Toast’s Business Services and Prior Valuation
Toast Inc. is a Boston-based restaurant software company that provides food establishments with payment management and point of sale services that operate seamlessly on an Android system. The company offers a massive host of software-based services such as a point of sale platform, commission-free online and app-based ordering, delivery services, payroll management, data analytics, multi-location management, and a kitchen display system among several others.
The company also offers several pieces of hardware to accompany their software, including a newly added contactless payment device. Toast had begun 2020 with sky-high expectations as a $400 million funding round supported by Bessemer Venture Partners, TPG, Greenoaks Capital, and Tiger Global Management LLC had pushed the business up to a strong $4.9 billion valuation.
However, following this funding round, the COVID-19 pandemic caused a serious decline in business as restaurants began closing down indefinitely in order to limit infections. In fact, the company had to reduce its employee base by a whopping 50% through both furloughs and layoffs. With business in the restaurant industry down by 80%, the company had to pull back significantly in response. However, these troubles were not meant to last as demand for their business software began to increase once again in the latter half of 2020 as takeout services began seeing wide-scale adoption across the entire restaurant industry.
The renewed business for Toast allowed for the company to begin thinking about growth in the future once again, leading eventually to the current plans for a possible IPO.
Toast Inc. IPO Plans and Possible Future Valuation
According to sources close to the company, Toast is planning on launching an IPO later in 2021. Goldman Sachs and JP Morgan Chase are expected to underwrite the potential listing, though a possible sale or combination with a blank-check company could also be routes to the same conclusion. What is incredibly tantalizing for the business would be the public valuation of $20 billion that would be paired with the IPO, immediately surging the value of the company as it looks to further expand in 2021.
Following the incredible IPOs of DoorDash, Bumble, Affirm, and Airbnb, Toast looks to be the next company in line to see a major bump from investor enthusiasm as tech-based companies have revolutionized the businesses they are focused on. Given the likely spike in restaurant sales to come in 2021, Toast is in a good position to capitalize on its spike in demand.