Toast, a POS solution partnering with nearly 50,000 restaurant locations, filed for a $100 million IPO.
The company describes itself as a cloud-based, end-to-end technology platform built to connect front of house and back of house operations across dine-in, takeout, and delivery. The platform provides a suite of SaaS products, integrated payment processing, restaurant-grade hardware, and an ecosystem of third-party partners.
As of June 30, Toast had 47,492 locations on its platform, compared to 33,129 a year ago, and 19,891 in 2019. The company generates revenue through four main streams: subscription services, financial technology solutions, hardware, and professional services. Revenue lifted to $823 million in 2020, a 24 percent increase year-over-year. In the six months ending June 30, revenue soared 105 percent to $704 million. In June, Toast saw an average of over 5.5 million customer orders per day on its platform.
In 2020, Toast swung a net loss of $248.2 million, compared to a loss of $209.4 million in 2019. In the six months ending June 30, it saw a net loss of $234.7 million.
The company was founded in 2011 with the hopes of building a mobile app that could streamline the payment experience at restaurants. The initial attempt failed as the company struggled to integrate with legacy systems and understand the complexities of running a restaurant. After listening to several restaurateurs, Toast learned how dissatisfied operators were with existing on-premises POS systems, and that’s where the company knew it had to innovate.
“We discovered the restaurant industry was lacking a true technology leader,” Toast said in an SEC filing. “Despite how large the industry is, restaurants often lag behind other industries in transitioning to modern, cloud-based platforms. Even today, many of our favorite restaurants run on a combination of legacy on-premise technology, commodity payment processors, phoned-in takeout orders, and a stack of paper invoices.”
“We’ve been committed to this vision for nearly a decade. Our restaurant-specific platform is fully integrated across point of sale, operations, digital ordering and delivery, marketing and loyalty, team management, financial technology solutions, and platform services to provide restaurant operators everything they need to run their businesses successfully,” the filing continued. “In short, we’re democratizing technology so that restaurants of all sizes can compete on an even playing field.”
Although the adoption of technology has accelerated in recent years, Toast said the restaurant industry falls behind in terms of digitization. According to the company, U.S. locations spent roughly $25 billion on technology in 2019, which was less than 3 percent of total sales.
Toast expects technology spend to increase to $55 billion by 2024, and it wants to be part of that rise in the restaurant community.
“The benefits of Toast to each stakeholder in the restaurant ecosystem bolsters the success of all,” the company said. “The result is a virtuous cycle between restaurants and their stakeholders. Higher spend from happier guests is correlated with higher wages for employees, which in tandem with the wage and benefits access enabled by our products, drives happier employees, lower turnover, improved quality of service, and enhanced operational efficiency.”
Toast is the second major restaurant technology company to file for an IPO this year. Olo, a first-party platform that assists with online ordering capabilities, filed in February. The company officially went public in mid-March after raising $450 million at a valuation of $3.6 billion.