Success of Toast Public Offering Underscores Resiliency of Restaurant Industry

Toast public offering
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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 entire sector.

Toast shares soared 56% in their New York Stock Exchange debut late last month after the provider of technology to restaurants priced its IPO above its expected range.

Update: New Toast Products Announced: Quicker Sales, More Takeout and Delivery Profits, Employee Retention

The company, whose products are used at more than 48,000 restaurant locations, raised about $870 million in its IPO, selling shares at $40 each. Toast previously said it expected to price the public offering at $34 to $36, following an initial range of $30 to $33.

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  • Inline Plastics Safe-T-Chef
  • Imperial Dade
  • Simplot Frozen Avocado
  • BelGioioso Burrata
  • Texas Pete
  • Atosa USA
  • RAK Porcelain
  • T&S Brass Eversteel Pre-Rinse Units
  • RATIONAL USA
  • Day & Nite
  • AyrKing Mixstir
  • Red Gold Sacramento
  • DAVO Sales Tax

The stock closed at $62.51, boosting Toast’s market cap to over $31 billion. The three co-founders — Steve Fredette, Aman Narang and Jonathan Grimm are now billionaires, and remain top executives at the company,

The original idea for Toast came from all the hours Fredette, Narang and Grimm spent hanging out in Boston 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’d found a problem that could be fixed by paying 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 start a tab at the restaurant and link a credit card.

“We used to go there a lot after work to get a burger and a beer,” Fredette said. As they slowly expanded in the region, they signed up Dwelltime, a cafe in Cambridge. That’s where Bennett got to demo the product. The transaction went through and the rest is now history.

Toast’s IPO comes amid a business resurgence for a company that was devastated in the early days of the Covid-19 pandemic, when restaurants were forced to close their doors and cities across the country shut down.

In April 2020, Toast slashed half its workforce, and CEO Chris Comparato wrote in a blog post that the prior month, “as a result of necessary social distancing and government-mandated closures, restaurant sales declined by 80 percent in most cities.”

Sales rebounded rapidly as eateries shifted to takeout and contactless ordering and eventually opened up to outside dining.

Toast initially gave a one-month credit of software fees to its customers and provided free access to its technology that enabled takeout, online ordering and gift card purchases.

By the third quarter, revenue was back on the upswing and was even higher than a year earlier, before the pandemic.

Toast Platform
Toast Platform

For all of 2020, revenue rose 24% to $823.1 million. In the second quarter of this year, revenue almost tripled to $424.7 million.

More than 80% of that is from what the company calls financial technology 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’s so reliant on processing fees for revenue, most of that gets paid back to card networks and other payment processors.

Toast’s gross margin, or the revenue left after accounting for the cost of goods sold, was 21% in the second quarter, much lower than for a typical software company.

With sales and marketing costs rising along with research and development expenses, Toast’s net loss swelled to $135.5 million in the second quarter from $53.7 million a year earlier.

Founded in 2012 in Cambridge, Massachusetts, Toast started building payment technology for restaurants and eventually developed a full point-of-sale system.

Before pandemic, Toast was thriving by helping restaurants combine their payment systems with things like inventory management and multilocation controls for eateries with more than one site.

Investors valued the company at $5 billion in February 2020.

After the rebound from the pandemic, the company held a secondary share sale in November, allowing employees and ex-employees to sell some of their vested stock at a price that valued the company at $8 billion.

“When we look at the delta variant and Covid in general, we feel the industry has been battle tested with the Covid pandemic,” Comparato said.

“While delta may dampen things, this industry is in recovery and we couldn’t be more excited to lead the charge ahead as the industry recovers and restaurants start to thrive again.”


Toast [NYSE: TOST] is the all-in-one platform built for restaurants of all sizes.

Toast provides a single platform of software as a service (SaaS) products and financial technology solutions that give restaurants everything they need to run their business across point of sale, operations, digital ordering and delivery, marketing and loyalty, and team management.

By serving as the restaurant operating system across dine-in, takeout, and delivery channels, Toast helps restaurants streamline operations, increase revenue and deliver amazing guest experiences.

Toast proudly serves 48,000 restaurant locations in the United States and counting. For more information, visit Toast | Restaurant Point of Sale & Management Systems.

  • BelGioioso Burrata
  • Imperial Dade
  • Red Gold Sacramento
  • DAVO Sales Tax
  • T&S Brass Eversteel Pre-Rinse Units
  • RATIONAL USA
  • AyrKing Mixstir
  • Day & Nite
  • McKee Foodservice
  • Atosa USA
  • RAK Porcelain
  • Inline Plastics Safe-T-Chef
  • Simplot Frozen Avocado
  • Texas Pete

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