Popular restaurant management software startup Toast has finally filed for its initial public offering, listing Goldman Sachs, Morgan Stanley and J.P. Morgan as underwriters.
Rumors of this much-anticipated public debut have been swirling since earlier this year, when the Wall Street Journal reported that the company was in talks with potential underwriters. At the time, the publication said the deal could be valued at upwards of $20 billion, citing individuals familiar with the matter.
Of course, this latest news is coming on the heels of DoorDash’s market debut in December, which valued the food delivery giant at more than $71 billion, as reported by Reuters. Other big recent moves in the industry include the $7.3 billion purchase of Grubhub by Dutch food delivery company Just Eat Takeaway.com, and Uber’s acquisition of Boston-based alcohol delivery startup Drizly for $1.1 billion.
Launched in 2013, Toast has become a key player in restaurant management, allowing users to handle everything from front-of-house operations to online ordering. Last month, the company was ranked among the world’s top private cloud companies according to Forbes, coming in at No. 5.
As of June 30, the platform has been used by nearly 48,000 restaurants, processing a whopping $38 billion in gross payments over the previous 12 months, according to a recent filing with the U.S. Securities and Exchange Commission. In June, it averaged 5.5 million guest orders daily.
Like many other tech startups in the food industry, Toast has been in especially high demand amid the pandemic. But this wasn’t always the case. The company was last valued at nearly $5 billion in February of 2020 — just one month before mass restaurant closures, which prompted the startup to lay off about 50 percent of its staff. It has since had a big recovery, with net revenue rising 105 percent year over year to more than $700 million during the six months ending on June 30. The company is valued at about $8 billion, according to a CNBC report in November.
Now, while it sees itself as a leading platform in the restaurant industry, Toast says this is just the beginning. In its prospectus, the company laid out that the platform serves just 6 percent of the country’s 860,000 existing restaurants. And its annualized recurring run-rate (ARR) as of June 30 was only about 3 percent of its near-term serviceable market opportunity of $15 billion.
“We believe we are in the early stages of capturing our addressable market opportunity,” co-founders Jonathan Grimm, Steve Fredette and Aman Narang said in the prospectus. “We see a significant opportunity to increase sales to both new and existing customers, further expand the usage of our platform outside the United States, and address the diverse needs of new and existing restaurant industry stakeholders.”
In the meantime, Toast is planning to raise $100 million, a placeholder amount that is likely to change, according to the SEC filing. It is also in the midst of a massive hiring push, with more than 250 open tech positions available now. The company says it employs 2,200 “Toasters,” about 700 of which are based at its Boston headquarters.
