Toast Stock

Toast, Inc. (Toast) operates a cloud-based digital technology platform purpose-built for the restaurant community.

The company provides a comprehensive platform of software-as-a-service, or SaaS, products and financial technology solutions, including integrated payment processing, restaurant-grade hardware, and a broad ecosystem of third-party partners. The company serves as the restaurant operating system, connecting front of house and back of house operations across service models, including dine-in, takeout, delivery, catering, and retail.

Products and Platform

Toast's all-in-one platform powers the entire restaurant community. The company's portfolio spans several product categories: restaurant operations and point of sale, digital ordering and delivery, marketing and loyalty, team management, supply chain and accounting, financial technology solutions, and platform and insights. Alongside this platform, the company's commitment to customer success drives a differentiated customer experience, powers operational innovation, and enables its and its customers' long-term growth and success.

As restaurants adopt more of its platform, the company's solutions work better together to help drive even more success for them. For example, as restaurants adopt its digital ordering solutions such as Order & Pay and Online Ordering, they can use data they collect through these solutions to fuel their Toast marketing and loyalty programs, increasing the likelihood of return visits, and even driving more guests to the restaurant's online ordering channel with Toast, which, in turn, helps restaurants save on third-party commissions, ultimately driving incremental margin for the restaurant.

Restaurant Operations and Point of Sale

Software: The company's Android-based software has been custom built for the restaurant industry and is the foundation that powers its single platform of vertically integrated solutions. The company's proprietary software enables seamless connectivity across restaurant operations, guests, and employees, and drives a differentiated dining experience.

Toast POS: The company's core software module integrates payment processing with point of sale functionality tailored for the needs of restaurants of all types and sizes. The company's products help drive reduced time to take an order, optimize operations, and seamlessly handle payments. Toast POS is easy to use, leverages consumer technology, allows restaurant employees to quickly get up to speed on the software and seamlessly use it throughout their day. The company provides solutions designed to give restaurants the option to take orders at the counter or at the table, leveraging software feature sets that support speed and help meet hospitality needs. Additionally, through an integrated payment solution, the company is able to offer key payments features from the POS. The company's integrated solution helps to increase speed of checkout with a suite of products built for restaurant needs.

Toast Now: The company's proprietary mobile application is designed to allow restaurant owners and operators to manage their restaurants, get real-time reporting, and communicate with staff on their mobile devices. It allows owners and operators to view sales data across multiple locations, view which employees are working, manage employee breaks, and view menu items that have sold out. For example, if a kitchen is busy with in-restaurant dining, an operator can turn off first- and third-party digital ordering to support a manageable flow of orders to the kitchen.

Multi-Location Management: The company's Multi-Location Management tool allows its customers to manage their operations and easily configure menus across multiple locations and channels, including online ordering and delivery. Using the tool, customers can set standard menus and prices across their brand and locations, and can also set location-specific menus and prices. Multi-Location Management also allows customers to view their centralized data across all their locations for a single, clear view of business performance.

Kitchen Display System: The company's proprietary Kitchen Display System software seamlessly connects the front of the house with the kitchen staff. The company's software fully integrates all ordering stations with the kitchen, automates cooking order by required preparation time, and instantaneously notifies servers when orders are ready. Additionally, the Kitchen Display System software provides kitchen tickets, mobile alerts, and guest text messaging to help keep restaurant staff organized for service. For example, when a dish is ready, kitchen staff can alert the server right on their Toast Go or send a text message directly to a guest for a pick-up order.

Toast Mobile Order and Pay: The company's order and pay solutions allow guests to scan a QR code to browse the menu, order, and pay, all from their mobile devices. This allows restaurants to have additional flexibility in staffing while still providing a great restaurant experience, and is designed to help drive sales, capture guest insights, and reduce table turn times.

Toast Catering and Events: The company's catering and events software integrates with the POS to allow restaurants to manage catering orders and streamline event planning. It allows restaurants to accept online inquiries and orders, keep track of event details, and automatically send catering orders to the kitchen at the appropriate time. It also uses the company's invoicing solution to support guest billing and payment, including the ability to accept deposits ahead of time.

Toast Invoicing: The company's invoicing product allows restaurants to easily create and send digital invoices to guests and collect payment, streamlining operations and simplifying transactions for all types of orders and events.

Toast Tables: The company's reservation and waitlist management product simplifies guest seating and table management. It integrates directly with the POS and the broader Toast platform to provide hosts with the information they need to understand and meet guests' needs, such as real-time table status updates and personalized guest profiles.

