Good morning, everyone. Thank you for joining us here in New York, and virtually for those on the webcast, for Toast's Inaugural Investor Day. Our team's excited to share more about our business this morning. Before we get started, let me cover the disclaimers. During this presentation, we'll make certain forward-looking statements, including statements about our future outlook and goals. Forward-looking statements reflect our views only as of today, and except as required by law, we undertake no obligation to update or revise these statements. Please refer to the cautionary language in today's presentation and our SEC filings for a discussion of the risks and uncertainty that could cause actual results to differ materially from our expectations. During this presentation, we'll also discuss certain non-GAAP financial measures, including, but not limited to, non-GAAP subscription services, gross profit, and non-GAAP financial...
These non-GAAP measures are not intended to be a substitute for our GAAP results. Please refer to the appendix of today's presentation for a detailed reconciliation of these non-GAAP measures to the most comparable GAAP measures. Now, let's turn to the agenda for today. Our CEO and Co-founder, Aman Narang, is gonna kick things off in a moment. He'll take you through our strategy and this incredible opportunity in front of us. He'll be followed by Jonathan Vassil, our Chief Revenue Officer, who we all refer to as JV. He's gonna discuss our go-to-market strategy and bring you deeper into this flywheel effect that you'll often hear us reference. Steve Fredette, our President and Co-founder, is then gonna discuss the innovation that underpins our unique vertical product offering, and how that delivers value for our customers.
Michel Rbeiz, our GM of FinTech, will follow, and he's gonna take you through how that value our product creates for customers naturally drives our monetization. Our CFO, Elena Gomez, will bring us home, tying together how we manage the growth and efficiency efforts that you're gonna hear throughout the day into a financial framework to drive shareholder value. Finally, we'll take Q&A from the analyst community to close out the day. Before I hand it over to Aman, we're gonna get the day started with this short video.
This is a point of sale. This is a point of sale making a sale. But it's so much more than that. Because this, this is a restaurant.
Number one!
Restaurants are businesses that aren't just business, they're family legacies.
My grandfather had a little deli, and I used to work there during the summertime, and that's when I started interacting with people and serving them.
Passion projects. To me, when someone's like, "Oh, my God, this is the best thing I've ever had," I'm like, "Yeah, someone's love went into that, a passion." Visionary ideas.
Our entire mission is paying living wages and supporting people that are in recovery.
Success stories.
Having the ball in the customer's court for the tips was a big deal. This year, between all our restaurants, I think we're gonna raise about $270,000 in tips for our crew.
We build our POS differently on purpose, because we build it for restaurants, for the heartbeat of local communities, where people come together over shared food and drink to celebrate, commiserate, and connect.
Starting out as a Mom-and-Pop Shop, one of the first things I wanted to do was to make a difference in the neighborhood. Bringing Toast on was one of the best decisions that we could've ever made.
From the beginning, we knew that technology built for the complexity of hospitality would be a little challenging. But like our customers who choose to be in the hardest business in the world, we choose restaurants. To understand how to build the best, most powerful POS system, connecting the right hardware, software, and data in one single place, so the humans can have more time for human stuff, and so they can actually make money doing what they love, not just surviving, but thriving, even through rapid change.
We've increased revenue. Our average check size has gone up.
We are tracking a 12.5% increase in top line earnings, and this is directly due to the efficiency that Toast brings to the operation.
When we started talking to Toast, we had six locations, and since we partnered with Toast, we have now opened 24 locations.
We went from two locations to six locations in a pretty short period of time. You know, going through that much growth really quickly, you have to really rely on your technology to help you grow like that.
It really has made our overall operation a lot smoother. I would say our digital sales grew about 80%. Especially with the dual-sided line, our throughput increased by 20%, and then our off-premise grew about 90%, which is crazy.
Order up!
But no matter where our growth takes us, we'll continue to power places where people connect, in restaurants and beyond, locally and at a global scale.
Every company says that they want our feedback, but Toast actually really does. Toast takes what we say and makes it a reality.
The future of business is hospitality, and no one does hospitality like Toast.
Please welcome to the stage Chief Executive Officer and Co-founder, Aman Narang.
Good morning, everybody.
Good morning.
We're excited to be here. Thank you all, first of all, for coming. Our mission at Toast is to empower the restaurant community to delight their guests, do what they love, and thrive. We started this business 12 years ago to help make the lives of restaurateurs better. We've got a mission and values-oriented culture because we firmly believe the companies that do outperform ones that don't. The team here is excited. The Toast team, five of us, are here to share our story with you today. Before I jump in, I thought I'd start at the very beginning. Steve, Jonathan, and I started Toast 12 years ago in my basement in Burlington, Massachusetts, feels like yesterday, to solve a problem we had, which was waiting for a check at the end of a meal in a busy restaurant when you just want to leave.
We built a mobile payments-based application, similar to what you see in many restaurants today. It didn't work. Partially because this consumer tech was ahead of its time, but also, as we got to know the restaurant community, we realized that we were dealing with legacy point-of-sale systems without modern APIs that made it really difficult to build a great customer experience. And we asked the question: How is it that an industry as large as restaurants, how come it doesn't have a modern, cloud-based solution? I remember talking to restaurateurs in the Boston, Cambridge area back in 2013.
Chris Kane specifically was one of the early customers we had, and I remember a conversation where he said, you know, in a world of smartphones in our pockets, this is in 2013, how come his restaurant technology was still built on legacy point-of-sale terminals with hardwired terminals and physical servers in their basement? What Steve, Jonathan, and I realized is that to solve the real problem, if we're gonna, if we were gonna help restaurants, we had to rebuild this technology from the ground up. So then we pivoted from this mobile app to the restaurant technology platform that you all know it well today. As we talked to restaurateurs as we were building the initial idea, we got really good feedback. They told us that the existing solutions were not purpose-built for them.
They were working with point solutions that didn't talk to each other. We also realized that restaurateurs are not technologists. They don't have CIOs on staff. And so in addition to building this great platform, we also had to build a great customer-facing team to enable the success of our customers. This intense focus on customer success has been a big part of what has led to our success. I'm incredibly proud of what the team has accomplished. You know, just since our IPO 2.5 years ago, we've more than doubled locations from 52,000 to over 112,000. We grew ARR from $544 million to over $1.3 billion. We've tripled gross profit, and we've done all of this growth while expanding margins. And what gets me excited is, despite all this progress, we're just getting started.
We have so much opportunity in front of us. If there's one important takeaway from our time together today, it's that while we started in small business restaurants here in the U.S., that is not our only ambition. This platform we've built is gonna allow us to expand into new geographies, new verticals, and launch more products. It's something we'll unpack, the team will unpack throughout the day. So let's talk about this opportunity. As you all know, the restaurant industry is one of the largest in the world. Going out to eat is one of the most common, if not the most frequent, commerce transaction out there. It's at the center of all of our communities. I suspect everybody in this room has great memories going out to a restaurant, celebrating with friends and family over a great meal. And restaurants are resilient.
Through macro booms and busts and recessions, restaurants are resilient, and it's because we all like to go out to eat. In fact, there's a 30-year+ trend of food in restaurants taking share from food at home. Now, restaurants are also incredibly complex. It's one of the few industries where you combine a manufacturing facility, this is the food prep, as well as the retail storefront, this is the service and hospitality that we all love, into a single location. You'll hear Steve talk more about this today, but there's so many different types of restaurants with so many different service models that all have slightly different needs. But the one thing that's in common is that you've got to get the meal and the customer experience right. It's what we all expect time after time after time, and that's what makes this such a complex business to run.
Let me try to bring this to life with a customer example. This is Isabelle's Osteria, one of our customers in Manhattan, right, about a block from Gramercy Park. On a typical Saturday night, they've got 200 people in their dining room, 70 people in their event space, 30 delivery orders in their delivery queue... The kitchen's managing maybe 300 orders an hour across their apps and entrees. Their bartenders are making, maybe you've been there, by the way, the bartenders are making 100s of drinks every hour. There's so many ways in which we can all customize our meals. We're all guilty of this, right? Not guilty is not the right word, maybe, but we all, we all do this.
You know, I want apps in this entree, I want salad on the side, I want extra nuts or no nuts, you know, I need to be out in 45 minutes. There's so many ways in which you can customize a meal, and they've got to get it right, because imagine there's an allergy on the table, so the stakes can be high. The team at Isabelle's prepares for this. They'll look at the reservations the night before, they'll go look at the weather, they'll look at what happened the same day last year, but it doesn't take much to throw them off. Imagine a spike in delivery orders, you know, maybe there's an unhappy customer in the front, maybe a dishwasher that breaks.
The story might seem concocted, but this is the daily life, this is the daily life of a restaurant owner. They get into this business because they love food and hospitality, not because they love managing increasingly complex technology. And that's why it's so important that their technology partner simplify their lives. That's why every product, every aspect of our platform is built with restaurants in mind. I'll give you an example of this. Our Toast Go handhelds, maybe you've experienced this when you go out to eat at a Toast restaurant, this is the handheld that you see that allows you to order and pay right at the table, vs having to take the paper and get it back when the server comes back to you. These devices have to be built with restaurants in mind. They have to last throughout service, so 16 hours.
Even if the dining room is full, the Wi-Fi has to last, has to work. If you drop the device, it can't break. Our hardware in the kitchens deals with heat, it deals with grease. Our terminals in the bars deal with wet conditions. On the software side, imagine if your internet goes down, your most SaaS applications will go down. Imagine if a restaurant were to go down at 9:00 P.M. at night because Comcast is down. Our software and our hardware over the past decade has been built, purpose-built with restaurants in mind, to make sure that no matter what happens outside the four walls of a restaurant, the experience is not impacted. Now, while complex, restaurants are also everywhere.
There are approximately 875,000 restaurants in the U.S. alone, and even after scaling to 112,000 locations, which we're incredibly proud of, and $1.3 billion in ARR, we're still at 13% share. Our journey started with small business restaurants, and since then, we've expanded to the full breadth of the TAM here in the U.S., with mid-market restaurants, as well as enterprise chains, including Marriott, MTY, Choice Hotels, Nothing Bundt Cakes, and so much more, so many more. The truth is, the industry still remains fragmented, with a significant portion of restaurants still on legacy platforms. Toast is leading the way across all cloud platforms. When you talk to customers, what they tell you is they want cloud, because they want a single platform that works end to end.
