Dive Brief:

• Toast, the restaurant software and payments firm, is working to capture more business from time-strapped customers by using artificial intelligence tools to assume more of a restaurateur's workflows.
• Toast’s first AI-enabled workflow product – a digital marketing tool called Toast IQ Grow – is poised to become the company’s fastest-growing product, with executives expecting it to generate $10 million in annual revenue since its May introduction, co-founder and CEO Aman Narang said Tuesday on a quarterly earnings call with analysts. He didn’t specify when the product would reach that sales level.
• Many Toast customers are unable to leverage the company’s various offerings, and often outsource major functions such as marketing, payroll and bookkeeping, Narang said. Toast believes that AI will allow it to take on more of a restaurant’s work, he said.

Dive Insight:

Toast is betting that investing in more aggressive growth – and new AI resources for customers – will pay longer-term yields, Narang and Chief Financial Officer Elena Gomez emphasized during their comments to Wall Street analysts. The company didn’t specify investment levels but noted that its profit outlook was affected by decisions to stockpile memory chips for its hardware amid industry price hikes and its effort to expand the business.

The new Toast tool can optimize restaurants’ websites, their search engine optimization, digital orders and social media presence, and uses customer data to create successful marketing campaigns, Narang said in his prepared remarks Tuesday. 

“And because we power the point of sale, we can close the loop with each campaign tied directly to the orders it drives,” he added.

Toast executives believe that “the broad signals they are getting on new product and vertical expansion are positive and worth the resources to build a bigger company over the long run,” Evercore ISI analysts wrote Tuesday in a client note.

To that point, Narang said that initial sales of Toast’s AI marketing product “reinforces that we’re solving a real problem and have a large opportunity to monetize our AI offerings.”

Over time, he said, Toast will deploy “agentic products” atop its software for various services a restaurant needs to operate, including demand forecasting, labor schedules, income tax help, food costs and availability. 

“That’s an incredibly exciting future, especially in an industry known for slim margins and long hours,” Narang said. 

Management is “already finding a product-market-fit with customers looking to drive better marketing campaigns, increase conversions, and generate higher same-store sales,” the Evercore analysts wrote.

Toast was founded in 2012. The company competes against software and payments services from Global Payments, Block-owned Square and Fiserv’s Clover in the restaurant and hospitality markets.

“Over 14 years, we’ve watched good and bad operators run their businesses long enough to learn what they do and how the best ones think and adapt,” the CEO said. 

Global Payments, which has been rolling out a new Genius point-of-sale service, is targeting small and midsize restaurant and retail customers, CEO Cameron Bready said during a Wednesday second-quarter earnings webcast. Locations with the new brand grew 50% over the year-ago quarter and 25% compared to the first quarter, he said.

For the second quarter, Boston-based Toast reported net income of $154 million, nearly double the $80 million from the same period of 2025. Revenue rose 23% to $1.91 billion from the year-ago quarter. 

Toast said it added a record 9,500 new locations to its client roster during the quarter, for a total of about 180,000, and it announced deals with BWH Hotels, the parent of the Best Western hotel chain, and Kung Fu Tea, a bubble tea cafe.

The company also said its annualized recurring run-rate, a measure of subscription and payment services revenue, rose 25% to $2.4 billion in the quarter. 

Toast collected a $10 million federal tariff refund during the quarter, which it reinvested “into key growth initiatives and to seed long-term bets,” Gomez said on the call.