Restaurant Retail: The company's retail offering enables restaurants to seamlessly manage their retail inventory (e.g., coffee beans, wine bottles, t-shirts) alongside their food service, directly in one unified POS. For example, restaurants can add new retail items by scanning the barcode, track and update inventory levels from their devices, and manage retail sales across online and in-store channels.

Hardware: The company's restaurant-grade hardware is custom built to withstand the rigors of a restaurant, combining durability and flexibility needed for the restaurant environment, with aesthetically pleasing designs and in-store branding, serving as the tool that helps deliver its end-to-end solutions.

Toast Flex: The company's proprietary hardware, Toast Flex, can be used for on-counter order and pay, but can also be used as a server station, guest kiosk, kitchen display system, or order fulfillment station, allowing the restaurant to flex its hardware to fit their specific needs. Toast Flex comes in different formats and sizes optimized for specific use cases and built to stand the real-world environment in a restaurant.

Toast Flex for Guest: The company's 8-inch guest-facing display is designed to help keep lines moving while improving order accuracy and allowing more transparency. Guests can view and track their orders by price and item and view their bills in real-time.

Toast Go 2: The company's fully-integrated, handheld POS device enhances the guest experience and improves table turn times through tableside ordering and payment acceptance. Toast Go 2 enables real-time menu updates, accelerated service, easy and accurate ordering, contactless payments, and with optimal system settings and usage can have an up to 24-hour battery life built to keep up with restaurants' needs.

Toast Tap: The company's proprietary card reader supports the acceptance of EMV-contactless payments for payment methods using Near Field Communication, or NFC, technology, EMV-dip payments for payment cards with an integrated chip, and magnetic stripe payments, creating a frictionless experience for its guests.

Kiosk: The company's proprietary and fully-integrated self ordering Kiosk puts guests in control of their dining experience, while freeing up staff to handle other tasks. The company's self-ordering kiosks come in a variety of sizes with stand options, customizable start screens, and other guest features designed to meet the needs of restaurants.

Delphi by Toast: In 2023, the company acquired Delphi Display Systems, Inc., or Delphi. Delphi provides indoor and outdoor digital menu boards that allows restaurants to dynamically adjust menu items and drive thru technology that is designed to increase order sizes and improve speed of service.

Digital Ordering and Delivery

The company provides software solutions that allow customers to take control of and consolidate digital ordering and delivery across Toast-provided solutions and third-party ordering channels:

Toast Online Ordering and Toast TakeOut: The company's commission-free, first-party online ordering product and consumer Toast TakeOut application simplify the digital ordering experience for guests, increases order accuracy, and allows restaurants to reduce reliance on third parties for driving online orders. By providing restaurants with a software-based platform to take off-premise orders directly, the company's products help reduce phone orders, minimize double entry and other costly errors, and optimize the balance between dine-in and takeout.

First-Party Delivery, Toast Delivery Services: Toast enables restaurants to offer delivery services in a variety of ways that can be tailored to their needs and operations. If a restaurant has its own delivery drivers, it can use Toast's first-party delivery solutions to manage deliveries, dispatch drivers, and customize delivery hours, zones, fees, and minimum ticket sizes.

Third-Party Delivery Integrations and Orders Hub: Through Toast Delivery Partners, the company provides POS integrations for restaurants using third-party delivery services to streamline order intake, eliminate the need for extra third-party tablets, and sync menus in real-time.

Marketing and Loyalty

Loyalty: Toast has designed a suite of guest-focused products that are intended to enhance a restaurant's cash flow by driving further engagement with their guests. The company's credit-card linked loyalty program automatically accrues points each time the guest pays using their card and special offers can be customized by the restaurant to help drive repeat visits and increased spend over time.

Email Marketing: The company's data driven insights allow restaurants to easily create and send pre-built email campaigns based on guest interactions across its product suite, such as visit frequency and spending patterns.

Toast Gift Cards: Toast allows customers to sell physical and electronic gift cards, designed to help customers increase sales and guest retention. Guests can redeem gift cards in store and online through Toast Online Ordering and Toast TakeOut.

Team Management

Payroll and Team Management: Employee satisfaction is an important element of a restaurant's success. The company has created a centralized hub that streamlines the entire employee onboarding, management, and payroll process. Integrated POS and payroll create a single employee record across systems, allowing for hours, tips, and employee data to synchronize seamlessly - helping managers save time and improving the employee experience.