We have conviction that just as a decade ago, you saw this industry consolidate across a few vendors, we have conviction that the same thing will happen as this transition happens to the cloud as well. Toast is incredibly well positioned to take share and grow as a result. Now, in addition to leading this transition in the U.S., we're also expanding globally, starting with the U.K., Canada, and Ireland. These three countries alone represent 285, 280,000 locations. We talked about 875,000 locations in the U.S. These three countries alone represent 280,000 locations. After hitting 1,000 locations at the end of last year, something we shared in our Q1 call, we've almost doubled that to almost 2,000 locations in just a few months.
You know, I was at the Toronto Food Show last year, spending time with our team and some of our customers in Toronto and Canada, and it felt like the early days of Toast. They told us that the existing solutions they were using were point solutions that didn't talk to each other. They were on legacy platforms, and they wanted a modern cloud platform like Toast. So as you think about the next decade for Toast, we have confidence that international represents a significant growth vector, starting with the U.K., Canada, and Ireland. Now, pivoting from this opportunity, let's talk about our strategy next, and our most important priorities. Before a platform like Toast existed, restaurants were using point solutions that didn't talk to each other.
That was really challenging for them, and we saw an opportunity to simplify that via a platform strategy that's anchored on a few key tenets. One, our SaaS platform is purpose-built for restaurants. At the end of the day, we succeed when our customers succeed. A local go-to-market team that is embedded in the same communities that our customers are in. And back to what I said earlier, our customers are not CIOs. They need a customer-facing team to enable that, their success. Third, an end-to-end platform across software, hardware, and network that works better together. And lastly, as a leading cloud platform, our data is becoming increasingly an important asset as well. You'll hear more from the team today about how we're leveraging this unique data set. We've got one of the most powerful data sets within restaurants to leverage the power of this data-...
Leverage the power of AI to help restaurants be even more successful. We've got a few use cases today that we'll show you. Let me try to bring this to life with a customer example. I was recently talking to Avy, who's the Founder and CEO of Boulangerie. This is an eight-location concept in the Miami area, and, you know, their big concept, they do counter service for breakfast, they do full service for lunch and dinner, they do delivery, they do takeout, and over time, they're using the full breadth of the Toast platform. So I talked to Avy a few weeks back, and he was telling me, by the way, anytime I talk to our customers, they'll always give you constructive feedback, so that's how it starts.
But he told me that since switching to Toast, using our Toast Go handhelds, these are the devices I talked about earlier, they've been able to turn tables faster, increase tips for staff, and drive more revenue. Using our kitchen display systems, you may have seen this outside, they were able to get 95% of orders delivered from the terminal to the KDS to the guest under 10 minutes. Huge improvement. That's very important. Throughput's really important to a restaurant for them, vs what they had. The data and reporting in our back end has allowed them to better understand food waste. Toast Payroll, back to an integrated end-to-end platform, because it's integrated into Toast, has allowed them to run payroll across all 8 locations in a matter of hours in a single day, something that took them three days to do it before.
Using our menu setup, they've been able to reduce voids and comps by over 40%. You can imagine food waste in restaurants, a big deal in a low-margin business. And lastly, the combination of our integrated online ordering and our CRM has allowed them to improve guest experience, drive efficiency, and get their repeat guests to come back more often. There are countless examples just like this one across our customer base, where we're transforming their businesses. This impact is what drives us. To capitalize on the strategy, we have four key priorities. This is what I outlined in our Q1 earnings call that I'm gonna build upon today. So one, scale restaurants in our core business. Two, expand what we do for restaurants. Three, deploy the same vertical strategy that has worked so well in restaurants into new geographies and verticals.
Lastly, continue to expand margins as we scale, as we have done over the past year. Starting with scaling locations. You've heard me talk about this before, but one of my favorite concepts to talk about is this flywheel concept. As you know, restaurants are local, and what you see in Boston or Chicago or New York is different. And what we find time after time is as we get more density on our platform, as we get more customers, we see better top of funnel, we see better conversion, and most importantly, our teams are more productive. The number of flywheel markets, this is markets with over 20% share, has grown 5x over the past three years. It's something JV will talk about next.
Even in our most penetrated markets, where we have 25 or 30% share, we're seeing some of the highest productivity. So these markets give us conviction in our ability to continue to grow and scale. They are harbingers of what's to come for the rest of our markets. Now, in addition to scaling locations, we're also incredibly uniquely positioned to expand our product offerings for customers. We have a culture of innovation, something Steve will talk about and is very passionate about. We were the first ones to build a restaurant platform with embedded payments. The Toast Go device revolutionized how people dine across the country. It's something we've talked about. Over time, we've added integrated online ordering, we've added tools to manage and pay employees, we've added tools to manage suppliers and inventory.
Just over the past year, we've added products like Toast Websites, Toast Retail, Toast Catering, as well as Toast Tables. And when you talk to our customers, they'll tell you that a single integrated platform with a single point of support is just easier. They want products that work better together. Many of these products are early in their adoption curve with plenty of headroom for growth. You'll hear the team talk more about this today, both in terms of our strategy, our priorities, as well as, like our opportunity to continue to expand ARPU over time. And going back to the strength of our data in our platform, we have one of the strongest data sets across restaurants, across 112,000 locations, and our customers are asking us: How can we leverage the data, this data, to create even more value for them?
I'll give you just a couple examples. The team will build upon this throughout the day. We recently launched a benchmarking tool to help restaurants better understand how they're performing relative to their, their peers. These are small business owners all throughout the country, and they're simple things like: What's going on with inflation? What's going on with my sales? What's going on with my menu? How, how should I price my menu? What should I put on my menu? These are things historically, that restaurateurs did based on gut. And so the ability to have data that's relevant to them to help them make these decisions is incredibly powerful. I'll give you another example. As you know, small business restaurants care deeply about driving demand. Think of how much they pay third-party providers to drive demand.
Our first-party tools, including online ordering and CRM, do an incredible job of collecting data on behalf of our customers. And recently, we launched an AI-driven marketing assistant that can drive demand for restaurants and create campaigns on their behalf without having to do any of the work. As you can imagine, restaurateurs are not marketers. They're strapped for time. They're not technologists. They're not marketers. They get in this business because they love food and hospitality. And so the ability, the ability to drive demand is incredibly powerful for them. It can transform their business.... So throughout the day, you'll hear about how we're leveraging this data to create value for customers. It's not just about data for data's sake, it's how can we create value for customers? Okay.
So next, I'm gonna switch gears and talk about how this platform we've built over the past decade can actually extend to new verticals as well. The lines between restaurant and retail have blurred, especially through COVID, and what we heard from customers was restaurants were selling retail items, and many retailers, convenience stores, and grocery stores were selling more and more prepared foods. And our customers asked us: "Can you support us with our retail SKUs?" That's what led to the beginning of our retail offering. And what we realized is many aspects of our platform are actually horizontal. Think about payment processing, lending, scheduling, payroll, and the parts that are specific, vertical specific, the core point-of-sale experience or the guest experience, those are things we know how to do at Toast. It's in our DNA to build great experiences on the point of sale.
So by combining this purpose-built approach, this vertical approach, and leveraging our horizontal platform, we're actually incredibly well-positioned to expand into new verticals over time. Starting with food and beverage retail. We've been incredibly intentional about which aspects of the TAM we're going after. And similar to restaurants, what you find with convenience stores and grocery stores and bottle shops, is these are inherently local businesses that want an end-to-end platform with a single point of support, and have some of the same challenges that restaurants have. Now, just as our handhelds, we've talked about, we love our handhelds. Just as our handheld, the Toast Go device, revolutionized dining at restaurants and improved restaurant throughput, we're taking the same approach with these new verticals as well. I'll give you an example of this.
We got feedback from some of our early customers that said, "You know, one of the hardest things about managing a retail store is managing inventory." It's at the heart of what they do. And so our team spent the past year building a mobile app-based smart scan capability that allows them to manage their inventory right on their store floor. It's made their team dramatically more efficient. You'll hear from one of our customers next. This is Tiny Grocer. This is in Austin, Texas. They're a two-location gourmet market, and you'll hear about how the Toast platform has allowed them to run a much more efficient business. So we're gonna continue to leverage this vertically focused approach to expand into food and beverage retail, and over time, expand into more verticals as well.
But we're gonna be incredibly intentional and disciplined about how we do it. If you think about it, over the past year, as we've expanded into these new verticals, we've also expanded margins. And so it's not about just picking any aspect of the, of the market, it's about picking the aspects of the market where we have a right to win. Now, the food and beverage retail vertical is significant. 220,000 locations just within SMB, and $660 billion in spend. If you think about restaurants, 875,000 locations, $1 trillion in spend. This is 220,000 locations, so less in locations, but $660 billion in spend. These are larger locations.
These are businesses with over $3 million in GPV per location, and they need, again, a technology partner because they're small business owners, to enable their success. Now, since our beta launch last year, we've scaled to nearly 1,000 locations. I think this is evidence that we can expand quickly and efficiently on the backs of our existing platform and our customer-facing team. This recipe that we've built in restaurants is gonna allow us to expand into more verticals as well. If we step back, since our IPO, we've expanded our platform to serve the full breadth of the restaurant market. We've launched three new countries, we've expanded into a new vertical, and we've done this while expanding margins. All in, we've increased our location TAM from 875,000- 1.4 million.
So just in 2.5 years, we've expanded the location TAM 60%, and the GPV TAM has almost doubled. As we think about the next decade, back to what I talked about earlier, while we started in U.S. restaurants, that is not our only ambition. Over the next decade, we're gonna expand into new locations, new geographies, and expand the product portfolio that we offer. Now, in addition to growth, as you've seen over the past year, we have also expanded margins. This foundation that we've built over the past decade allows us to drive incrementally high margins for every incremental dollar in revenue in our core business. This is what's allowed us to expand margins while we innovate and expand what Toast does.
This efficiency and leverage that we're seeing in our core business is not just about expanding margins; it's the fuel that allows us to invest in our future growth investments. The management team at Toast is being incredibly disciplined to make sure that we're allocating capital against our most important priorities. It's something we're spending a lot of time on. Elena is spending a lot of time on with me on that, on that. And as a result, for the first time, we're ready to share that we're gonna have 40%+ EBITDA margins in this business in the long term. So as I wrap up, I'll leave you with a few key, key points. One, we have an amazing opportunity in front of us. Our vertical strategy is at the intersection of our platform and our customer-facing team.
