There’s a scrum underway among startups that want to replace the clunky old cash register at restaurants, bars, and cafés. Companies like Square, Breadcrumb, and Cambridge-based Leaf have all been touting the benefits of using sleek tablets and cloud-based software. But one of the quieter local players, Toast, has been steadily building momentum.
The Cambridge company recently surpassed 100 employees (13 new hires started this week), and later in July, Toast will move from Alewife into roomier digs in the Landmark Center in Boston. CEO Chris Comparato says the new space could accommodate as many as 250 employees.
Comparato says the company also expects that its system will be installed in 1,000 locations by the end of this month. Toast was founded by two alumni of Endeca, a Cambridge maker of business intelligence software that was acquired by Oracle for about $1 billion in 2011.
And the company now finds itself competing against … Oracle, which last year bought Micros, one of the dominant makers of cash registers and related software, for $5.3 billion. (At the time, Micros had its technology installed in more than 330,000 locations, and employed 6,600 people.) NCR, with a market cap of $5 billion, is also a major established player in the market for what are sometimes called “point-of-sale systems.”
Toast’s hope is that by deploying inexpensive tablets that run the Android operating system, and software that can be upgraded automatically once a month, it can outmaneuver and out-innovate the giants.
“A restaurant operator has to be a mini CIO,” Comparato says, using the initialism for a chief information officer. Lots of startups are knocking on their doors to talk to them about a new frequent-diner program, an online ordering and delivery site, or software to manage their inventory. “You have lots of players going after a little slice of the picture,” he says, while Toast is selling a platform that encompasses most of that. Of special interest to restaurateurs: real-time data about sales, and lower costs for handling credit cards. “We can get really good rates because of our buying power,” explains Comparato.
One of the problems that has plagued many startups trying to sell to restaurants — not known as eager adopters of new technology — has been the need to dispatch salespeople around the country for in-person pitches. That’s expensive, so Toast has designed a strategy that relies more on telephone salespeople who can demo the product over the phone — and even close some deals that way.
Among the startup’s earliest customers were Dwelltime, a Cambridge café; Finale, which specializes in dessert; and Mei Mei, an Asian restaurant in Boston that also operates a food truck. Lately, though, Comparato says the company has been focusing its sales efforts on companies that operate chains with hundreds or thousands of locations.
Toast has raised north of $7 million in funding so far; its primary backer has been former Endeca chief executive Steve Papa, but Comparato says he hopes to do “a significant second round” later this year.
Every quarter, the startup holds an employee hackathon to encourage employees to work on enhancements to the product — or develop future product concepts. They have 24 hours to work as teams, and last Thursday, they were presenting the projects from their summer hackathon. (Comparato noted that several team members had stayed in the office all night.) Among the projects were software that tried to predict a restaurant’s future sales based on day of the week and weather, and a tutorial that could make it easier for employees to learn how to use Toast.
But several of the hackathon ideas suggested that once Toast attracts enough restaurants to its point-of-sale system, it may start building apps and services for consumers, like a way to pay your check quickly by tapping your table number into your phone (or Apple Watch), or sending a digital gift certificate to a friend. Comparato says consumer-facing apps could debut as early as 2016.
When I originally wrote about Toast in late 2012, the company was developing an iPhone app that would let restaurant patrons split the check.
In 2013, the Globe ran this article about startups founded by former Endeca employees, which mentioned Toast.
Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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