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Should You Buy Toast Stock? A Breakdown of Restaurant SaaS

By Eric Cuka – Sep 22, 2021 at 10:30AM

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Toast is launching its IPO this week. The restaurant industry is being disrupted by innovation and digital transformation. Which restaurant SaaS stock should be in your portfolio?

Toast is expected to begin trading on the New York Stock Exchange Wednesday, Sept. 22, under the ticker TOST. It will be the latest in a long list of technology companies that have gone public over the past couple of years. In a nutshell, restaurants can run on Toast. The company is a one-stop shop offering point of sale, contactless ordering, hardware, online ordering and delivery, marketing, payroll and team management, and more. Toast is laser focused on helping restaurants be successful. 

Toast has four revenue streams:

  1. Software-as-a-service: Includes solutions for POS, back-of-the-house kitchen displays, invoice management, digital ordering and delivery, marketing, loyalty, and team management.
  2. Fintech: Includes payments, transaction fees, and even loans.
  3. Hardware: Toast sells terminals, tablets, handheld devices, and accessories.
  4. Professional services: Includes installation and configuration. 

Toast competes with POS vendors such as Lightspeed Commerce (LSPD -0.12%) and Square (SQ -1.43%). Additionally, the company competes with Olo (OLO 0.42%) in online ordering and delivery. With that said, Toast and Olo also partner, and the solutions can be integrated using Olo Rails. Rails allow integration with food delivery apps such as DoorDash (DASH -3.38%), Uber Eats (UBER 1.45%), and GrubHub, which is formally Just Eat (JTKWY 1.49%)

In today's video, I break down Toast's business and compare it with the companies mentioned above. I also do deep-dive analysis on Toast's financial metrics and offer my opinions on the stock and if I'm buying. Please watch the below video for more information, and don't forget to subscribe to the channel. 

*Stock prices used in the below video were during the trading day of Sept. 21, 2021. The video was published on Sept. 21, 2021.

Eric Cuka owns shares of Olo Inc. and Square. The Motley Fool owns shares of and recommends Lightspeed POS Inc., Olo Inc., and Square. The Motley Fool recommends Just Eat N.V. and Uber Technologies. The Motley Fool has a disclosure policy. Eric is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Block Stock Quote
$68.18 (-1.43%) $0.99
Lightspeed Commerce Stock Quote
Lightspeed Commerce
$17.24 (-0.12%) $0.02
Olo Inc. Stock Quote
Olo Inc.
$7.21 (0.42%) $0.03
Oracle Stock Quote
$83.35 (-0.90%) $0.76
Uber Technologies Stock Quote
Uber Technologies
$28.75 (1.45%) $0.41
Just Eat Stock Quote
Just Eat
$4.77 (1.49%) $0.07
DoorDash Stock Quote
$55.19 (-3.38%) $-1.93

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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