We have aspirations to build the restaurant platform for the vertical restaurant platform for restaurants globally, and this platform we've built over the past decade allows us to get into new verticals, naturally. Thank you for your time this morning. There's a few thoughts I'll leave you with. One, we have an incredible opportunity. We have a passionate team that's mission-oriented, and we couldn't be more excited about what the future holds for Toast. Thank you. Next, I'm gonna pass it on to JV, who's gonna talk about our growth. But before we do that, let's hear from Tiny Grocer. This is the customer I talked to you about, about how Toast has transformed Tiny Grocer's business. Thank you.
Hi, my name is Steph Steele. I'm the owner of Tiny Grocer. My background is that I worked for Whole Foods Market for 24 years. I did every department you can imagine in a Whole Foods, went into running departments, ran big stores for Whole Foods for over a decade. The concept is really that it's an entire supermarket in a very small space. We opened March 8, 2021, the shop on South Congress. That's been going for over three years, and now we have the Hyde Park location. It's about six months old, and just to make it a little harder, let's add a restaurant. It's a French bistro called Bureau de Poste, in the evenings and on the weekends for brunch, and it's absolutely incredible. As I was already a bit disgruntled with my current service, Tony showed up.
When I walked into Steph's office, she had three tablets everywhere, a couple of printers. My first thought is, Toast can eliminate all of this for you.
Toast had a beta retail project happening, and really got into discussions with Toast about what that might look like for us to jump on. I'm really grateful for the team of being able to have sounding boards, and really having that team listen and make changes pretty quickly to their system to make it more robust.
I'm Melinda Whitten. I am, the Tiny Grocer Hyde Park's general manager. Another great feature on the dashboard is you can see where you're at payroll-wise, and so it is easy to track and know where the spending is and adjust as you go.
It also can alert you to things that are happening within the space. Are you having theft issues? There's lots of systems for spoilage as well. So you need to make pretty quick business decisions around this information. My favorite Toast feature is the mobile application, of being able to have this on your phone for counting inventory and receiving items.
Every one of our team members is able to take their phone out, scan the item, make sure it's right in the system. We're able to count this entire store in about three days, and we do that while we're open with customers. I came from corporate America, where you didn't count while your store was open, and that was a big investment of labor to count an entire building. So this is really great, how it just marks your spot where you're at. You can pick right back up if you go to ring up a customer, or you have to step away. It's all super intuitive, easy click-through process, and you don't have to stress about it. Lots of places I've worked, lots of systems I've dealt with, I have to say, Toast is the easiest to integrate.
It was the easiest to teach my team, and I would absolutely recommend it.
Good morning! Aman, you were a tough act to follow. I'm gonna do my best here. I'm Jonathan Vassil. Senno and Aman mentioned that many folks at Toast know me as JV, so I'm glad today they all know my name, my full first name. On behalf of our entire go-to-market organization, I'm thrilled to be here to walk you through our story. I joined Toast in 2017. We had $20 million in ARR and 50 sales reps. A lot has changed since then. More importantly, we've learned a ton. We've been able to use those learnings, apply them to our motions, refine them over time to what you're gonna learn from today. Okay, I'm gonna walk you through how we've built our go-to-market and distribution advantage, why we're confident in its lasting durability, and the very clear path to category leadership.
And it really starts with the confluence of a few factors. One, a large, dynamic, TAM, paired with a go-to-market strategy that's designed to leverage and optimize the unique characteristics of our TAM. This pairing of our TAM and our motion leads to network effects, what we call flywheel markets, that have become an underlying growth driver for Toast, with significant runway ahead. And lastly, our strategy to sell, support, onboard, and grow our customers has led to a trust equation that places us as the preferred and trusted technology partner in our customers' eyes. All right, let's get into it. Let's start with our TAM, and really foundational to the success we've had thus far is our TAM. Aman touched on this, 875,000 restaurants in the U.S., many multiples north of that across the globe.
The majority of the U.S. TAM is made up of SMB restaurants. These are individual owners and operators, which leads to a fragmented market, where decisions are made on a rooftop-by-rooftop basis. What makes this TAM unique is not just the size of the vertical, but also its density. Now, in any street corner, pick, you know, main street in your hometown, you may have a bottle shop, you may have a convenience store, you'll have maybe a real estate agency, a bank, hair salon, but you'll have four or five restaurants, right? This applies to any city or any town of any size, from New York to Chicago, to Toledo, to Iowa City, Iowa. This density plays a critical role in the process restaurants use to make purchasing decisions.
Okay, but it's not just the density that's unique, it's also the inherently local nature of these businesses.... Their guests, their customers, are members of the local community. Their employees, their team members, are members of the local community. The vendors, the 100s of vendors that they use to supply their restaurant and operate their business, are also members of this local community. The combination of this density and the local nature of these businesses results in the formation of a restaurant community or ecosystem that heavily influences purchasing decisions in the form of social proof. Think about it. How often, when you're in need of a restaurant recommendation or a, a new babysitter, I know we are, or a, a reliable local plumber, what do you do? You reach out to someone you know and trust, you ask for a recommendation, and social proof takes over from there.
Believe it or not, the same dynamic occurs when restaurants make purchasing decisions. They don't issue RFPs. They don't attend conferences. They don't hire a CIO. They don't have a CIO. Rather, they ask their neighbor, their staff, or perhaps the most admired or innovative operator in their community, and they ask them: Which system do you use? This is why we have a local go-to-market team, and this is why we've been successful. We've catered our go-to-market strategy around leveraging social proof, thereby placing ourselves at the center of these restaurant communities, and as a result, very few point-of-sale, point-of-sale decisions are made that don't include Toast. So this local approach has helped us embed ourselves in the local restaurant community, but building a dynamic, on-the-ground, go-to-market organization is not easy. Aman referenced our focused vertical strategy.
The strategy and go-to-market approach was purpose-built over years to serve this unique TAM. We think of our go-to-market organization as a manufactured facility that produces contracts. What we mean by that is everything that we do is rooted in data, analytics, optimization, and process. Stealing from Gladwell, we've reached 10,000 hours. We've put in the time and effort it takes to collect the data and use it to refine our motion over many, many years. It really starts with the core capabilities around how to hire, train, and develop an elite sales organization. We've built these capabilities over time using data. We have 100s and 100s of sales reps, which means we've interviewed 1000s, probably 10s of 1000s of candidates. Every time we interview a candidate, we capture a data point or data points.
We then use that data to determine who to hire and why, where to place them, and how to make them successful. This also creates a tenured leadership team that has the advantage of experience and continuity in optimizing our motion. Now, this data-driven approach gives us distinct advantage. We have 112,000 live locations, which means we've pitched or demoed 100s of 1000s of restaurants. Again, every time we demo our product, we're capturing a data point or data points. Why did they buy? Why did they not buy? Who was the incumbent? What competitors were in the deal? What products did they purchase? What commonalities do they have with other Toast restaurants? We use this data to determine where to allocate capacity, which restaurants to target within a market, and how to refine our pitch.
Now, most critical of all, this data and experience cannot be accelerated. You have to put in the work, you have to put in the repetition to gain the level of depth and precision that we have. All right. So we've talked about our TAM, we've talked about our motion and how that's been catered to leverage social proof, we've talked about the ethos behind how we thought about building our organization. Let me give you an example and bring this to life for you and show this to you in practice. This is a map of Brooklyn. I'm using this as an example 'cause we're in New York. This could be anywhere, this could be any geography. And let's just assume for a moment that this geography has 2,000 restaurants. We start with one rep.
We arm that rep with the data, insights, and tools that they need to make progress and knock down accounts. And as soon as they do, we add a second rep. So we went from having one rep cover 2,000 restaurants, we've reduced their territory size, but we've doubled our coverage. Now, we've got two reps covering 1,000 restaurants. We do it again, and again. So now we've gone from one rep covering 2,000 restaurants to four reps covering 500. While we're doing that, we're increasing productivity, we're increasing referrals, and we're driving penetration. This allows us to get deeper into the community and penetrate more decisions, participate in more decisions. As we get deeper in the community, we unlock more opportunity. As we unlock more opportunity, our productivity grows.
More, the further we embed ourselves into the communities, the more we receive from the communities in return. This is the basis behind our flywheel concept. It's also a virtuous cycle. Zooming out, this virtuous cycle leads to three key tailwinds that are the underlying drivers of growth for Toast. The first is brand awareness. Every time we add a restaurant, our brand grows, and as our brand grows, inbound demand grows. Today, three out of four deals that we sell originate through inbound channels. The second is customer advocacy. As we embed ourselves in these communities and gain more and more trust from our customers, the trust then drives customers to introduce and refer us to other restaurants in their ecosystem.
When you combine these two, it yields the ability to scale our motion incredibly efficiently and incredibly consistently, as measured by increase in productivity while we increase sales capacity and reduce territory size per AE. Importantly, and I think this is a key differentiator for our vertical, our customers play a central role in the growth of our market share. This happens in two forms. First is referrals. As mentioned, the more we penetrate these local communities, the more trust we gain, and the more our customers help us sell Toast. We have 100s of sales reps across the country and now across the globe. We also have 100s of 1000s of restaurants that are selling our product for us every day. Referrals over the last two years, two or three years, actually two years, have grown by 50%.
Not only do we have more customers, but our customers are referring their network to Toast on a more frequent basis. We now see 20%, or one in five deals, originate from partner or customer referral channels. The other unique way in which our customers drive market share growth for Toast is through new restaurant openings, or what we refer to as NROs. In any community, there are a number of new restaurant openings every year. We're going to use Austin, Texas as an example. New restaurants come to Toast in one of two ways, okay? The first are NROs that are purchasing point-of-sale for the very, very first time and choose Toast. That's the orange bar.
As restaurateurs open new restaurants and Toast grows its penetration, our brand strengthens, and if you're thinking of opening a new restaurant, you're considering point of sale, we are at the top of the list. And you can see in this graph, the orange bar is growing over time alongside our market penetration. The second way we capture NROs is through our customers. Our customers expand and grow themselves. Because we have a great product, and our customers are happy with Toast, they choose to expand with us. This is the blue bar. And you can very quickly begin to see a world where the blue bar, as we gain market share and get to 30, 35, 40% market share, where a majority of the NROs within a community or a market actually come from our customers, okay?
Putting these two things together, we estimate that 70% of all NROs in Austin, 70% of all SMB openings in Austin are coming to Toast either as a new customer or an expansion through our existing customers. Okay. As our penetration grows and our flywheel strengthens, we reach a point where, with competitive advantage that is incredibly difficult to disrupt. And there are two proof points that we use to measure this. The first is rep productivity. As we add sales capacity, thereby reducing territory size per AE, our productivity actually grows. This is what leads us, gives us the ability to scale efficiently. And as we reduce territory size, again, productivity actually increases. As our penetration improves, we add more reps, which is, which increases our coverage, which grows the number of deals coming to Toast.
