Toast Launches Restaurant Payments Device to Take on Samsung, Square

Xconomy Boston — 

[Corrected 5/1/18, 9:59 am. See below.] Toast, one of the biggest venture-backed startup bets in Boston, is getting more ambitious with its restaurant technology products.

The seven-year-old company sells cloud-based software that can handle a range of tasks for eateries, including executing payments, either through computers at the counter or right at the table with handheld tablets. Toast customers that equip food servers with mobile tablets have been running the company’s software on Samsung devices. But now, the startup is rolling out a handheld payments gadget of its own—its first hardware product designed in-house.

Dubbed Toast Go, the Internet-connected device (pictured above) is meant to be an all-purpose tool for restaurant servers. They can use it to access information that might help patrons make orders—looking up ingredients in dishes, tracking which items are out of stock, suggesting drink pairings, and so on. Servers can send the order to the kitchen with a few taps on the screen, and they’ll receive a notification on the device when an order is ready, so dishes can be delivered more quickly. Toast Go also has a built-in credit card reader so customers can pay at the table or—in the case of a fast casual restaurant—while waiting in line to order food.

The new product puts Toast—backed by more than $133 million from Generation Investment Management, Bessemer Venture Partners, and other investors—in competition with tablet makers like Samsung and Apple. It also intensifies the startup’s rivalry with other payments technology companies, such as Square, which sells payments software and small credit card-reading devices that can snap onto smartphones.

Toast is betting restaurants will choose its own device because it has been designed specifically to survive exposure to the “extreme environment” of a restaurant, from spilled drinks to kitchen heat, says Yi Chen, Toast’s vice president of product.

“It’s designed to protect against water, humidity—all the things you’ll experience in a restaurant environment,” Chen says. “It’s also designed to withstand a lot of dropping. We did a lot of drop testing” from several feet high, he adds.

Toast also touts the device’s ergonomic design and its size—it has a big enough screen (6 inches) to avoid typos, but the device is small enough to fit into a back pocket, the company says. It also has a strap on the back to help servers avoid dropping it.

The device will cost about $600, a spokeswoman says. That’s around the same cost clients are currently paying for Samsung tablets running Toast’s software, she says. (The Samsung tablet itself is cheaper, but customers must also purchase a credit card reader and a “drop-proof case,” she adds.) The company is currently offering a buy one, get one free deal on Toast Go devices. [An earlier version of this paragraph gave an incorrect price. We regret the error.]

The bigger picture here is that restaurants are adopting new technologies intended to make their operations more efficient, track data, boost sales, and please customers, who increasingly expect the dining experience—such as the payments process—to be simple and convenient.

At a sit-down restaurant, if servers can take payments right at the table—saving the walk to the register—that time savings adds up. The restaurant can serve more guests and make more money; more guests means servers could also receive more tips, which can help restaurants retain their employees, Chen says.

Chen says Toast looked at integrating its software with more “robust” and “rugged” tablets from Samsung, but then “the cost advantages went away.” So, Toast decided to develop its own hardware. (The device is being manufactured in China, Chen says.)

The product expansion also signals the progress Toast has made, says Chen, who was one of the company’s earliest hires. Since it launched its first product in 2013, Toast has grown to “tens of thousands” of customers across the U.S., and it employs nearly 1,000 people. Having reached that scale, it made sense financially and strategically “to start building our own tablet,” Chen says.

“We felt like the risk, in terms of making this investment, was much lower than it was” two or three years ago, Chen says. Now, “we have some control of our hardware roadmap as well.”