Sling by Toast: Sling by Toast provides streamlined scheduling and team communication. Through in-app messaging and multi-location team management, Sling by Toast helps restaurants staff more efficiently, better manage labor costs, and increase employee job satisfaction.

Toast Pay Card and PayOut1: Toast Pay Card and PayOut allows customers to offer eligible employees instant access to a portion of their tips and wages as soon as after their shift.

Tips Manager: The company's Tips Manager product automates tip pooling calculations and sends pooled tips to employee paychecks within Toast Payroll and Team Management.

Partner-Enabled Products (Insurance and Benefits): Through uts partners, Toast offers workers' compensation insurance, business owners' policy insurance, integrated 401k, and restaurant-specific add-ons, such as liquor liability insurance, which simplifies the procurement process for restaurants and provides much-requested benefits to their teams.

Supply Chain and Accounting

xtraCHEF by Toast: xtraCHEF provides a suite of back-office tools for restaurants, including accounts payable automation, inventory management, ingredient price tracking, and recipe costing. xtraCHEF provides operators with insights designed to help them take control of changing inventory costs, automate accounts payable, and streamline back-office tasks to proactively manage margins and increase overall profitability.

Financial Technology Solutions

Payment Processing: Toast provides a fully-integrated platform that enables the company's customers to securely accept and process payments, while also providing valuable data-driven insights and driving its guest engagement programs. The company maintains competitive and clear pricing, its systems are in compliance with PCI Security Council standards, and its hardware supports EMV and NFC payment technology.

Toast Capital: Toast Capital offers eligible restaurants access to fast and flexible funding via loans issued by its bank partner and repaid along with fees generally through a daily holdback of payment card receipts. The company is uniquely positioned to provide its restaurants with access to capital using patented systems for loan origination that incorporate data science models, historical POS data, and payment processing volume. Toast Capital provides applicants with a straightforward process that can deliver funds as soon as the next business day after signing a credit agreement, allowing restaurateurs to focus on running and growing their businesses.

Purchase Plans: The company also offers a number of ways for customers to reduce the upfront cost of its products, often one of the largest barriers to switching to or purchasing a new POS system. Depending on customer type and eligibility, the company's programs include access to 0% interest financing and Toast Easy Pay for investments made in Toast products. Toast Easy Pay is a 180-day lease that allows customers to make daily payments for hardware, onboarding and implementation, shipping and handling, and taxes through a percentage of sales.

Platform and Insights

Reporting and Analytics: The company's differentiated software and financial technology ecosystem underpins its data collection and analytics capabilities, providing insights and reporting on real-time sales, menu, and labor data, and allowing its customers to analyze their results and improve performance over time. The company's cloud-based reporting products enable access to performance data regardless of physical location, and its automatic nightly email sends key business metrics directly to its customers, sharing the critical daily insights they need to successfully operate their business. The company estimates that on any given day, approximately two-thirds of Toast locations engage with reporting in their restaurant dashboard.

Toast Shop: Toast Shop is an e-commerce website available to Toast's pre-existing customers that allows customers to easily purchase additional hardware or software offerings from Toast.

Toast Partner Connect and APIs: Toast's partner ecosystem allows the company's customers to customize their technology stack to meet their business needs, choosing from a curated portfolio of over 200 technology partners that deliver a broad spectrum of specialized solutions. Toast Partner Connect is a portal within Toast that allows customers to discover, select, and seamlessly connect their restaurant to the company's technology partners. The company's suite of bi-directional application programming interfaces, or APIs, allows its technology partners to connect to its workflows and data, and also allows its customers to connect custom applications and software to its ecosystem.

Technology

The company empowers its customers to take control of their operations by utilizing its proprietary technology that spans across its products. Each of its products is built on Toast's shared platform infrastructure and services. This platform layer provides common capabilities and reusable components, allowing a streamlined, integrated customer experience to be built efficiently by its independent teams.

The company's digital technology platform includes:

Software, cloud-based services, and partner ecosystem

Reliable Cloud Services: The company's highly scalable, services-based, multi-tenant architecture runs on Amazon Web Services.

Offline POS capabilities: In the event of an internet or network disruption, Toast's offline POS capabilities provide essential continuity of operations. This capability allows customers to continue to place orders, print tickets and receipts, and take credit card payments. Many customers can also send orders to Kitchen Display Systems in offline mode. In offline mode, all credit card information is securely encrypted and stored on the Toast device until it regains connection.