Over the last few years, we've reduced territory size by 30% and have seen a double-digit increase in productivity alongside. The second way we look at this is really through the product of increasing sales capacity and increasing AE productivity. And when you do that, you earn a capture rate that actually grows alongside our market share. Our model is simple: As penetration grows, we add sales capacity, thereby reducing territory size per AE, which drives coverage, which drives even more penetration, which drives the cycle to start all over again. This leads to more locations being booked on Toast. What you see in the graph here, the x-axis is represented by market penetration. The y-axis is the total number of deals sold, and what you can see is they grow together over time. Okay, this is our flywheel effect.
It's akin to a freight train running downhill. What gives us confidence that this will continue and that we can scale this across the country are a few things. First, it's proven to be very, very repeatable. Aman mentioned we've grown the number of flywheel markets by 5x over the last few years. One of the reasons this is the case is because a flywheel market, again, relating back to density and social proof, anywhere there are restaurants, there's density, or there's density, there's social proof. Flywheel markets can happen anywhere. This can be Boston. This can be South Florida. This could be Austin, Austin, Texas. This could be Bridgeport, Connecticut, Grand Rapids, Michigan. We've proven that we can consistently replicate this dynamic across markets, and our ambition is to build this network effect in all of our markets over the coming years.
What gives us confidence that we can continue to scale our network effects or flywheel markets. The other element that gives us confidence is by looking at our top 10 most penetrated markets, okay? You would expect these markets to show decline in growth, but in fact, they are our fastest-growing markets. On paper, we know how many restaurants exist in every zip code. We actually know it down to the street level. We can see that there's plenty of TAM left, even when we reach elevated or accelerated market penetration levels. If you look at the graph, you'll see that the growth rates of some of our most penetrated markets are growing the fastest with plenty of runway ahead. And this proven model is playing out in other segments as we climb deeper and deeper into our TAM.
As we've gone deeper, we've identified and discovered greenfield opportunities like emerging markets. This is a subset of our core TAM. We have bilingual sales and onboarding reps, creating an end-to-end experience tailored to this important segment. This is another example of how we bring this vertical strategy to life and go incredibly deep on our TAM and serve all parts of the market. We can also apply our model to segments outside of the traditional restaurant vertical, like retail, where today we are using both our SMB team and a dedicated retail team to penetrate this subsegment.... We've touched on international. We've made a lot of progress internationally. They benefit from what we benefit with international is not having to rewrite the playbook. We spent the last 12 years writing our go-to-market playbook. It applies perfectly to our international markets, and we're excited about our progress.
These segments allow us to go deeper into our TAM, and create a dynamic install base for us to grow alongside. Once we land a customer, our job is not done. You'll hear from Steve and Michel, we have a lot of products and multiple channels to grow our customers. We have Toast Shop as a self-service option to purchase more from Toast. Customers generally use this to purchase hardware or basic modules. We have a group of dedicated growth or upsell reps that are solely focused on selling back into our install base. These reps focus on our more sophisticated products. We're beginning to develop product-led growth strategies, leveraging AI and incredibly unique customer data, to help surface the next best product for each customer.
Speaking of upsell, with our growth team, we are still in our, in early days, in early innings, as this team is just two years old. To date, we've seen strong signal that the same dynamic plays out, where we can scale the team, reduce territory... Scale the team, reduce territory size, improve coverage, and increase productivity. An additional benefit, because we're adding net location, new locations every month, is our TAM actually grows as we add new customers. So as the Toast install base grows, the upsell TAM grows. We're able to expand this team at a faster rate and increase AR contribution per AE. You'll hear more about the ARPU opportunity with Michel in the monetization section. Okay, a few key takeaways. We pair an inherently local TAM with a local team. We embed ourselves into local restaurant communities.
This creates a flywheel or network effect that delivers accelerating, lasting growth for Toast. Our flywheel allows us, allows us to continue to win and grow ARPU over time. The secret sauce isn't necessarily just the TAM or emotion on their own, but rather the symbiotic relationship between the two. All right, Steve will speak next about product, but before that, let's hear from another one of our customers, Julie, co-owner of nine different restaurants across four different concepts, about how Toast has supported their growth.
My name is Julie. I'm Co-owner of nine restaurants. Crawfish Cafe is a seafood restaurant that started 11 years ago. We're a full-service, casual restaurant, specializing in boiled seafood. Hook Boil House is the sister company of Crawfish Cafe. It's similar, but it's a counter service style. We have The Pho Fix, which is a quick service, build-your-own Vietnamese noodle soup restaurant, and Ocean Palace, which is a full-service dim sum restaurant. Multi-Location Management is my favorite Toast product. Prior to having MLM, we had three Crawfish Cafe locations, and making menu updates and updating settings was very challenging. Being able to make a change once instead of multiple times has been extremely time-saving. I do all the admin work for all nine of my restaurants, so having Toast makes it easy because we have one spot to log in for all the restaurants.
Everyone in my restaurant group uses Toast. My front of house obviously uses it the most. They use the handheld. It probably saves them 10-15 minutes per table or more.
I care a lot about the customer's experience. I could just take their order, write that in there, send it to the kitchen, and tuck it away into my pocket and continue to interact with them. The staff picks it up extremely quickly. It's just overall the easiest system I've ever used.
At The Pho Fix, we use Toast a little different than Crawfish Cafe. We only have two terminals and one KDS screen, and the guest comes in, we take their order, it prints a ticket, and we take them down the line to build their bowls. Adding more Toast products helped us grow our business because it provided a lot of efficiency and consistency between stores. With Toast Tables is being able to start the ticket on the wait list tablet, see it on the POS side, and have an idea of where they are in their dining process, allows us to be more efficient and consistent with the service we provide, and also give them accurate wait times based on where they are in their meal. Life without Toast probably wouldn't be nine restaurants.
Without Toast and all of the products that it provides for us, I feel like we wouldn't have come this far, this fast. I have a lot of friends in the industry. If they're not using Toast, I usually ask them why they're not on Toast, and tell them that they should get on Toast.
All right, well, good morning, everyone. Thank you for coming. I'm Steve Fredette, the President and Co-founder of Toast, and what you just heard from Julie will echo some of the key themes that I'm going to discuss. She talked about how Toast can be tailored to meet the needs of her nine very different restaurants, bustling FSRs and QSRs, and that having more products in a single integrated into a simple solution provides her with even more value. This is the ultimate mark of success for us at Toast. When we can become an integral part of helping our customers to grow their business and to thrive, as we've done for Julie and her husband's restaurants in this video, this is what drives our success.
As a co-founder, I'm just incredibly proud of everything that our whole team has been able to do to create this kind of value for all the customers that we have today.
... So I'll jump into our product strategy. Our product strategy is to build the world's best vertical SaaS platform that serves the unique needs of restaurants, and as you heard from Aman, more verticals over time. This is anchored on four pillars that I'm gonna take you through today. One, delivering product breadth and depth for restaurants better than anyone. Two, leveraging our platform investments and our culture of innovation to rapidly build and scale products. Three, using our extensible platform and our components that build and expand our addressable market. And now, four, harnessing the incredible unique data that we have with the power of AI to create outsized customer value. So first, I'm gonna walk you through how we deliver breadth and depth to solve the unique needs of restaurants better than anyone. As you heard from Aman, restaurants are extremely complex.
As their operations get larger and more sophisticated, their product needs only compound. And as customer and employee preferences continue to evolve to want to have a digital-first experience, it's pushing restaurants to adapt at an even faster pace. More than ever, restaurants need a technology partner to help them solve this complexity. And so our approach to solving this complexity for restaurants centers around three principles: building the depth of restaurant-specific functionality to handle the unique needs and full range of restaurant types, having the breadth of an all-in-one platform, and not only need, meeting the needs of restaurants, but also providing a great experience to stakeholders across the entire ecosystem. Now, doing any one of these things is difficult, but to do all of these three things well is what makes our platform hard to copy. So let's start with depth.
Think about all the various different types of restaurants and different operating models: takeout, delivery, kiosk, private events, corporate dining, food trucks, bottle service, subscriptions, et cetera. It's a big list, and across all of these different types and service models, the permutations are almost endless. And so we pride ourselves on providing the restaurants that we have as customers, flexibility to open any new revenue stream with different service models and to constantly be adapting. Now, everyone's familiar with the major product releases that we've announced over the past few years, Toast Tables, Toast Catering & Events, Toast Now, just to name a few. But on top of those major products, we're constantly innovating on 1,000 little restaurant-first features. These features add tremendous depth, and these are the cornerstone of our vertical strategy.
We've been doing this now for over 10 years, and so every year, we talk to more customers, we learn more, and we fine-tune things a little bit further. You may have heard the concept of there's no compression algorithm for experience. I really believe that there is the same thing that applies here. There's no compression algorithm that would have gotten us to the point we are today, faster, without 100s of product teams spending 100s and 1000s of hours talking to customers every year for many, many years to fine-tune this product. So more than any one product, it's these detailed features that help customers manage this immense complexity of running a restaurant operation in, day in and day out.
Our customers will say that Toast is the best, and when they say this, what I think they mean is actually these 1000 little things. Because the difference between running a smooth operation, Aman talked about some of the complexity in the example of Isabelle's and things going wrong. Smooth operations are critical, and knowing restaurants as deeply as we do, and making sure that their lives are easy for everything they're using, they're using these systems 16 hours a day, seven days a week, it better work for every little thing they do. That really matters a lot to our customers, and they know it matters. And so when our competitors say that they do everything Toast does, it's much easier said than done. It's much easier to copy a few big things vs 1000 little things. So depth really matters. But breadth is just as important.
You heard from Aman say the majority of our customers are SMBs, they don't have CIOs. They want to consolidate as much of their operation with a single platform partner, and they value the all-in-one solution that we provide. Even customers with CIOs will tell us the same thing, they want to manage fewer partners. And so by helping our customers, by providing offerings across the full breadth of functions to operate a restaurant, guest engagement, managing your team, managing the inside of a restaurant, suppliers, accounting, this breadth allows us to help our customers to do everything they need to run. And just as important as providing this breadth, is building a great experience for all the stakeholders across the top of our ecosystem here.
