Toast (NYSE: TOST) manages a cloud based, digital platform for enabling all aspects of the restaurant business. Its services include ERP, supply chain, HR, marketing, online capabilities, and payments technology solutions for point-of-sale (PoS) transactions which generated 31% of TOAST’s total revenue ( $1.2 billion in ARR) while expanding over 40% last year. One time revenue sources include PoS hardware, such as their proprietary handheld device, and professional services. As the numbers above imply, TOAST enjoys economies of scale from enabling 106,000 restaurant locations, up 34% Y/Y out of a domestic TAM of 860,000 which reflects only 12.5% penetration. The international opportunity is much larger. Other metrics include a remarkable 43% penetration rate of the existing client base with at least six elective products, and processing $126 billion in payment volume.
TOAST is an example of how an all-ecosystem inclusive approach can use data, technology, and the internet to serve a slow-moving industry. The same can produce valuable business and commercial insights such as what types of cuisine are most popular, what hours of the day patrons like to visit most frequently, or whether in-person or online ordering is seeing the most activity. This helps make product and marketing decisions more accurate and timelier. The company’s one-stop-shop, cloud-based tools vastly improve an owner’s operational efficiency compared to the fragmented, piecemeal solutions currently available. The company’s unique offering is resonating with the restaurant vertical in the form of new customer wins and strong top line performance. If those trends continue, improved profitability may not be far behind.
