Restaurant Kitchens Break iPads, So Toast Built Its Own Hardware
The devices survive heat and spills, and the supply chain and sales network behind them are hard for rivals to copy.
Business Breakdowns · Toast: Sticky SaaS - [Business Breakdowns, EP.247]Toast sells software and payment processing for restaurants, and every customer has to buy its hardware too. There is no software only option. Walk into one of its restaurants and you will usually see the kit: a small card reader for payments at the front counter, a larger screen for taking orders, a kitchen display where cooks follow tickets, and Toast Go handhelds, portable devices servers carry to take orders at the table.
That requirement started as a practical fix. A restaurant kitchen is hot and wet, with water, liquids, and heat. Several rivals tried to take an easier path by selling an app that restaurants could download onto an iPad, said Shawn Barrett, an investor at Counter Global who follows the company closely. Those tablets broke all the time in that environment, and the shortcut cost those competitors sales and helped send customers back to Toast.
Building something tougher took Toast years. It had to design devices made specifically for restaurants, and then handle the complicated work behind them: chips, supply chains, and keeping enough inventory on hand as it added restaurants.
That work, plus local sales and service, is now part of its edge. Toast puts people on the ground in every major American city who walk into restaurants, talk to owners, and make sure they are being served properly. Barrett pointed to a high profile artificial intelligence startup launched a year or two ago to serve restaurants that seemed to think it could copy Toast quickly. He said they are not seeing it at all in the market, and last he heard it had extended its timeline by at least two more years. Even then, he said, it would still have to build the hardware, the supply chain, and the local presence.
Questions people ask
What is a kitchen display system?
It is a screen in the kitchen that shows incoming food orders, replacing printed paper tickets. In a Toast restaurant, that screen is built to handle a hot, wet kitchen.
Why is restaurant hardware harder than it looks?
Design is only the start. A hardware company must secure chips and components, line up manufacturing, forecast demand, and keep enough inventory to equip new customers. For thousands of restaurants, getting the right device to the right place on time is a large operation.