Whether that's the Toast app for consumers to order takeout or delivery, or the Toast employee app to make it seamless for employees to adjust their schedules on the fly, we create a solution that benefits the whole restaurant ecosystem. Where we don't have everything that our customers need, our partner ecosystem of over 200 integration partners complement this strategy of restaurant depth, breadth, and stakeholder ecosystems. Our partner ecosystem also helps us as we look to understand what's working really well, and we look to inform our M&A strategy. If you look at our team management, our supplier accounting suites as examples, these came from seeing the success of partners in our ecosystem, and then using M&A to bring those products native into our platform.
So to summarize, the combination of platform depth, breadth, and the ability for us to serve the needs of the entire restaurant ecosystem, are what makes Toast the leading restaurant platform today. These ingredients help us to create outsized value for customers and truly be a strategic partner in a way that's very hard to replicate. Okay, so now I want to turn to how we leverage the valuable asset that we've built over the past decade to develop and scale products fast and efficiently. Over the past 10 years, we've built the foundational elements to give all of our product teams tremendous leverage in building product. Starting at the bottom, we have a reliable technology infrastructure layer that allows our products to scale to 100s of 1000s of locations with the same reliability and high performance that our customers expect.
You heard Aman talk about what happens at 9:00 P.M., when it's really busy, something goes wrong, it has to work. It just has to work, and so our technology layer allows our teams to get that kind of leverage from day one. Second, we have a sophisticated FinTech layer to enable the dual SaaS and FinTech monetization approach that Toast takes. Third, we have all the core merchant operations primitives. If you want to build something for restaurants, we have orders, menus, employees, master locations for multi-units, CRM for guest data. You just get that for free. And finally, we have a customer experience layer that's designed to be simple and intuitive for our customers to start easily using all of our products. And so by leveraging these existing platform capabilities, our product teams build quickly and efficiently.
We've also allowed our teams to tap into our global development presence. We've tapped into top talent across the world. We've established best practices for global development around the clock that allow us to optimize for talent and for location cost. We're continuously raising the bar on speed and execution as well. We've flattened the org to bring leaders closer to the work, reducing overhead so that teams can go faster. We've built a rigorous performance culture that we continue to cultivate, which drives increases in engineering productivity, and we're very excited about the potential of AI to further amplify our productivity gains over time. We're piloting AI today with a portion of our engineers, and the early results are very promising in terms of the improvements that they've been able to deliver for us.
So this platform and this focus on the execution of our team enables us to bring products to market faster. Let's take catering and events as an example. We already had the invoicing, menu management, online ordering, and integrated payments capabilities. That product team simply had to build lead forms and quoting capability to round out the product to get us started. And as we add these new capabilities for new products, we can then reuse them for future products, which further increases our velocity and efficiency going forward. In addition to faster development, there's also three other important advantages that we have. By integrating products into our platform, leveraging existing components, our products are easy to use and can deliver provide value for our customers immediately. Our products are better together. You heard Aman say that.
With our distribution engine, we can also scale products faster than competitors. As an example, if you look at the bottom here, catering and events reached over 5,000 customers, 3.5x faster than a leading point solution. The other thing is the scale and the depth of our customer relationships provide valuable feedback loops for our teams to iterate and make our offerings best-in-class much sooner. This ability to build quickly has not only helped us launch these new products, it's helped us significantly deepen our product suites. This is our Digital Storefront solution, for example. In 2021, we started with a fairly basic online ordering solution, and over the last three years, we've added advanced online ordering, we've added websites, and we're soon releasing a branded app.
This focus on building deep solutions creates a ton of value for our customers, and as we create more value, you'll hear from Michel later, the more value we create for customers, the more this drives monetization and value for Toast. So we're very aligned with our customers. In addition to developing products faster and more efficiently, we also have made investments in our SaaS platform, and as Aman mentioned, our broad product offering of horizontal products that enable to us address new customer segments and with modest incremental investments. So this allows us to expand. Our core platform and several of those horizontal products are just as relevant for food and beverage retail customers as they are for restaurants. In fact, our journey to expanding this segment started with restaurant customers evolving over time to add retail concepts.
They wanted an integrated solution to open up new revenue streams, and in serving these hybrid restaurants, it became a natural extension for us to add the specific functionality needed for convenience stores, independent grocers, and bottle shops. Longer term, we can use this same approach, developing vertical-specific features that plug into our existing platform to extend to new offerings with a differentiated offering over time. Now, similar to the restaurant industry, food and beverage retailers are largely local SMBs. They operate on legacy technology, and they have complex workflows and unique needs. We can apply the same purpose-built vertical product approach, where we build modern tools to solve for the specific, unique complexities and needs of that industry, and we add functionality that creates value for our customers.
The video you heard from Tiny Grocer earlier provided a glimpse into some of the products that we've built so far, and you heard them say, inventory and SKU management is at the heart of those stores. Much like a menu is for a restaurant, our inventory products have transformed the management of their business, making it seamless, scalable, and ensuring the accuracy of their inventory. Just like online ordering is foundational for restaurants, operating an e-commerce channel is critical for retailers. Having that seamlessly integrated with the POS, leveraging the same inventory as in-store, these are big differentiators. In the same way that we modernized restaurant tools over the last 10+ years, we're modernizing the tools for retailers, simplifying the complex to make their lives easier. Now, international is another example, where we're expanding our addressable market with modest incremental product investment.
We're adding important foundational capabilities, currency, fiscalization, translation, and a global payments platform. Once we finish embedding these core elements into our platform, we can expand to future markets with less R&D investment even faster. On the product side, we went to market with just a few of our initial products, and already just with POS payments, KDS scheduling, the initial offering is really resonating. We're also finding that the same core killer features that we built for U.S. restaurants are things that our international customers want as well. So we're excited as we go through the year this year to roll out several of our guest-facing and core commerce products, and then we have a roadmap to methodically bring more of our existing products in our platform to all of our international customers.
We're very confident that this approach of expanding our platform further will allow us to differentiate our global offering and significantly accelerate our progress. Both of these investments in platform capabilities and product components, we are making with an eye towards positioning ourselves to quickly and efficiently expand beyond our first three markets. Finally, we continue to serve the above store capabilities that are required to grow in our enterprise customer base. Now, inside the four walls of a restaurant, the needs of an enterprise restaurant chain are no different than they are for SMB. So again, the same core functionality that we have, that we've invested in for years, help to differentiate Toast in the Enterprise segment.
On top of that, we've been adding above store capabilities that large operators need, and things like what we launched, our newest management suite offering that we just launched, Advanced Analytics, Publishing Center, Multi-Location Management. You just heard from Julie talk about that's her favorite feature, so it's great to hear validation of the work that we're doing on the enterprise side. Over time, we're gonna continue to take the same approach we do with all of our customers, which is to use our culture of innovation to drive more value for customers. No different for any of our segments. We will continue to create more value for enterprise customers through above store and the foundational capabilities in our platform over time. Okay, so now let's take a look at how all of those things come together.
The breadth and depth that I've just talked about, and the number of customers that we have, put us in a position to harness the power of AI to create outsized value for customers and unlock the next phase of our innovation. So first of all, we all know that data is the most important ingredient to unlock AI. Without AI, data, you can't power AI. The breadth and depth of our products allow us to capture the detail in the restaurant across interactions with guests, employees, and suppliers. And with over 100,000 locations and many of the best restaurants in the United States, we have all of these data points at scale.
So this gives us really valuable, unique data set that's very hard to replicate, and it positions Toast to provide insights on everything from sales performance to the most granular operational metrics inside the restaurant. Now, while data is key, data and AI alone still can't create value. They need to be part of a fully integrated solution to unlock their full potential. And ultimately, it can't just be about creating a cool demo. You can't just release an AI feature and say, "Hey, I've got AI now." It actually has to provide step function value for customers. This is the unique challenge that we have, and there's very few, if any, companies in our market that can bring together the scale, the data, and the capabilities to do this. So this is why Toast is the best positioned to capitalize on this revolution going forward.
So let me bring this to life with an example of how we're transforming our customer support experience with AI. So the initial step to get adoption was the release of Toast Now. This put real-time reporting in the hands of our customers, and today, around half of our customers are using this app every single week, and that number only continues to grow. Next, we had to integrate technology from a partner to enable our care agents to switch from phone support to text support. We had to leverage our extensive knowledge base of existing content to feed into the AI to understand how to resolve tickets. And of course, there's still a human element to it. We have trained care agents to step in when the AI is not able to resolve more complex issues yet.
This is a great example that shows how you need more than AI. You need new software, you need new systems, you need existing content to feed it, and you need humans working side by side. You need services. This fully integrated approach is what creates outsized value. Today, over 15% of our support volume is already now going through this, and that's growing every day. We're seeing clear signals of the value we're creating. Over 30% of the tickets are able to be deflected by AI. Our customer satisfaction in this experience is much higher, and the agents themselves are 2x more productive with the tools that we've been able to give them.
This experience is also only going to get better as we collect more data, as we enhance the component parts and the AI engine, and as we scale it to our entire growing customer base. And so, as I said earlier, we believe the most important thing is that AI helps to solve for creating outsized customer value... And that's, as I mentioned, pretty hard, 'cause restaurants are complicated. Every SMB location is a little bit unique, and in many ways, running a restaurant is a form of managed chaos. It's not an easy thing to get a demo to work in that kind of environment. So it's important that we figure out how to ensure that AI works for the needs of our everyday, gritty, real-world restaurant environments. And we, as a company, understand restaurants better than anyone.
This depth and, of both our industry understanding and our customer relationships is what's gonna allow us to figure out how to leverage AI within that complex restaurant environment. This is where the craftsmanship of 100s of product teams, each talking with 100s of customers to find the right way to apply AI technology, is gonna come in. And so some examples that the, our product teams are exploring today of where we believe we can create outsized customer value. First, dramatic productivity gains. What are the tasks that restaurateurs are doing every single day that we can make significantly easier to do? That could be managing a team, that could be ordering food and beverages, that could be paying bills. Those are the types of things that restaurants have to do every day.
The second thing we're doing is designing AI products to make it easy for customers to do things that they might not otherwise have the time, the skills, or the expertise to do. How do we democratize access to specialized expertise? A great example in that category is what Aman mentioned: our marketing AI assistant. Our customers want more revenue; they want to do marketing, but they will tell us they just don't have the time, and they're not marketers. Some of our customers will spend a lot of money on expensive third-party contractors to do the marketing for them, but many restaurateurs don't have the dollars to spend. And so what AI can do is to make our customers into great marketers.