Partner APIs: Toast has curated a portfolio of over 200 restaurant technology partners that utilize Toast APIs to deliver a broad range of specialized solutions.

Payments

Toast provides fast and secure, integrated payment processing through its POS devices, standalone contactless reader, or Toast Tap, and online ordering applications.

Security and Compliance: Toast is a PCI-DSS compliant Level 1 Service Provider. All of the company's card processing products and services are assessed annually by an independent security organization that has been qualified by the PCI Security Standards Council to validate an entity's adherence to PCI-DSS.

Reliability: The company leverages its extensive on-the-ground experience to provide a reliable payments experience that is resilient to issues with restaurants' networks or internet service providers, as well as Toast's own cloud platform.

Flexible Omni-Channel Capabilities: Toast provides in-store, digital, and partner payment capabilities. In-store payments through the Toast integrated card reader and Toast Tap support card dipping, tapping, and swiping, as well as Apple Pay, Google Pay, and Samsung Pay, with fraud detection capabilities to minimize transaction risks. Using Toast-provided payments across channels simplifies the company's customers' experience, providing them with a single daily deposit of funds and consolidated reporting for easier accounting.

Hardware

User-Friendly, Durable, and Designed To Last: The company's custom-designed hardware is pre-configured to enable self-installation with limited support and is created to be spill- and drop-proof with a long battery life to withstand the rigors of the restaurant environment.

Device Management: The company's hardware utilizes the open-source Android mobile operating system which enables it to freely distribute the operating system to the Toast terminal and handheld devices. Proprietary management tools allow Toast to safely and efficiently upgrade POS software and device firmware as well as to monitor the health of devices across the fleet.

Growth Strategy

The company's strategy is to continue to invest in areas that align with its customers' needs. The company expects that both it and its customers will continue to realize the value of its platform as it scales, makes enhancements to its technology, offers more products and services, and helps restaurants increase revenue while saving time and money. Toast both drives and benefits from the success of its customers-when restaurants grow, Toast grows through higher payments volume and increased adoption of the company's full platform.

The key elements of the company's strategy are to estimate that its current locations account for just above 10% of restaurant locations in the United States; increase adoption of its products; invest in and expand its product platform; further develop its partner ecosystem; selectively pursue inorganic growth; and expand internationally.

Sales and Marketing

The company's sales and marketing motion is designed from the ground up to integrate into this dynamic by combining a high-volume marketing engine with a localized and consultative sales force.

The company starts with in-market sales teams that are deeply familiar with, and trusted by, the local community. This deep knowledge of the local food and beverage scene provides the company with a competitive advantage. The company's sales team is organized by three main functional areas: an acquisition team that focuses on new location growth and organized by restaurant size (i.e., number of locations per customer), an upsell team that focuses on expansion into the install base, and a growth team focused on sales enablement and operations.

To generate and capture demand the company invests heavily in the primary discovery channels for restaurant operators. The company combines its demand generation efforts with pricing and packaging that is designed to increase platform adoption and simplify the buying process for restaurants. This approach provides multiple entry points into the Toast platform ranging from a single terminal point of sale to a multi-product setup for a complex restaurant.

As Toast continues to grow, so does the importance of brand recognition and its investments into strengthening it. This brand recognition will help continue to drive growth in the restaurant community and increase referrals.

Intellectual Property

As of December 31, 2023, the company had 62 U.S. patent applications allowed/granted, and in addition it has 6 U.S. patent applications pending. The company's issued patents are estimated to expire between 2034 and 2042. Such expiration dates may vary based on a variety of factors, including benefit claims, term adjustments, and/or extensions as well as the timely payment of maintenance fees.

The company has common law rights in some trademarks and numerous pending trademark applications in U.S. jurisdictions. In addition, the company has registered domain names for websites that it uses in its business, such as www.toasttab.com and other variations.

Seasonality

The company experiences seasonality in its financial technology solutions revenue, which is largely driven by the level of Gross Payment Volume, or GPV, processed through its platform. The company's financial technology solutions revenue per Toast Processing Location has historically been stronger in the second and third quarters (year ended December 31, 2023).

