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Toast eyes the throne
Inside Toast’s push to unseat the POS giants
Hey!
In December 2015, Bessemer Venture Partners wrote a $17.5 million check to a “company selling restaurant point of sale software”. The company was going after the incumbents, Micros and NCR, each controlling “roughly 25% market share”. At the time, the funding round valued it at $122 million.
That company was Toast $TOST ( ▲ 2.01% ) . A decade later, Toast is a public company with a market cap of over $20 billion, but…the same incumbents still dominate the market. Toast is expanding internationally and pursuing new customer segments, and I believe, finally, it has the muscle to dethrone these incumbents.
Toast is not a startup, and its stock is far from cheap, but the growth opportunity in front of it is still massive. Let’s dig in!
Jevgenijs
p.s. if you have feedback, just reply to this email or ping me on X/Twitter
In December 2015, Kent Bennett and Eric Ahlgren wrote an investment memo recommending that Bessemer Venture Partners invest $17.5 million in a “company selling restaurant point of sale (POS) software”. The investment would give BVP a 14.3% ownership, implying a $122 million valuation of the company.
They argued that “the POS market [ was ] extremely fragmented, with two large incumbents, Micros and NCR, each accounting for roughly 25% market share.” Nevertheless, the company was “consistently [ winning ] based on the quality of product and reasonable pricing.”
As you might have guessed, that company was Toast $TOST ( ▲ 2.01% ) . In September 2021, Toast went public and, as of this writing, its market capitalization is around $20.8 billion.
Toast started with POS software, but over time has expanded its software offering. Today, it offers software solutions for nearly every aspect of restaurant operations, including payroll and HR, marketing, and kitchen management.

Image source: Toast Investor Day 2024
“Toast is a cloud-based, all-in-one digital technology platform purpose-built for the entire restaurant community. Toast provides a single platform of software as a service, or 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.”
The number of restaurant locations that the company serves increased fivefold over the last 5 years, and Toast finished 2024 serving 134,000 restaurant locations.

Toast charges its customers a software subscription fee and finished 2024 with $832 million in annual recurring revenue (ARR). In 2024, the company generated $706 million in subscription revenue, earning a gross profit margin of approximately 70%.

However, they also “attach” payment processing (and lately, lending) to their software offering. Thus, in 2024, Toast processed $159 billion in payments, generating $4.1 billion in revenue and earning a 22% gross profit margin.

“Some of our competitors offer specific point solutions without the requirement to use related payment processing services. While we believe that our integrated software and payments platform offers significant advantages over such point solutions, customers who have specific needs, and customers who do not want to change from an existing payment processing relationship, may believe that products and services offered by competitors better address their needs.”