With a few clicks, the AI can auto-generate campaigns and auto-generate campaign content, and the customer can say, "That looks great," push the button, and all of a sudden, they've become a marketer. They've been able to do something for which previously they didn't have the time, they didn't have the expertise, they didn't have the capital. So we think there's a lot of examples in that category of what the best restaurateurs do that we can really make much simpler and easier with AI, and allow every restaurant to do, and significantly improve the performance of their business. You heard about our recent launch of our Benchmarking product as well. We're very excited about this tool because we have over 100,000 restaurants at scale, including some of the best restaurants in every single city.
You heard JV talk about local density and how important this is to our go-to-market engine, but it's also really important for the value we're able to provide customers with our benchmarking tool. I'll take an example of a customer, GD Ritzy's in Columbus, Ohio. They used the tool and found that they were missing out on late-night sales compared to their local peers. Now, they plan to stay open an hour later every night, which they expect will increase revenues by 3%-5%. That doesn't sound like a lot, but when your profit margin average in a restaurant is 5%, and if a lot of that increase in top line flows directly to the bottom line, it's huge. That's a massive increase.
They also saw that they lagged similar local restaurants in their online orders, and they've adjusted their marketing to drive more guests through their online ordering platform and their mobile app. So it's really easy to see how customers can quickly use benchmarking to improve their business. But it's also worth noting that this is very hard to copy. GD Ritzy's doesn't really care about what's happening here in New York. They don't care about what's happening in El Paso, Texas. They don't really even care about what's happening at the coffee shop down the street. So without the local density that we have, without the wide variety of restaurants that Toast has, it would be very difficult to provide the kind of value that our benchmarking marketing product is providing to our customers today.
So we're just scratching the surface with what we can do with data and AI. And this year, the Toast product is gonna get a new superpower to bring this to life with our own AI Copilot for restaurant operators. I'm super excited to preview for all of you what's coming in 2024 to a handful of our customers before the end of the year, a new AI agent called Sous Chef. This is the brand for our AI efforts going forward. And over time, our AI Sous Chef is only gonna get smarter as all of our 100s of product teams start to plug into it, to create new skills, new insights, new next best actions, to create this analyst and this copilot. So let's roll the video and see what's coming from Sous Chef this year.
Hello, my name is Jehad Affoneh, and I'm Chief Design Officer at Toast. I am really excited to introduce Sous Chef, the AI assistant we are building especially for restaurant operators. Sous Chef will use AI and Toast's unique data to provide operators tailor-made recommendations and allow them to ask nearly any question about their restaurant, guests, or employees. Let's take an example of what we envision. Using varying different data sources, Sous Chef may find an opportunity to grow my revenue during shoulder hours on Wednesdays between 5 and 6 P.M. Clicking on that, I would get a detailed analysis of the way Sous Chef made this recommendation. Sous Chef is showing its work and helping me gain confidence in its credibility. Net sales are down during these hours, and my labor costs are up.
I'm also performing lower than my peers in my area, which means there is a ton of opportunity here. Sous Chef won't just go do the analysis, it will also create an action plan using multiple Toast modules and products. In this example, Sous Chef is recommending that I combine a promo with an SMS campaign to my loyalty members. It has also auto-generated the content of that message for me. I don't really quite like the way the SMS looks, so I'm going to quickly go change it. With Sous Chef's help, I can try a couple different versions. This one looks good. I'm gonna save it, and with that, I'm ready to launch my action plan. And just like that, the action plan is out.
... As day turns into night, Sous Chef keeps me up to date on the impact it's making for me, and gets me ready to close for the night with timely recommendations and new insight. This will be one of the many optimizations Sous Chef is being built to recommend for me every day, helping me improve my business one day at a time. We're excited to have an early version of Sous Chef in the hands of select customers later this year.
All right. That's incredibly exciting. I think in the swimming pool for magic, right? That's what you want from great technology. And so we're incredibly excited about the potential benefits this is gonna provide for customers, whether that's unlocking efficiency gains, giving them new business insights to improve their customer experience. It's just the future. So we look forward to continuing to see this get better and better, and smarter as we add more going forward to help our customers. So to wrap up, I'll leave you with a few key points. First, we have the unique vertical SaaS platform with the breadth and depth to solve the unique, complex needs of any restaurant concept in the industry in a way that horizontal-first solutions do not. Second, we're positioned to develop and scale products fast and efficiently, and continuously improve productivity.
Third, the platform that we've built can easily extend into new geographies and adjacent verticals, and as we make those first steps, we're doing it in a way that adds the foundation, so we expand even faster and more cost-effectively going forward. And finally, we're entering into this exciting new phase of innovation, where our incredible data asset and AI can unlock a completely new level of value for customers. Now, before I turn it over to Michel to talk about how all the products work together to translate the value that we create for customers into value for Toast, you'll hear from another customer, Riddhi, co-owner of Befikre in Toronto, on her experience with how we help her restaurant grow their sales, create a better customer experience, operate more efficiently outside of the US as well.
We bring the element of entertainment. We do a lot of Bollywood dance parties, live bands, equally focusing on the food and the gastronomy piece to it. I co-own the restaurant named Befikre. We're located in Toronto. I would say from hostess to kitchen staff, to our head chef, our servers, bartenders, us as owners, everybody is using Toast in some or the other way. We started with POS and KDS. Those two were a game changer for us. When we got introduced to the KDS, the communication between the kitchen and the front and the bar is through this one machine, which is very important. Before, we used to use physical printers, where you'll have physical receipts. We would have 50 receipts, where all the chef is doing is, you know, trying to coordinate the receipt, which was taking a lot of their time.
It's really helpful for a chef and for the kitchen team, for the service team, to see what exactly is happening here. Now, I don't have to shout on weekends, to just read the KDS and orders, make sure they're making the right dishes, and errors have been eliminated.
I think having KDS in place has helped us save one full person coordinating the orders for an eight-hour shift.
Before Toast, the server usually take, like, three or four, or maximum five tables if we get big tables. But after choosing Toast, the server can easily take eight to ten tables because the devices that they have are very handy.
You have one system where you take the orders, you have the same system to do the payments and everything. Our average guest check, when we started, was around $45-$50, and now with all the training, I'm so proud to say that we're at $65 right now. Toast has really good reporting system online, where I can sit on my phone, I can sit on my laptop, I see everything real time, where I can make sure that my staff is taking care of every single table. I don't have to be physically here to do that job, which makes my life very easy for me to focus on a lot of other stuff, which I can, to grow my business. Toast has been very helpful overall in the whole transition of opening more and more.
I think we started with just downstairs with a capacity of 300, then we opened our upstairs private lounge, and now that summers are coming, we're now opening for the patio. We'll be adding many more products to it as well.
Thank you, Steve. My name is Michel Rbeiz. I'm the General Manager of FinTech. In this next section, we're gonna talk about our platform value and our monetization strategy, and how it flows from what Steve just covered with you on our product strategy. To frame today's discussion, we'll discuss three primary levers, coupled with our product strategy, that drive our monetization. But at the core of our strategy, there's one key theme: driving customer outcomes underpins our monetization strategy. We enable our customers to grow, and we grow with them. The first lever is around our product packaging, and we package our products into suites to unlock value and monetization. Those suites are organized against the critical jobs that are needed to successfully run a restaurant.
Within each suite, there are tiered landing points with the natural upgrade motions as needs of those customers become more sophisticated over time. And as we increase the value that we deliver with new innovation, we can unlock more customer value and evolve our pricing. The second lever is around our scale, and how it's enabled us to increase pricing with the value that we deliver, as well as our FinTech net take rate. And then the last lever is as we look beyond the existing products, we sit at a unique vantage point between 112,000 restaurants, their guests, their employees, suppliers, and their partners, and we believe we can drive better outcomes in the ecosystems that we play in and pave the next S-curve. Before we go into each of these levers, let me recap a little bit how we measure overall monetization.
Our key metric is recurring gross profit per location. This includes recurring gross profit from SaaS, payments, and other FinTech products. Today, this is primarily Toast Capital. Overall monetization has grown by 37% since 2021. This growth is also reflected in an increase in ARPU, driven by a growth in our platform adoption and more closely aligning value with pricing, particularly with new customer cohorts. The growth in Toast Capital to $1 billion in annualized origination has played a key role in driving all-in monetization, which is typically not captured in ARPU. As we look forward at the new products we're piloting, recurring gross profit per location captures a comprehensive view of our monetization. I'll now cover the main monetization levers in a bit more detail.
Just to show a link a little bit with what Steve just covered, our products and platform are organized around the critical jobs that are needed to successfully run a restaurant. We drive better customer outcomes, which in turn drives monetization. We enable our customers to grow, and we grow with them, and you'll see this as a recurring theme throughout this section. The five critical jobs are, one: help a restaurant run better and deliver one integrated experience between front of house, back of house, and our partners. Second: attract, engage, and retain guests. Third: building and managing teams. Fourth: managing their costs and inventory, and lastly, managing their finances and enable them to thrive. Our products work better together to create a flywheel effect across the entirety of the restaurant life cycle. Now, within each suite, we also have tiered packages.
Each suite provide our customers with tiered landing points that cater to their different needs, and there's a natural upgrade motion throughout. We follow a good, better, best tiering structure. Good is a foundational tool, meant to meet the basic needs of a customer, and it typically has a lower price. Better is a differentiated product offering meant to incentivize adoption, and it's generally sold at a premium. Best is our best-of-breed, fully integrated offering, and it commands the highest price. Tiered packaging enables us to align our packages and our suites with how customers run our business. We make it simple to buy and simple to sell. We create the natural product-led motion to upgrade, and this framework leaves additional room for us to add tiers and increase prices as we unlock new product innovation.
Let me give you an example with the Digital Storefront Suite that Steve just covered. The Digital Storefront Suite enable restaurants to grow their online sales and own the guest relationship. Good includes our Digital Storefront Essentials. This is commission-free online ordering, Toast Delivery Services, and Toast Takeout. Better, which we just launched, includes a pro version of online ordering and custom white label websites for each restaurant. Best provides a custom mobile app white label for every restaurant, downloadable from the App Store. And the different tiers increase the value a customer gets, and in turn, the price that we can charge. And there's an intuitive upsell motion for customers whose needs grow more sophisticated over time. For this suite, in particular, attach went up from 45% in 2019 to over 60% in recent years, and during that time, ARPU doubled.
