Home Restaurant industry Success of Toast’s public offering underscores resilience of the restaurant industry

Success of Toast’s public offering underscores resilience of the restaurant industry

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For the restaurant industry, the hope is that last week’s news on Wall Street is a harbinger of things to come for the industry as a whole. Toast the shares climbed 56% when they debuted on the New York Stock Exchange late last month after the restaurant technology provider valued its IPO above its expected range.

The business, whose products are used in more than 48,000 restaurants, raised about $ 870 million during its IPO, selling shares at $ 40 each. Toast had previously said he expected a public offering price of $ 34 to $ 36, after an initial range of $ 30 to $ 33. The stock closed at $ 62.51, bringing Toast’s market cap to over $ 31 billion. The three co-founders – Steve Fredette, Aman Narang and Jonathan Grimm are now billionaires and remain the top executives of the company,

The original idea for Toast came from all the hours Fredette, Narang, and Grimm spent hanging out in Boston’s bars, cafes and restaurants trying to figure out what to build. After experiencing a particularly long wait time for the check one day, they thought they had found a problem that could be solved by paying for the check from their smartphone – if only the technology existed.

They developed an app and launched it in 2012 with Firebrand Saints, a bar they frequented in Cambridge. The app gave customers a way to create a restaurant tab and link a credit card. “We often went there after work to buy a burger and a beer,” said Fredette. As they slowly grew in the area, they signed on to Dwelltime, a cafe in Cambridge. This is where Bennett was able to demonstrate the product. The transaction took place and the rest is now history.

Toast’s IPO comes amid a business resurgence for a company that was devastated at the start of the Covid-19 pandemic, when restaurants were forced to close and cities across the country closed. In April 2020, Toast cut its workforce by half, and CEO Chris Comparato wrote in a blog post that the previous month, “due to necessary social distancing and government-imposed closures, restaurant sales have decreased by 80% in most cities ”.

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Sales rebounded quickly as restaurants turned to take-out and contactless orders and eventually opened up to out-door dining. Toast initially provided a one-month software fee credit to its customers and provided free access to its technology that enabled takeout, online ordering, and gift card purchases. In the third quarter, revenues were on the rise again and were even higher than a year earlier, before the pandemic.

Toast Platform

For 2020 as a whole, revenue increased 24% to $ 823.1 million. In the second quarter of this year, revenue nearly tripled to $ 424.7 million. More than 80% of that comes from what the company calls FinTech solutions consisting primarily of fees paid by customers for payment transactions. The rest comes from a combination of hardware, subscription services, and professional services.

Because it depends so much on revenue processing fees, most of it goes back to card networks and other payment processors. Toast’s gross margin, or the revenue remaining after taking into account cost of goods sold, was 21% in the second quarter, well below that of a typical software company. With increased selling and marketing costs as well as research and development expenses, Toast’s net loss reached $ 135.5 million in the second quarter, from $ 53.7 million a year earlier.

Founded in 2012 in Cambridge, Massachusetts, Toast began developing payment technology for restaurants and eventually developed a complete point of sale system. Before the pandemic, Toast thrived on helping restaurants combine their payment systems with things like inventory management and multi-location controls for restaurants with more than one location. Investors valued the company at $ 5 billion in February 2020. After the pandemic rebounded, the company proceeded with a secondary stock sale in November, allowing employees and former employees to sell part of their stock. acquired at a price that valued the company at $ 8. billion.

“When we look at the delta variant and Covid in general, we think the industry has been put to the test with the Covid pandemic,” Comparato said. “While the Delta may slow things down, this industry is recovering and we couldn’t be more excited to lead the charge as the industry recovers and restaurants start to thrive again.”


About Toast: Launched in 2013, Toast democratizes technology for restaurants of all sizes. Designed exclusively for restaurants and driven by a passion to drive their success, Toast connects employees, operations and customers on an easy-to-use platform so restaurateurs can stay ahead of the market. rapidly changing hotel industry. Tens of thousands of restaurants are partnering with Toast to increase revenue, streamline operations, retain employees and build enthusiastic fans. Toast was named among Fortune’s Best Tech Workplaces 2020, Forbes Fintech 50 2020, Forbes Cloud 100 2020, Ernst & Young’s Entrepreneur Of The Year® 2020 Listing – National Overall Winner, and the SXSW Interactive Innovation Final 2019. Learn more about www.toasttab.com.


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