Toast and Shift4 are duking it out over bigger customers in the competitive restaurant payments market.

The intensity of their head-to-head combat became clear in dueling executives’ commentary this week at Wall Street investor conferences.

Those two companies “have the market” when it comes to upgrading restaurants from older to more modern point-of-sale software, Shift4 CEO Jared Isaacman said Tuesday during an appearance at the Raymond James Institutional Investors Conference. 

Shift4 had about 100,000 restaurant customers as of late last year, according to Isaacman. Meanwhile, Toast counted 79,000 restaurant customers as of the end of last year, according to the company’s annual filing with the Securities and Exchange Commission.

Boston-based Toast focuses on the restaurant software market, while Allentown, Pennsylvania-based Shift4 has a big presence in payments software across the hotel, stadium and casino markets as well.

Upmarket moves

The competitive restaurant payments landscape includes point solutions, legacy providers and modern cloud players, Toast Chief Financial Officer Elena Gomez said at the Morgan Stanley Global Technology, Media and Telecom Conference.

Although the two companies are handling restaurant point of sale in much the same way, Isaacman said rival Toast’s capital and payroll services are for “a very small customer,” while Shift4 has focused on features that matter to its larger customers, including business intelligence and loyalty products.

Indeed, small- to medium-sized restaurants are Toast’s “bread and butter,” but the company is increasingly pursuing mid-market and large restaurant customers, Gomez said. The latter are unique and tend to want different services, such as rich reporting and data security, she noted. 

Toast currently counts Jamba Juice and Nothing Bundt Cakes among its large customers. “We are getting pulled upmarket,” Gomez said. “We’re building some of that capability already, and we’ll be able to penetrate that market deeper as we continue to innovate in that space.” 

Still, Toast is “going to be balanced in making sure that the unit economics also make sense” when pursuing bigger customers, Gomez said. To rope in bigger clients, Toast has a dedicated sales team that focuses on those customers, although it’s “not a very big team,” Gomez said.

Pursuing larger customers is more expensive though, and investing in that can be financially risky, the company’s annual filing in March noted. “If we are unsuccessful in closing sales after expending significant funds and management resources, or we experience delays or incur greater than anticipated costs, our business, financial condition, and results of operations could be adversely affected,” it said.

Toast wins competitive deals a majority of the time, Gomez argued, conceding “we don’t win all the time, obviously.”

Plotting growth

Toast added about 5,000 to 6,000 customer locations per quarter last year, Gomez said after being asked about a forecast for growth this year. She didn’t respond directly, but pointed to last year’s expansion as a pace that Toast executives see as “a pretty healthy clip over time.”

Isaacman has said he’s less concerned with quarterly location counts, citing Shift4’s presence in multiple verticals. “I think, at the end of the year, Toast will almost assuredly beat us on site count and we will not be that far behind, and we will have done all the other things in all the other verticals that make us special,” he said Friday during the Evercore ISI Payments and Fintech Innovators Forum. 

Compared to Toast, Shift4 has “a little bit more disciplined approach, I think our unit economic model is better, we have a lower customer acquisition cost,” Isaacman asserted. A spokesperson for Toast didn’t immediately respond to a request for comment. 

Shift4 has been competitive even as its competitors have “had an unlimited checkbook,” Isaacman contended. As many companies now pledge to be more diligent with expense management and pursue profitability, “they’re the ones that are going to have to adjust the model, not us,” Isaacman said. “That should be advantageous for us.”

Toast delivered consistent margin expansion in 2022, Gomez said, and the company plans to be disciplined this year and drive more operating leverage.

Both companies, which have been focused on the U.S. market, also have international ambitions. Securing large customers overseas could bolster Toast's growth over time, but that’s a long term pursuit, Gomez noted.