Zooming out, when we look at our products in their totality, they work seamlessly together to improve outcomes across the entire restaurant ecosystem. Our digital storefront, which we just covered, drive repeat visitors and generate new demand for our customers. Our core POS connects front of house and back of house for one integrated experience. We provide handhelds that are a POS in the palm of every server. This, in turn, drives faster table turn and improves service quality. This improved service quality drives a better guest experience, which in turn then translate to higher sales, tips, and wages. We offer restaurants solutions for faster employee access and benefits, and because it's all on one integrated platform, our back-office solutions provide real-time insights based on sales, costs across the entirety of the ecosystem, and enable restaurants to fine-tune their recipes and manage inventory to improve their margins.
And lastly, our FinTech and embedded finance offering enable them to better manage their finances and consider expansion. Let me give you a real example of how this comes to life for one of our customers. We mentioned how one of our core tenets is to enable our customers to grow and growing with them. Colada Shop is such an example. They grew 3x with Toast in terms of GPV and location. This also translated to ARPU tripling and total ARR going up by 5x-7x. Colada is a D.C.-based Cuban fine casual restaurant serving Cuban coffee, food, cocktails, and they got started in 2016. They joined Toast in 2017, and have since added four more locations.
Initially, they started with Toast like any other customers, with restaurants and guest modules, and over time, they added products from virtually all the Toast suites as their business grew. I spoke to Daniella, the owner of Colada Shop, about the impact Toast has had, and I asked her for specific examples of how we helped her grow. She mentioned that the number one thing that she loves about Toast is that our product works seamlessly across all the suites to be more efficient. There's no syncing to do across modules. The other example that she gave me is that the kiosk increased average check size by over 10%. She's able to get real-time insight into sales per labor hour, and which enables her to adjust staffing.
They also use Toast Capital to catalyze their growth from two locations to six, and the results speak for themselves. Colada's business grew by 3x, from two to six locations, from $2 million- $6 million in GPV growth, and during this time, Toast ARPU went up by 3x as well. Now, thinking beyond the existing product set and pulling on this thread of innovation that Steve just covered, we believe there's a large opportunity to innovate within each suite to deliver more customer value, which will result, in turn, in higher monetization. As you would expect, POS and payments are among our most mature offerings, and we believe there's room to continue expanding our offerings and attach rates across all our suites. Very similar to what we just covered in digital storefront, we expect ARPU to expand considerably across and attach rates across the rest of our suites.
If we just look at the gross SaaS ARPU potential, it has increased from $20,000 in 2021 to over $30,000 at the beginning of this year. New product innovation will drive increased value to customers, which, in turn, unlock new monetization opportunities. Let me give you another example. The Team Suite aims to make Toast restaurants the most sought-after employers in the restaurant industry. You'll recall we started with payroll in 2019 when we acquired StratEx. We've then expanded this offering to include scheduling with the acquisition of Sling. During this time, we also launched our pay card offering and a number of other features. From 2019 till now, attach rate for the Team Management Suite went from 3%- 25% at the beginning of this year.
Later this year, we'll be launching our integrated Toast Teams app, which brings together all the functionality under one app to be the one landing spot for restaurant employees to onboard onto a restaurant and get acquainted with Toast. This is the key to enable Toast restaurants to be the most sought-after employers in the industry, and it creates new monetization opportunities as we expand this direct employee relationship. Let me shift a little bit to talk about pricing. Our business has matured, and with our scale, so have our pricing strategies. We continue to optimize pricing to deliver value and win market share. In particular, there are two areas that I wanted to highlight here in addition to product packaging, which we just covered. The first one is our pricing maturity.
This includes fine-tuning pricing on select products and closely aligning value to pricing, which enables us to increase our prices. The second one is around our pricing discipline, and it's about narrowing the discounting distribution across customers and improving discipline with new cohorts. So as an example, SaaS ARPU for Commerce and Guest product has gone up by 50% since 2020, and this was driven by an increase on a subset of our products, and during this time, attach rates also went up. Similar to this, our scale has enabled us to improve FinTech monetization. To double-click on our scale, our product innovation support our location and GPV growth, and today, approximately 0.5 % point of the U.S. GDP flows through Toast.
As we look forward, GPV growth will continue to come from the continued digital transformation of our industry and Toast product innovation that fuels it. So we continue to make investments to support our growth here, including investments to improve GMV capture. Steve and Aman touched on some of those, delivery services, catering and events, and expansion to retail. And we also make investments to help customers grow with new products like surcharging, accepting new digital payment methods, and access their money instantly via instant deposits. Now, as more GPV flows through Toast, we're also evolving our take rate strategy. We've grown the FinTech take rate, this includes payments and capital, from 36 basis points to 55 basis points since 2019. And as we look forward, we have four levers to expand FinTech monetization and counter headwinds in processing costs.
The first lever is around the COGS optimization, and this involves leveraging our scale in our partnerships, so that's processor and network agreements, paired with a continued optimization, such as dynamic routing. The second is around a continued refinement of our go-to-market pricing to align our growth engine with product value. So this involves new pricing structures, such as pay-as-you-go, and an optimization of channel-based pricing. The third is around driving GPV growth and increasing the digital mix. We just covered some of those investments on the prior slide. If I zoom out, and we look a little bit at the long term, we have upside opportunity in a couple of dimensions. The first one is around expanding our presence across the transaction life cycle into consumer, supplier ecosystems, and I'll cover ecosystems in a bit more details in a couple of slides.
Then the second one is around an expansion of embedded finance products. Building on this last point, I'm gonna dive a little bit deeper on embedded finance and lending. We have a large opportunity. We have a large opportunity to capture, share, and embed finance, and it starts with Toast Capital. Embedded finance today primarily consists of Toast Capital, where we offer eligible customers access to capital. It's a far superior experience to alternatives in the market, and the results shows. We have a very high NPS rate and a 120% gross repeat rate for this product. We're also piloting a number of new embedded finance products: a banking solution, an insurance solutions, a bill pay solution. And we believe we have a very strong right to win in this market. We have a large underwriting advantage based on the data on our platform.
We cap our credit risk. We have a loan repayment model within the Toast ecosystem. We have robust funding partnerships, and the product offers both Toast and its partners a healthy risk-adjusted return. And to power these products, we have a network of partners we work with. In particular, for Toast Capital, we follow a dual funding approach with a clear strategy for expansion, with a balanced risk equation. The first structure, which has been our model to date, is a credit risk transfer structure, where we share basically the risk with our banking partner. Revenue take rates in the mid-teens. Losses of this program are capped at 15% of origination, though we manage to a much lower number, and this structure benefits from a healthy risk-adjusted margin with high single-digit return per loan origination.
The second structure, which Elena recently announced in our Q1 earnings, enables us to expand by facilitating Toast Capital loan sales to a third party. This is what we refer to as forward flow. In this approach, we do not take any credit risk. As a result, there's a lower revenue take rate with return risk based on performance. This results in mid- to high single-digit return per loan origination. Stepping back, as our footprint grows, there are some long-term upside opportunities beyond the existing Toast products. So we've grown to 112,000 restaurants. Every month, 2 million employees clock in to our POS. We take payments from 130 million unique cards. We process 700,000 invoices.
We sit at a unique vantage point between restaurants, their guests, their employees, suppliers, and partners to drive better experiences, better outcomes, and upside opportunities in the long term. Aman touched on our opportunity to build powerful networks across the stakeholders that we serve. So for example, our Toast consumer app is in the early stages of becoming the remote control in our pocket for the best dining experience in this country. The goal is to provide a frictionless, personalized experience for discovering, booking, ordering, and paying restaurants, all while saving guests money and driving new demands to restaurants. The other potential upside opportunity, which Steve touched on, is providing operators with an AI platform with benchmarking for them to learn from one another and improve decision-making. We can do this because of our scale and because we believe that the best restaurants run on Toast.
As I wrap up, I leave you with four key takeaways. The first one, driving customer outcomes underpins our monetization strategy. The second is around packaging our products into suites which work better together to unlock value for our customers, and new monetization opportunities are unlocked with new innovation. Third is around our scale, enabling multiple levers to increase our pricing, as well as our FinTech net take rate. And then lastly, we see platform expansion to stakeholder ecosystems as the potential next S-curve. Before I turn it over to Elena to wrap things up, you'll hear from one more customer, Maman, a cafe and bakery, who provided us breakfast this morning and were kind enough to participate in our product demo. Maman started in New York, and has grown with Toast to over 20 locations across the Mid-Atlantic, with multiple service models. Thank you.
Maman is a cafe and bakery, and for us, it was very important to do something that represents us. So I hope, you know, when you come into Maman, you feel like you're in a dining room in a home. When we started talking to Toast, we had six locations, and since we partnered with Toast, we have now opened 24 locations. The beautiful part about Toast is all the data that they were able to provide us, because as you grow, you cannot be everywhere. Without a partner like Toast, it would have been very complex to grow that fast. For example, at Maman, we do a counter service Monday to Friday, and on weekends we do table service. You can be a fast casual at the counter, in a switch, you can become a table service restaurant.
Using the Toast Go 2 has been crucial for our brunch service. It really speeds up the production of the day. Before Toast, we had to manually write everything, so the addition of KDS screens, kitchen display screens, has been a huge, huge plus for us. It has generated more sales.
We open a store, it's almost like... I would say it's really at the bottom of the opening list at Toast, because we know it's gonna be just a plug and play, which is what we want from a POS provider, for sure.
Without Toast, Maman would not be as successful or would not have the growth that it does today.
All right. Thank you all for being here for our first Toast Analyst Day. I'm super excited to talk to you about our long-term opportunity. You heard from my colleagues today, and you saw in these videos, the passion we have around creating differentiated customer experiences. If we do that well, we believe we have conviction to drive long-term shareholder value. The conviction we have is grounded in four things. One, we are early in our TAM opportunity, lots of runway for growth. Two, we believe the intersection of our go-to-market footprint motion, combined with our purpose-built vertical platform, creates a competitive advantage, and that competitive advantage allows us to add restaurants to our platform at high incremental margins. Third, with this growing profitability, we are enabling growth in future verticals where we believe we have a right to win.
Finally, we are confident in our path to adjusted EBITDA margins of 40% or more. We have oriented the company around driving GAAP margin. There are three financial principles that we use every day as we make investment choices. One is driving durable growth, two is driving leverage as we grow, and three, underpinning both of these, is a very disciplined capital allocation framework. I'm gonna go through these in more detail. At the center of everything we do is our customer. If we can drive differentiated outcomes for our customers, the financials will follow. These financial principles complement our strategy, and our recent performance is a proof point that our strategy is working. Let's take a look at our operational metrics.
