Investment Thesis for TOST

Toast: The Restaurant Operating System

Toast, Inc. operates a cloud-based and digital technology platform for the restaurant industry in the United States and Ireland. The company offers Toast Point of Sale (POS), a hardware product; Toast Order & Pay, which allows guests to order and pay from their mobile devices; Toast Flex that is used for on-counter order and pay, as well as used as a server station, guest kiosk, kitchen display system, or order fulfillment station; Toast Go, a handheld POS device that enhances the table turn times through tableside ordering and payment acceptance; and Toast Tap, a card reader. It also provides kitchen display system software that connects the front of the house with the kitchen staff; multi-location management software, which allows customers to manage and standardize their operations and configure menus; xtraCHEF that provides back-office tools; and Toast Flex for Kitchen, a larger format mountable piece of hardware that can be used as a kitchen screen. In addition, the company offers Toast Online Ordering & Toast TakeOut app, a software-based platform that provides restaurants to take off-premises orders directly through their branded website; First-Party Delivery services for restaurants to manage a fleet of drivers, and customize delivery hours, zones, fees, and minimum ticket sizes; Toast Delivery Services, which enables restaurants to utilize a partner network of delivery drivers; and Toast Delivery Partners services. Further, it provides loyalty programs and gift cards; payroll and team management products; business owner policy insurance and restaurant-specific add-ons; payment processing solutions; loans advanced to restaurants; purchase financing; reporting and analytics solutions; Toast Partner Connect that allows customers to discover, select, and connect their restaurant to its partners; and bi-directional APIs. The company was incorporated in 2011 and is headquartered in Boston, Massachusetts.

The Thesis

Toast is not just a Point-of-Sale (POS) provider; it is the Operating System for Restaurants. By combining SaaS (workflow) with Fintech (payments), Toast captures a slice of every burger and beer sold on its platform.

The thesis is driven by the Fintech-SaaS Flywheel:

Software (ordering, kitchen display) wins the merchant.
Payments monetize the volume.
Data enables capital (lending) and payroll products.

Product Deep Dive: Beyond the Register

Toast's "special sauce" is that it is purpose-built for the brutal environment of a commercial kitchen.

1. Toast Go (Hardware)

The Product: Handheld ordering devices that are spill-proof, heat-resistant, and drop-proof.
The Value: Servers take orders tableside, sending them instantly to the kitchen. This increases table turnover by 15-20%.

2. Kitchen Display System (KDS)

The Product: Digital screens in the kitchen that replace paper tickets.
The Value: Routes items to the correct station (grill vs. salad) and tracks cook times to ensure food comes out hot together.

3. Toast Tables & Order & Pay

The Product: QR code ordering and table management software.
The Value: Reduces reliance on labor (servers) during staffing shortages.

Toast: The Restaurant Operating System

The Thesis

Product Deep Dive: Beyond the Register

1. Toast Go (Hardware)

2. Kitchen Display System (KDS)

3. Toast Tables & Order & Pay

4. Toast Capital

The Business Model

The Problem: Low Margins?

Risks

Conclusion

TOST Valuation Model

INVESTMENT PRIMER

Toast: The Restaurant Operating System