Toast, an integrated restaurant operating system, is gaining momentum: order value growth above 21% for several quarters, recurring revenue up 25% year over year, and 180,000 locations, up 21.6%. Its future looks bright as eating out rises, though restaurant concentration leaves it exposed if sector spending slows.

If you haven't looked at Toast recently, it's a restaurant operating system. Its use has increased significantly in the United States . Actually, I don't know if you know, but I opened a restaurant that uses Toast about ten years ago.

In 2017 we made our decisions, and we launched in 2018. I have a long history with this company, but its rating today is much better .

But the third name is one that not many people talk about, and that is Toast. I think they reached the peak of their success a few years ago when prices rose. Perhaps their business growth was also rapid.

But Toast, for me, has always been an interesting company.

Whenever I looked at Toast, Shift Four, Square, and now Block, because Toast was very focused on restaurants and seeking to dominate that sector, I always looked at the other aspects and said, "Well, if I buy Shift Four or Block, I'll get to know the restaurant sector, as well as other sectors as well."

But Toast seems to have achieved great success in the restaurant sector, and may expand into other sectors.

So, let's go back and talk about why Toast is different from so many of those other companies. The most important reason is that it is not just a financial technology company, and it is not just a financial services company .

It is actually an operating system for restaurants.

So, if you are a waiter, when you enter, your login is often via the Toast app. The same applies to the bar staff. When ordering a drink or food , this is recorded in the Toast system, whether the order is placed at the table using the small mobile device, or via a self-service kiosk .

Even in the kitchen, orders arrive via toast. But it doesn't stop there. This is part of the daily work.

Toast has evolved to help you obtain capital for your restaurant. So, as you know , more companies have started to adopt this approach; it makes it easier for you to plan your work schedule.

It is in fact an operating system not only for the restaurant staff, which is extremely important, but also for the restaurant owners. How would you manage your business if you had, for example, three, four or five restaurants?

You need a platform that allows you to know your current situation and where to find the products you need to order. They have already succeeded in developing a fully integrated operating system .

They have already succeeded in developing a fully integrated operating system. If we look at the growth of their transaction-side revenues, we find that they are making money in two different ways.

They make money from transactions from which a small percentage is taken, and that is exactly what Block and Square do.

If we look at transaction fees, we find that credit card fees are usually around 3%, while they deduct about 1% of it, which is a This growth in subscriptions indicates that restaurants are saying: "We are willing to pay for other software services because they make our work easier.

Instead of using four or five different systems that we try to combine to manage our restaurant or group of restaurants, we will manage everything using Toast, and this is much easier, makes our business more profitable, easier to manage, and more efficient." This is the secret to Toast's success.

Once you become a user of this system, you can move on to...well, just like with other restaurants, right? You are a waiter, a bartender, or a cook. Do you know how to use Toast?

Yes. Okay, a check mark. Now we can move on to choosing the right person for this job. It's a fruitful cycle for Toast, and I think the future will be bright because we'll have more time and money to eat out, just like we did in the last 20 or 30 years.

Toast is in a unique position with these companies. From my point of view as a delivery and collection service operator, the great advantage of Toast is that you don't have to work on these platforms.

You can simply create your own website and order toast. There is also a toast app, called ToastGo, I don't remember its exact name, but I use it periodically with some restaurants from which we order takeout meals.

There are no different fees; you only pay the usual transaction fee. The order is sent to the kitchen as usual, and a notification appears such as: "Travis just ordered a takeaway meal, prepare it in 20 minutes or so."

But you can also use some of these systems, which gives you more options. This is why the operating system is the restaurant's own system, and not Uber Eats or DoorDash. They are merely a delivery mechanism, but Toast is still the foundation. I think that's what gave them power.

I admire all of these companies because making food ordering easier is a good thing, but if you are a restaurant owner and are wondering which one you would direct your customers to?

You want them to order via Toast from your website, which is very easy.

It has achieved growth in total order value exceeding 21% for several consecutive quarters. Total annual recurring revenue is growing by 25% year-on-year. The number of sites in the last quarter reached 180,000, an increase of 21.6%, clearly demonstrating their continued strong momentum despite fierce competition in the market.

Perhaps this is due to their excellence in the restaurant sector, as they focus on restaurants, hotels and other sectors.

The company name is interesting. As I mentioned earlier, there may be a problem with the market, or perhaps my problem was the reason why I didn't invest in these companies, which is that they are limited to restaurants only.

If we assume that there are some challenges in this sector, such as a decrease in consumer spending, then focusing only on restaurants without other sectors will negatively affect the company’s business in general.

While some shifts may lead to a sharp drop in the share price, or perhaps the reason is that their growth has fallen significantly below expectations.

But the company has a presence in hotels, casinos, sports stadiums and restaurants. I believe they are second in the United States in the restaurant industry. At least you are diversifying your work instead of focusing on just one type, but if you can be number one in your field, I think that's an excellent position.

Yes, as you know, there is talk about the possibility of them expanding into other areas. I've always heard that grocery stores are one of them. I don't know if this makes sense, but this is another area where they have a simple ordering system for running a grocery store.

So perhaps they will move towards this field in the future.

As for restaurants, they may face individual pressures if there is a general slowdown in the sector, but I think what Toast is really betting on is the overall health of restaurant spending.

If one restaurant doesn't perform well, it won't affect Toast's business. As long as people spend more on eating out in general. This will ultimately be a boost for restaurants.

There may be some pressure here and there, but I think we are generally seeing an increasing increase in eating out and an increasing increase in food demand.