How we source: figures on this page come from the company’s own filings (SEC 10-K, 10-Q and earnings releases, or its annual report), with the period stated next to each number. Last refreshed October 2026. Our methodology.
In short
Toast makes money mainly by processing card payments for restaurants. Financial technology solutions brought in $5,037M of its $6,153Mrevenue in fiscal 2025, on $195.1B of gross payment volume. Software subscriptions added $936M, and hardware and services $180M, which cost $400M to deliver.
How Toast makes money, FY2025: the income statement as a flow, to scale. Toast gives away hardware, charges for software, earns on payments. Source: Toast, Inc. (NYSE: TOST) Form 10-K for fiscal 2025 (filed 2026-02-18). Gross profit, margins and shares calculated.
Toast sells a point-of-sale system to restaurants and then processes their card payments. The filing says restaurants pay “a percentage of the total transaction amount processed plus a per-transaction fee”, and Toast books those fees gross. That line, financial technology solutions, was $5,037M in fiscal 2025, or 81.9% of revenue. It also includes fees from Toast Capital, which markets and services loans made by a partner bank.
Toast revenue by fiscal year, FY2021 to FY2025, from the company's filings. Chart: The Business Engineer.
Software subscriptions brought in $936M (15.2%). Toast says it prices them “primarily based on a rate per location”, varying with the products bought and staff count. Hardware and professional services added $180M (2.9%).
Toast says it had about 164,000 Locations at the end of 2025, up 22%. Those Locations processed $195.1B of gross payment volume during the year. Toast says more locations drove growth in both payments and subscription revenue.
How Toast compares
The three lines earn very different margins. On the reported figures, payments produced $1,146M of gross profit, a 22.8% margin. Subscriptions produced $672M, a 71.8% margin. Hardware and services lost $220M at the gross level, with $180M of revenue against $400M of cost.
So subscriptions were 15% of revenue but about 42% of gross profit. Payments were 82% of revenue and about 72% of gross profit.
Revenue has grown from $1,705M in fiscal 2021 to $6,153M in fiscal 2025. Fiscal 2025 was Toast’s second year with positive operating income, after $16M in fiscal 2024 and a $287M operating loss in fiscal 2023.
Revenue rose 24% to $6,153M. Operating income rose to $292M from $16M, and net income to $342M from $19M. Restructuring costs fell to $12M from $46M, once the costs of the February 2024 plan had passed.
Toast revenue by line, prior year against FY2025, as reported. Chart: The Business Engineer.
Subscription revenue grew fastest, at 33%. Hardware and professional services revenue fell 10%. General and administrative costs rose 12%, which Toast attributes mainly to higher bad debt expense.
Free cash flow rose to $608M from $306M. Toast bought back $107M of Class A stock during the year.
What to watch
Payments revenue depends on what diners spend. Toast warns that a weaker economy could cut locations “through restaurant closures or a reduction in gross payment volume”. It also says the mix of card-present, card-not-present, debit and credit transactions can move its gross profit.
Toast relies on third-party payment processors, and the filing says most of its customers are small and medium-sized businesses.
Toast estimates that it holds about 20% of the U.S. restaurant market. It describes its international and food-and-beverage retail efforts as “early stages”. Tariffs on hardware sourced from China are a listed cost risk.
Frequently asked questions
How does Toast make money?
Mostly from payment processing. In fiscal 2025, financial technology solutions brought in $5,037M of $6,153M total revenue (81.9%). Subscriptions added $936M and hardware and professional services $180M.
How many restaurants use Toast?
Toast reported about 164,000 Locations as of 31 December 2025, up 22% year over year. They processed about $195B of gross payment volume over the trailing 12 months.
Is Toast profitable?
Yes, on a GAAP basis in fiscal 2025. Operating income was $292M and net income $342M, up from $16M and $19M in fiscal 2024.
Does Toast make money on hardware?
Not at the gross level. In fiscal 2025, hardware and professional services revenue was $180M against $400M of costs of revenue, a gross loss of $220M.
Though the trio were all recent MIT graduates, they met while working for software company Endeca. When Endeca was sold to Oracle in 2011, the co-founders embarked on a mission to revolutionize restaurant point-of-sale systems.
However, Toast had difficulty securing early funding because many believed the industry was too complicated and nuanced.
Many restaurants were running antiquated systems that were over twenty years old because it was too difficult to upgrade.
Whatโs more, investors were spooked by notoriously poor margins and tight budgets within the industry.
Toast initially began as a consumer app centered on mobile payments and customer loyalty.
However, the company quickly pivoted to a full restaurant technology platform after the founders realized restaurant owners wanted something that could do more than just accept payments.
By 2013, more than 1,000 merchants across the United States signed up to a service offering online ordering, gift cards, and consumer analytics.
Impressed by the passion, drive, and ability of Narang in particular, former Endeca CEO Steve Papa got the ball rolling with $500,000 of his own money.
Successive rounds of venture capital funding resulted after it became clear that Toastโs profit margins were sustainable and that the client base was rapidly growing.
