This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down the vertical market software business, Toast. Toast is a software platform built specifically for restaurants. Their operating system gives restauranteurs all the tools they need to serve customers, from taking orders to allocating shifts. It was founded in 2011 and went public a decade later. Today, it’s used by nearly 80,000 restaurants across the US.
To breakdown Toast, I’m joined by Will Schreiber, the co-founder and CEO of Bottle – an ecommerce platform built for subscription businesses. We cover the different ways that Toast minimises the complexities of operating a restaurant, how their deep vertical focus has helped them outcompete Square, and how much room there is for potential growth. Please enjoy this breakdown of Toast.  

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. 

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Show Notes
(00:01:42) - (First question) - An overview of Toast
(00:04:16) - Toast's origins and pivot to Point-of-Sale (POS) solutions
(00:07:35) - Convincing restaurants to switch from antiquated systems to modern POS solutions
(00:09:48) - The complexity of restaurant operations requires efficient POS systems
(00:13:04) - An overview of the POS revenue model
(00:17:16) - Addressable market and limiting it intentionally with pricing 
(00:20:04) - How their tech expertise enabled them to build a hardware and software ecosystem
(00:23:23) - The Toast network effect and their potential margin profile at full scale 
(00:26:19) - Their revenue mix impacts its margin profile, with transaction revenue dominating
(00:27:37) - How they aim to dominate the restaurant industry with comprehensive services
(00:29:59) - APIs enable integration, yet in-house features may risk partner relationships
(00:33:45) - The key risks for Toast moving forward
(00:38:40) - Why expanding beyond restaurants could challenge Toast
(00:41:02) - Third-party integrations may erode Toast's point-of-sale dominance
(00:44:36) - Lessons learned from studying Toast
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