Months after laying off half its staff, Toast has reached an $8 billion valuation, according to a new report from CNBC.
That new valuation, up from $4.9 billion in February of this year, is the result of a secondary sale Toast closed out last week. Through that deal, both current and former employees could sell up to 25 percent of their vested shares for $75 each. Toast said the deal was for up to 800,000 shares, totaling $60 million.
It’s a big change from April, when the company cut 50 percent of its staff. In a letter to employees, CEO Chris Comparato said the layoffs were in response to “massive disruption” caused by COVID-19 that “hit the industry virtually overnight.” The move also called into question the value of restaurant tech in general, which runs the gamut in terms of providing businesses with products that deliver on ROI and those that are, as a friend of mine likes to say, solutions in search of problems.
Toast has sat squarely in the middle of those two extremes for a long time. Once offering just a humble POS system, the company has over the years added payroll and team management, email marketing capabilities, and a massive list of third-party integrations. There were plenty of valuable uses for the Toast ecosystem, but that seemed to be part of the problem, too. One glance at the company’s sight shows how easily overwhelmed a restaurant owner or manager could get by the number of available options.
Toast, however, seemed to grasp the idea that too many bells and whistles can be no good thing, and more recently (since the pandemic hit), the company’s new features have been focused on the most important area of the restaurant biz right now: making off-premises orders more efficient, faster, and of better quality. The company released a platform to process delivery orders in April. It has since also launched a “contactless” suite of products for ordering and payments. Nowadays, a restaurant could easily run an entire off-premises business using Toast’s platform. With more restaurants than ever adopting digital ordering and off-premises channels like drive-thru, curbside, and ghost kitchens, Toast’s recent focus on the to-go world could wind up being very fruitful for the company. Hence the $8 billion valuation.
CNBC noted that Toast’s rebound “has been so rapid” that investors on the secondary market have recently put in bids above the $8 billion valuation. People familiar with the matter who spoke to CNBC also said the company “is viewed as a potential 2021 IPO candidate.”