The company now provides point-of-sale systems in more than 48,000 restaurant locations, with a recent IPO raising $870 million one of the largest in 2021.
Toast is a cloud-based restaurant software company founded by Steve Fredette, Aman Narang, and Jon Grimm in 2012. After receiving the necessary funding, the trio was able to build a platform that revolutionized a restaurant industry plagued by archaic technology and slim margins.
Toast makes money by selling hardware combining point-of-sale systems, third-party payment processing, customer loyalty programs, and other value-adding features. The company also sells associated hardware such as cash drawers and receipt printers.
Revenue generation is split into the categories of digital ordering and point of sale. Each category features three, tiered subscription plans with varying degrees of functionality.
Hardware Sales
Description: Toast offers a range of hardware solutions to restaurants, including POS terminals, kitchen display systems, handheld devices, self-ordering kiosks, and more. Restaurants purchase this hardware to modernize their operations and enhance the customer experience. Revenue is generated through the sale of these hardware products.
Software Licensing
Description: Toast provides software licensing for its POS system and various software modules that cater to different aspects of restaurant management, such as order management, menu customization, and inventory control. Restaurants pay subscription fees for access to Toast’s software, often on a monthly basis. These recurring fees are a significant source of revenue.
Transaction Processing Fees
Description: Toast processes payments for restaurants and charges transaction processing fees for each payment transaction made through its platform. These fees typically include a percentage of the transaction value and a fixed fee per transaction. Restaurants rely on Toast for secure and efficient payment processing, contributing to Toast’s revenue.
Subscription Services
Description: In addition to software licensing, Toast offers various subscription services to restaurants. These can include add-on services like loyalty programs, online ordering, and delivery management. Restaurants subscribe to these services to expand their capabilities and enhance customer engagement. Subscription fees from these services provide additional revenue.
Additional Services
Description: Toast may offer additional services such as hardware installation, training, and customer support to ensure that restaurants can effectively use its technology solutions. Restaurants pay fees for these services, which can vary depending on the level of support required. These services complement the core offerings and contribute to revenue.
Analytics and Insights
Description: Toast provides analytics and insights tools that help restaurants analyze their sales, customer data, and operational performance. Restaurants may pay for advanced analytics and reporting services, which enable them to make data-driven decisions and optimize their operations. Fees generated from these services contribute to revenue.
Challenges and Competition
Description: Toast operates in a competitive market with various restaurant management and POS system providers. Staying competitive, offering robust and user-friendly software, ensuring data security, and providing excellent customer support are ongoing challenges. Keeping up with technological advancements is also essential.
Future Growth Strategies
Description: Toast’s future growth strategies may involve: – Product Innovation: Continuously developing and enhancing its software and hardware offerings. – Market Expansion: Expanding its presence into new regions and markets. – Integration Partnerships: Collaborating with third-party providers to offer additional services. – Customer Engagement: Building strong relationships with restaurant owners and operators. – Data Monetization: Leveraging restaurant data for insights and targeted services.
Origin Story
Toast is a cloud-based restaurant software company founded by Steve Fredette, Aman Narang, and Jon Grimm in 2012.
Toast revenue generation
Toast makes money by selling hardware that combines point-of-sale systems, third-party payment processing, customer loyalty programs, and other value-adding features.
The company also sells associated hardware including receipt printers, cash drawers, and magstripe card readers.
Importantly, the Toast platform can be used in the kitchen and integrates with restaurant-specific services such as Grubhub and OpenTable.
Revenue generation is split into two categories: point of sale and digital ordering.
Point of sale
Customizable point-of-sale packages are available to restaurants, with several plans available depending on the growth stage of the restaurant:
Pay-as-you-go (from $0/month)
A plan ideal for smaller restaurants that want to get up and running on the Toast platform.
Features include starter kit essentials such as a point-of-sale terminal, tap payment device and router, point-of-sale software, and dedicated customer support.
Additional hardware can be purchased as required for wan upfront fee and sometimes a monthly fee also.
For example, a handheld device for drive-through and curb-side orders costs $389 plus $50/month.
Essentials (from $165/month)
For restaurants wishing to expand into off-premise channels. In addition to pay-as-you-go features, the essentials plan features online ordering and delivery, restaurant-grade hardware, and the Toast take-out app.
Growth (from $272/month)
For restaurants interested in using data to attract new clients and drive repeat visits.
Additional features here revolve around loyalty programs, marketing tools, and gift cards.
Digital ordering
Toast also offers three plans for restaurants who simply want an online presence:
Toast Now (from $75/month) โ offering online ordering, the Toast take-out app, and contactless delivery.
Toast Now Plus (from $100/month) โ offering all Toast Now features plus e-gift cards.
Toast Now Premium (from $175/month) โ offering all Toast Now Plus features plus email marketing.
For all three plans, delivery services are also available at an extra cost. While there are no upfront costs for this service, Toast charges its restaurant partners a flat per-order service fee.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur, HackerNoon and Search Engine People. Find him on LinkedIn and Substack. See how we source.
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