Government Regulation

Certain of the company's payment technology solutions are or may become subject to anti-money laundering laws and regulations under the Bank Secrecy Act of 1970, as amended by the USA PATRIOT Act of 2001, or the BSA. The BSA requires certain financial institutions, including banks and money services business, or MSBs (such as money transmitters), to register with the Treasury Department's Financial Crimes Enforcement Network, or FinCEN, as MSBs and to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, and maintain transaction records, among other things.

The company's subsidiary, Toast Processing Services LLC, or TPS, is registered as an MSB with FinCEN in its capacity as a money transmitter. As an MSB, the company is required to maintain a written anti-money laundering program, or AML Program, that meets the standards set forth in the FinCEN regulations implementing the BSA. In addition, the company's AML Program is designed to address and comply with the Money Laundering Control Act and other U.S. laws and regulations regarding anti-money laundering and countering the financing of terrorism, which it refers to as AML/CFT, and to control for the AML/CFT risks inherent to its business. The AML Program is also designed to prevent the company's platform from being used to facilitate business with certain individuals, entities, countries, and territories that are targets of economic or trade sanctions, including those imposed by the Treasury Department's Office of Foreign Assets Control.

The company's subsidiary, Toast Insurance Services, Inc., has obtained certain insurance related licenses from a majority of the 50 states plus Washington, D.C. As a result, the company is subject to a variety of, and may in the future become subject to additional or newly enacted, state insurance laws and regulations in various jurisdictions.

The company relies on its relationships with financial institutions and third-party payment processors to access the payment card networks, such as Visa and Mastercard, which enable its acceptance of credit cards and debit cards, and its ability to explore and offer certain other products. The company pays fees to such financial institutions and third-party payment processors for such services. The company is required by these third-party payment processors to register with Visa, Mastercard, and other card networks and to comply with the rules and the requirements of these card networks' self-regulatory organizations. The payment networks and their member financial institutions routinely update, generally expand, and modify requirements applicable to the company's customers, including rules regulating data integrity, third-party relationships, merchant chargeback standards and compliance with the Payment Card Industry Data Security Standard, or PCI DSS. PCI DSS is a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect cardholder data.

The company is also subject to the operating rules of the National Automated Clearing House Association, or NACHA. NACHA is a self-regulatory organization which administers and facilitates private-sector operating rules for ACH payments and defines the roles and responsibilities of financial institutions and other ACH network participants. The NACHA Rules and Operating Guidelines impose obligations on the company and its partner financial institutions, such as audit and oversight by the financial institutions and the imposition of mandatory corrective action, including termination, for serious violations.

In addition, under these laws and regulations, including the federal Gramm-Leach-Bliley Act, or GLBA, and Regulation P promulgated thereunder, the company must disclose its privacy policy and practices, including those policies relating to the sharing of nonpublic personal information with third parties. The GLBA may restrict the purposes for which the company may use personal information obtained from consumers and third parties. The company may also be required to provide an opt-out from certain sharing.

Together with its bank partner, the company offers a payroll card, which allows the restaurant's employees to receive wages, tips, and other compensation from their employers. These debit cards are subject to federal and state financial services laws, as well as the payment card network rules and NACHA rules. The Durbin Amendment to the Dodd-Frank Act and its implementing regulation, Regulation II, limit the amount of interchange revenue that the bank partner may receive, and share with the company, on transactions made using these cards.

Since the California Consumer Privacy Act, or the CCPA, took effect on January 1, 2020, the company's California business operations have been directly impacted in addition to an indirect impact on its operations nationwide. Subsequently, on January 1, 2023, the California Privacy Rights Act of 2020, an amendment to the CCPA, took effect along with the Virginia Consumer Data Protection Act, or the VCDPA. Additional US state-specific consumer privacy laws, such as those in Colorado, Connecticut and Utah, have become effective since 2023 and more such laws will come into effect in 2024 and after. While personal information that the company processes that is subject to the GLBA is exempt from the CCPA and many of these other state laws, the CCPA and these additional state laws will regulate other personal information that it collect and process and impose new consumer rights and limitations around personal information. Legislators and regulators at the state and federal level are continuing to propose new requirements that may, if passed, deviate from or exceed the requirements of the laws and regulations that already apply to its business.

Additionally, as the company grows its business internationally, international privacy legislation, such as the European Union General Data Protection Regulation, or the GDPR, the United Kingdom GDPR (and other local legislation) and Canada's Personal Information Protection and Electronic Documents Act along with provincial legislation will similarly impact its operations.

History

Toast, Inc. was founded in 2011. The company was incorporated under the laws of Delaware in 2011.