Investors Slather A $1.4 Billion Valuation On Restaurant Software Maker Toast

The Toast Go handheld device is one recent addition that's helped Toast score a $1.4 billion valuation from investors.


With a new funding round that values it at a $1.4 billion price tag, Boston startup Toast is close to popping up.

Toast, which makes management software for restaurants, announced on Tuesday it had raised $115 million in a funding round led by T. Rowe Price. The Series D round included Tiger Global and existing investors, Toast said. With the funding, six-year-old Toast joins the ranks of software's highest-valued startups with its valuation of $1.4 billion.

"We're trying to help the good old hospitality of having a restaurant be successful and be recommended by you," says CEO Chris Comparato. "But we're still in early innings of adoption."

Given the size of the restaurant market, it's easy to overlook the scale of an operation like Toast. The company has a strong market presence in 25 cities across the United States, Comparato says, working with a bunch of name-brand fast-casual brands such as Jamba Juice, Dos Toros Taqueria and B.Good burgers. Overall, Comparato says, Toast software is used in tens of thousands of restaurant locations. But in an $800 billion market that employs what Toast says is nearly 15 million people, that leaves the lion's share of companies still using paper or legacy tech.

Toast's big funding round will be spent on research and development and more hiring, according to Comparato. The company's headcount grew from around 600 employees last fall, when Toast was named to the Forbes Cloud 100 list of the top private cloud companies, to more than 1,000 as of July 2018.

Originally used to help manage staff, Toast has since looked to expand its use cases within restaurants. It launched a mobile point-of-sale device, Toast Go, in May that the company says has increased revenue and tips at at least one high-profile test user, Odd Duck in Austin, where server tips are now projected to rise $7,000 per server annually. Toast also developed display systems for letting customers know when food is ready.

Toast doesn't share its sales data, but the company says it has grown sales 150% in the past year, off a basis that is likely in the tens of millions of dollars at least. Toast also added about 30 partnerships to the 20 it had in place last year with companies like GrubHub.

Should Toast go public soon, the Boston tech scene—and cloud companies looking to go public—will gladly claim it as one of their own. Comparato already has a CFO, a key role to fill for any IPO-minded company, as well as recent additions such as a vice president of marketing and small- and medium-size business sales. Its CEO, who took over from cofounders Steve Fredette, Aman Narang and Jonathan Grimm in 2015, says that Toast is at the scale to at least think about an IPO, but isn't prioritizing that option at present.

Speaking to Forbes from a trip to Italy, Toast's CEO says he witnessed plenty of waistline-busting restaurants using outdated management tech but still wants his company to focus on the U.S. market for the months to come. Far from a target, he hopes the company's high valuation will help customers and employees recognize they're "onto something special." "I think for them, it's a sign of Toast continuing to win, and that they've chosen a winner," he says.

With such a large sum of money to invest, Toast will now have to make sure it doesn't get spread too thin.

