payments, and digital menu solutions, lowering the barrier to entry for restaurants to adopt mobile-first technology. Now guests can easily scan a QR code to browse the menu, order, and pay, all from their mobile devices. Key new updates will include server-started ordering, allowing both servers and guests to start and add to a tab, and customizable digital menus by service area, such as the patio, takeout window, and full table service. Toast Digital Menus and Mobile Payments are also now included within Toast’s industry restaurant POS at no extra cost. Guests at full-service restaurants will no longer have to wait on servers to add to their order or checkout.

Last month, Toast also released Learn with Toast, a new eLearning platform that offers fast-paced video courses on how to start and grow a restaurant business. The content provides information on how to build, and rebuild teams, how to make more money with online ordering, and how to make front-of-house operations more efficient.

Toast’s main competitors include Square, Clover, Lightspeed, and PAR. Most of these players provide similar services. But, Toast is rated to be among the better vendors on account of its features and inventory management capabilities. Toast also operates a robust partner and an API-based model that offers integrations with the most widely used restaurant software. Its API integration provides restaurant operators with the flexibility to build a high-performing restaurant tech stack. Toast does not share detailed metrics of API usage or on its partner ecosystem.

Toast’s stock is currently trading at $14 with a market capitalization of $7.16 billion. It went public in September 2021. It raised $870 million through its IPO by selling the stock at a list price of $40 and was valued at $20 billion. It soon hit a 52-week high of $69.93 in November but has now fallen to a 52-week low of $11.91 in June.

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