- Restaurant management platform Toast has announced a $250 million round of funding led by TCV and Tiger Global Management, according to a company release. This investment comes on the heels of a $115 million round less than a year ago and brings Toast’s total valuation to $2.7 billion, according to VentureBeat.
- The company plans to use the funding for research and development to continue building software and hardware designed specifically for the restaurant industry, according to the release.
- Toast’s revenue increased by 148% last year. According to the company, the number of restaurants that selected Toast more than doubled throughout the past year.
Restaurant operators have historically been tasked with serving good (and safe) food and providing memorable service. Now that consumers are demanding convenience and personalization as well, these operators have been forced to step outside of their comfort zone and dive deep into technology. Toast’s $250 million vote of investor confidence underscores the significance of having the right point-of-sale system in place in a competitive restaurant environment.
Driving this confidence is the staggering speed at which technology is changing the industry, forging everything from delivery to mobile payments to loyalty. It’s hard to predict, for example, just how big delivery is actually going to get (some estimates have delivery reaching 40% of industry sales in the next few years) or whether or not the current third-party aggregate market will consolidate or change, so having a future-proofed POS that can integrate foreseeable technologies can make or break a brand.
For its part, Toast announced that it plans to use the funding to help solve some of the restaurant industry’s biggest challenges, including attracting and retaining guests, recruiting and retaining employees, improving operations and growing profitability. Toast’s Guest Feedback solution, for example, captures feedback in real-time, allowing operators to rectify situations immediately before losing a customer for good, or having that customer share negative feedback on social media.
Toast expects to go a step further this year by personalizing offers triggered by guest behavior. As the battle over traffic intensifies, such personalization has become a major differentiator for restaurant brands, especially as customers have grown fatigued by blanketed promotions that have no relevance to them. Chick-fil-A, Subway, Papa John’s, Starbucks and Chipotle are just a few restaurant brands taking a more personalized approach, for example.
Traffic is hardly the only challenge nipping at the restaurant industry. The labor market continues to pose a challenge with wage increases and low unemployment rates hindering recruitment and retention efforts. Toast is attempting to remedy turnover rates through new back-of-the-house simplification products and recruitment and hiring tools.
As president and co-founder Steve Fredette told Forbes, with such an abundance of challenges arising and evolving, Toast is focused on developing a comprehensive platform to handle these changes. Indeed, according to Grand View Research, the restaurant POS market is expected to reach nearly $25 billion by 2025, driven by the benefits these systems provide in a quickly-changing environment. The restaurant POS system helps operators improve inventory buying decisions, staff management, increase customer satisfaction with faster payment processing and more, the report states.
Automating and managing such a big — and growing — chunk of the business is a big deal for operators. So, while Toast’s investments are significant, the entire POS space looks attractive at this point, and further investments seem likely.