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Toast Finance

To empower the restaurant community with innovative financial solutions that enable all restaurants to thrive in a digital-first economy

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To empower the restaurant community with innovative financial solutions that enable all restaurants to thrive in a digital-first economy

Strengths

  • PLATFORM: Comprehensive integrated financial ecosystem for restaurants
  • GROWTH: 40% YoY revenue growth with 93% recurring revenue stream
  • DATA: Financial insights from 85K+ restaurant customer base
  • MARGIN: Improving gross margins, reaching 24% in recent quarter
  • ADOPTION: High attachment rates for financial products (62%+)

Weaknesses

  • PROFITABILITY: Not yet consistently profitable at scale
  • DEPENDENCY: Heavy reliance on payment processing revenue (72%)
  • COMPETITION: Facing increasing competition in restaurant fintech
  • RETENTION: Customer churn rates higher in smaller establishments
  • SCALING: Operational inefficiencies in financial support functions

Opportunities

  • EXPANSION: International financial services growth beyond US market
  • LENDING: Expand capital offerings, currently only reaching 4% of base
  • ANALYTICS: Monetize financial benchmarking data across segments
  • INTEGRATION: Deeper ERP and accounting system partnerships
  • SEGMENT: Specialized financial solutions for enterprise restaurants

Threats

  • CONSOLIDATION: Industry competitors merging financial capabilities
  • REGULATION: Changing payment processing compliance requirements
  • ECONOMY: Restaurant industry vulnerability to economic downturns
  • MARGINS: Payment processing margin compression from competition
  • SECURITY: Financial data breaches and payment security concerns

Key Priorities

  • DIVERSIFY: Reduce dependency on payment processing revenue
  • EFFICIENCY: Streamline financial operations to achieve profitability
  • EXPANSION: Develop targeted international financial services
  • ENTERPRISE: Create specialized financial solutions for larger clients
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To empower the restaurant community with innovative financial solutions that enable all restaurants to thrive in a digital-first economy

DIVERSIFY REVENUE

Reduce payment processing revenue dependency to 65%

  • PRODUCTS: Launch 3 new financial services with 15%+ gross margins by Q3
  • ADOPTION: Increase financial product attachment rate from 62% to 75% of customer base
  • CROSS-SELL: Implement targeted campaign yielding 25% Toast Capital adoption among payment users
  • PRICING: Optimize financial product pricing tiers resulting in 12% ARPU increase
DRIVE EFFICIENCY

Achieve positive operating income for first time

  • AUTOMATION: Implement AI-driven financial operations yielding 18% reduction in processing costs
  • MARGINS: Improve gross margins from 24% to 28% through vendor renegotiations and economies of scale
  • HEADCOUNT: Optimize finance organization structure to support 35% growth with only 15% team expansion
  • TECHNOLOGY: Consolidate financial systems reducing technology spend by $2.3M annually
EXPAND GLOBALLY

Scale international financial services to 15% of revenue

  • MARKETS: Successfully launch financial services in 3 new international markets with regulatory approval
  • LOCALIZATION: Adapt payment processing infrastructure for 5 new currency and banking systems
  • PARTNERSHIPS: Establish 4 strategic banking partnerships in key expansion regions
  • COMPLIANCE: Achieve financial regulatory certification in all target markets with zero deficiencies
ENTERPRISE FOCUS

Double enterprise segment contribution to 30% of ARR

  • SOLUTIONS: Develop enterprise-grade financial consolidation and reporting solution for multi-location clients
  • INTEGRATION: Build 5 new ERP connectors enabling seamless financial data exchange for enterprise clients
  • ACCOUNTS: Convert 40 mid-market customers to full enterprise financial solutions package
  • RETENTION: Achieve 95% gross retention rate in enterprise segment through dedicated financial success team
METRICS
  • ARR Growth: 30% YoY
  • Gross Margin: 28%
  • Operating Income: $5M positive
VALUES
  • Customer-First Financial Stewardship
  • Financial Innovation Excellence
  • Collaborative Resource Optimization
  • Transparent Decision-Making
  • Data-Driven Financial Intelligence
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Align the learnings

Toast Finance Retrospective

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To empower the restaurant community with innovative financial solutions that enable all restaurants to thrive in a digital-first economy

What Went Well

  • GROWTH: ARR increased 35% YoY, exceeding market expectations by 7%
  • PRODUCTS: Financial services portfolio expanded with payroll launch
  • ADOPTION: Payment processing take rate improved to 0.57% from 0.52%
  • EFFICIENCY: Operating loss decreased to 3% of revenue from 7% YoY

Not So Well

  • SPENDING: Sales & marketing costs increased to 24% of revenue (+3pts)
  • CHURN: Small restaurant segment saw retention decline to 78% (-4pts)
  • INTERNATIONAL: UK expansion financial metrics below initial targets
  • MARGINS: Gross margin improvement slowed to 1pt vs 3pt prior quarter

Learnings

  • SEGMENTATION: Enterprise customer ROI exceeds SMB by 2.7x on CAC
  • BUNDLING: Financial product attachment highest with 3+ offerings
  • EFFICIENCY: Remote implementation reduced onboarding costs by 22%
  • PAYMENTS: Restaurants with Toast Capital show 17% higher processing

Action Items

  • FOCUS: Reallocate 30% of SMB acquisition budget to mid-market segment
  • OPTIMIZE: Implement cost-reduction initiative to improve operating margin
  • INTEGRATE: Accelerate payroll cross-sell to payment processing customers
  • EXPAND: Develop targeted financial product bundles for enterprise segment
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To empower the restaurant community with innovative financial solutions that enable all restaurants to thrive in a digital-first economy

Strengths

  • DATA: Massive restaurant financial transaction dataset for AI training
  • INFRASTRUCTURE: Cloud-based platform enables AI deployment
  • PERSONALIZATION: Existing AI-driven financial recommendation engine
  • AUTOMATION: Basic financial workflow automation capabilities
  • TALENT: Growing team of financial data scientists and AI engineers

Weaknesses

  • INTEGRATION: Siloed AI initiatives across financial functions
  • RESOURCES: Limited dedicated AI budget for finance transformation
  • ADOPTION: Inconsistent internal AI tool usage for financial analysis
  • TRAINING: Gap in AI financial literacy among finance team members
  • GOVERNANCE: Underdeveloped AI risk management framework

Opportunities

  • FORECASTING: AI-powered financial planning and scenario analysis
  • FRAUD: Advanced anomaly detection for payment fraud prevention
  • PRICING: Dynamic pricing optimization for financial products
  • DECISIONING: Automated credit risk assessment for lending products
  • INSIGHTS: Predictive financial benchmarking for customer segments

Threats

  • COMPETITION: Competitors investing heavily in financial AI capabilities
  • REGULATION: Evolving AI compliance requirements in financial services
  • QUALITY: Data quality issues affecting AI financial model accuracy
  • ETHICS: Potential bias in automated financial decision-making
  • SECURITY: AI-specific vulnerabilities in financial systems

Key Priorities

  • CENTRALIZE: Establish unified AI strategy across financial functions
  • UPSKILL: Enhance AI financial literacy throughout finance org
  • AUTOMATE: Accelerate financial workflow automation with AI
  • GOVERNANCE: Develop robust AI risk management framework