While the COVID-19 pandemic slammed the restaurant industry, Boston tech company Toast took a hit but was also well-positioned to capitalize on the trend of diners favoring more takeout and online ordering.
Toast filed paperwork Friday to make an initial public stock offering for what will be one of the most anticipated deals of the year. If it goes through, Toast plans to trade on the New York Stock Exchange under the ticker symbol TOST.
The nine-year-old company also disclosed how hard COVID has knocked its various businesses, which include selling payment-processing tablets and handheld devices, as well as cloud-based software for restaurants to manage orders, payroll, and marketing.
Just 16 months ago, Toast chief executive Chris Comparato laid off about half the company’s employees, cutting 1,300 people, furloughed hundreds more, and slashed executive salaries. Restaurants using Toast’s payments and ordering software saw their sales cut by one-quarter, and the company forgave $20 million of fees its customers owed, it revealed Friday.
But by developing software to help restaurants quickly add capabilities to accept online orders, arrange deliveries, issue gift cards, and do marketing via e-mail, Toast bounced back much more quickly than the overall recovery in dining out. The company also created partnerships with delivery services such as DoorDash, allowing restaurants to pay a flat fee for each delivery instead of a percentage of the order.
“A year ago COVID looked catastrophic for Toast, but Toast moved quickly to meet their restaurant customers needs in the most difficult time and it propelled the company to an entirely new level,” said Eric Paley, managing partner of venture capital firm Founder Collective, who is not involved with the company.
From the middle of 2019 to the middle of 2020, Toast nearly doubled the number of restaurants using its devices and software to 33,129, the company said. And by the middle of 2021, it served 47,942.
“This is only the beginning of our journey,” co-founders Stephen Fredette, Aman Narang and Jon Grimm wrote in the filing with the Securities and Exchange Commission. “Our goal to become the platform of choice for restaurants all over the world is broad and could take us in many directions.”
The company declined interview requests Friday.
Toast’s revenue in the first half of 2021 more than doubled to $704 million from the same period in 2020. The company’s net loss of $235 million was up 88 percent from 2020. The amount of sales that Toast’s restaurant customers processed through its system increased 125 percent in the first half of 2021, compared to a year earlier, to $23.4 billion.
The rise of online ordering during the pandemic also boosted Boston-based alcohol delivery service Drizly, which was acquired by Uber in February for $1.1 billion. And the Toast IPO filing comes days after another Boston restaurant-tech company, Spyce, was acquired by national salad chain Sweetgreen.
Toast’s IPO could value the company at $20 billion or more, making billionaires of the founders, at least on paper, and generating even greater profits for the venture capital firms that funded the company, including Bessemer Venture Partners and Steve Papa’s Technology Investment Dining Group. (Papa, an early investor, previously led Endeca, a software company where Toast’s founders used to work before it was acquired by Oracle in 2011.)
The planned stock market offering comes as some of Toast’s competitors have seen their share prices skyrocket. Square’s stock is up 75 percent over the past year, Lightspeed Commerce is up more than 200 percent, and Fiserv, which owns Toast rival Clover Network, is up 20 percent.
Despite the competition, the company says it has room to keep growing, citing that only 6 percent of restaurant locations in America use its services. And the global restaurant industry is more than 20 times larger than that.
Goldman Sachs, Morgan Stanley, and JP Morgan are leading the IPO.
Anissa Gardizy and Pranshu Verma of the Globe staff contributed to this report.
Aaron Pressman can be reached at email@example.com. Follow him on Twitter @ampressman.