Across all of our operational metrics, we have more than doubled our performance, and for ARR specifically, it is growing over 140%, our North Star metric. This operational performance has resulted in strong financial performance. We have found the recipe to balance both growth and profitability. As you can see, we've grown over 200% in our gross, recurring gross profit streams, and at the same time, we have delivered over $300 million of operating leverage since our IPO. When I reflect on what really produced the outcome you're seeing here, it's really two things. One is we are building a culture of efficiency in every corner of this business, and at the same time, we are driving growth. Two, we've invested to build a differentiated business. We're reaping the benefits of that business.
We're at a tipping point of scale, where we can add customers to our platform at high incremental margins. I'm incredibly proud of the results I just shared with you, but I'm even more excited about what lies ahead for us. The execution that you've seen is the proof point that our strategy is working. The intersection of go-to-market and our purpose-built platform has seen success. We're gonna lean into that success to drive and open the door for future vertical adjacencies, where we believe we have a right to win. So now I'm gonna dive into durable growth. When we think about growth as a management team, we often talk about building a generational company. When you're building a generational company, you have to consider what are all the growth levers that we can lean on over the next decade?...
One, we're early in our TAM opportunity, and as JV talked about, the flywheel dynamic is working. Two, Michel just talked about our platform monetization strategy, and we believe there is untapped monetization opportunity within our customer cohorts. And finally, we will extend into adjacent TAMs, given our advantage model that I just talked about. So let's talk about the TAM. Since our IPO, Aman mentioned we have doubled the locations in under 3 years. The flywheel dynamic is working. The innovation that you've seen strengthens our opportunity to continue to penetrate this TAM, and we're able to serve needs of restaurants of all types and segments. The fragmented market that Aman talked about, and a lot of that being legacy players, positions us to capitalize on this opportunity as we continue to innovate.
As restaurants continue to digitize their operation from front of house to back of house, we are well-positioned to capture this opportunity. The chart on the right reflects this is looking at our customer cohorts since they joined Toast. As you can see, our customers are expanding with us over time. All of our cohorts show expansion, and anecdotally, we hear often that customers want us to do more for them. This is a proof point that our go-to-market teams are executing well against this TAM, and we are far from our potential, as Michel laid out, in terms of our terminal attach rates. Now, looking at our customers, and specifically looking at customers that pay us more than $10,000 a year, what you can see is we've grown from 2% to 14% since 2020.
The key point here is there's multiple paths by which a customer can pay us over $10,000. So I'm showing a couple of examples here of two restaurants, both processing about 1.3 billion of GPV. And as you can see, one customer, the New York FSR, has a host of products on our platform. The Texas pizzeria has four products. Both customers are paying us more than $10,000 a year, speaks to the breadth and depth of our platform. Stepping back, what you can see here, this chart reflects our total monetization, including SaaS and FinTech.
And what's clear is customers are expanding with us, and as Michel mentioned, we have untapped monetization opportunity ahead, whether that's through continued innovation, whether that's continuing to optimize the products we have, we believe there is untapped monetization opportunity within our cohort of customers. Now, zooming out as we think about the broader market, we have a proven playbook that we've been executing in the U.S. market. We've used that platform and product to unlock enterprise. We're leveraging these core strengths to add and invest in adjacent markets with modest investment. Closing out the section, overall, between our unlimited, with early progress in our TAM, our platform monetization, and our ability to extend into natural adjacencies, we believe we can drive enduring growth.
I'm gonna pivot now to scaling efficiently. As you can see, over the course of the last several years, we've already delivered significant operating leverage. Through our differentiated model, our continued focus on unit economics, and the culture of efficiency, which I've talked about, all of those combined are allowing us, enabling us, to add customers to our platform at high incremental margins. As we're extending into new TAMs, payback periods will continue to be, and have always been central to how we make decisions. And as you can see, since 2019, even as we've invested in international, even as we've made investments in retail, we've managed our payback periods to mid-teens, 14 months. Flywheels are a key contributor to our payback periods. And as you can see, I'm sharing here an example of the, of the flywheel market in the South.
As we've compounded our ARR growth here, what you can see is our rep headcount has remained relatively flat. JV talked about that earlier today. That is the power of our flywheel markets. Taking another double click on flywheel markets, the chart on the left shows the ARR contribution of a flywheel market is 2x that of a market that is not a flywheel market. And more important, only 30% of our markets are flywheel today, which speaks to the opportunity we have to continue to grow efficiently. Beyond our go-to-market motion, we are embedding a culture of efficiency across the company. As you can see here, whether it's R&D, sales and marketing, or G&A, we are driving operating leverage in every part of our P&L.
This is through prioritization, through focused on diligent hiring, through automation, through considering global shared service centers for hiring. Every corner of the business is driving efficiency. I shared with you goals we have around stock-based comp at our last earnings call. We are driving towards a medium-term target of stock-based comp as a % of recurring gross profit in the low teens, and we are also driving dilution to 2% or less. So what is giving me confidence that we can deliver on this goal? Number one, we announced a restructure earlier this year, which had an impact on our stock-based comp in 2024 and beyond. Two, we issued grants around the IPO when we were hiring significantly. Those will roll off in 2025.
Three. We've changed our equity granting policies, being more surgical and targeted, making sure we're retaining our top talent, but also making sure we can attract the best talent to Toast. And finally, we've increased the visibility of stock-based comp to all of our leaders in the organization. So every single time that an employee is hired, it is very clear what the stock-based comp impact is. So when I put it all together, and I think about this differentiated model, the deep focus every day on unit economics and payback periods, combined with this culture of efficiency, which is embedded deeply in our organization, I have confidence we can still add restaurants with high incremental margins as we grow and drive operating leverage for the long term. I'm going to pivot now to our capital allocation framework, which I talked about at the beginning.
There's really four principles that underpin our capital allocation strategy: driving durable growth, which I just talked about, scaling efficiency, and balancing both of those, and of course, maintaining a strong, flexible balance sheet as we continue to drive free cash flow. And really important, we're orienting the company around GAAP Rule 40, balancing both growth and profitability on an all-in basis, including stock-based comp. So let's actually go through how we, how we execute against this capital allocation framework every day. Number one, it starts with a continued focus to invest organically in our core business to sustain long-term growth. That is our number one priority. Even as we strategically invest, we're committed to driving increasing profit and free cash flow. Growing the cash flow gives us the opportunity and fuels investment in new growth areas.
And finally, with excess free cash flow, opportunistically, we'll consider M&A, and opportunistically consider share repurchases. We have a framework internally about how we think about new growth areas, so I'm going to walk through this playbook. This is the same playbook that we used when we invested in the U.S.. We've run it many times. Number one, we look and identify areas where we believe we have a right to win, leveraging the capabilities that we've invested in over a decade. Two, we place a seed investment to prove our thesis. And three, we focus on the KPIs that we're focused on to drive leverage and make sure we tie back to the payback periods that I've talked about. If we see the signal with customers, and we see the KPIs improve, then we increase investment.
It's very much a gated process to invest further. So I'm going to walk you through an example with international. We made an investment in international late in 2021. We had a thesis that we could take our core capabilities and, and leverage those to expand internationally. We proved. We built a model, we started adding customers to our platform, and started to begin to see what the unit economics would tell us over time. As we've learned more, we're now in a position to invest more in that platform, to continue to grow and continue, and we are continuing to see the KPIs that we set out and the goals we have. This is just one example of how we manage the business. Very much seed investment with gated funding as we make progress. So now I'm going to pivot to our long-term financial framework.
We had earnings a few weeks ago. I provided guidance, we provided guidance on both Q2 and 2024, and we are on track to deliver against that guidance. Today, I'm going to focus on the long term. In February of 2023, we guided to 30%-35% adjusted EBITDA margins for our core business. That did not include international, and did not include enterprise or any other segments beyond our core business. Today, I'm updating that guidance to deliver 30%-35% within two to three years for the entirety of our business. In addition to that, on our recurring gross profit stream, we are introducing new guidance to deliver 20% growth at a minimum, each of the next three years. What gives us confidence in the guidance I just shared? It's really what we've talked about today.
We've talked about the multiple growth levers in our business across the growth algorithm we have, locations, and monetization per location. JV talked about the opportunity to continue to execute against this flywheel dynamic. Michel talked about the untapped monetization opportunity. Together, we believe those will drive the growth algorithm that supports the margins I just shared. In terms of efficiency, we are driving leverage across every corner of this business, across every P&L line item. This is how we do business every day. For example, JV talked about how the sales motion is scaling efficiently and driving more productivity as reps get deeper into a market. Steve talked about the productivity he's trying to leverage by hiring outside in shared global services, service centers outside the U.S. In G&A, we're focused on automation as well as driving and increasing hiring outside the U.S...
I just talked about stock-based comp. This is what gives me confidence, and there's detailed initiatives underneath each of these that give me confidence that driving leverage in our business is possible, and we believe that every corner of this business is going to drive leverage over the long term. As I look out further beyond the next two to three years, we have confidence in our business and in the trajectory that we've seen to deliver adjusted EBITDA margins of 40% or greater. As I think about both all of the growth levers we talked about today, as we see the market unfold, the timing to deliver this is in our control. We've proven our ability to manage both profit and efficiency at the same time. So as I close today, there's a few things I'll leave you with.
We have built something really special. We've got a differentiated model, this intersection of go-to-market and a purpose-built platform that provides a competitive advantage. That's positioning us to lead in the generation shift in restaurant technology. We've hit a tipping point of scale. We're reaping the benefits of this investment we've made over the course of several years, which is enabling us to add customers to our platform at high incremental margin. That's also driving expanding profitability and opening the door for us to continue to grow in adjacent verticals where we believe we have a right to win. We're positioned to drive durable growth for the next decade and expand profitability. Our team is focused on GAAP margins, and if we deliver on the differentiated outcomes that we all talked about today, we believe we can drive long-term shareholder value. Thank you.
Got it. Good job.
Thank you.
Okay, I'm gonna have the team come up and join for our Q&A. Just give us a moment to get seated. We'll have everyone just kinda raise our hand and call around, and if you could just give your name and your firm, and we'll, as usual, try to keep it to one or two questions so that we could get to as many of you as possible. So...
It's for you.
Seated at the end here.
Hey, thank you. Andrew Bauch from Wells Fargo. Just wanted to touch upon the 20%, at least 20% growth over the next two to three years. If you could maybe just unpack that across the three legs of the stool on your growth strategy, be it locations, monetization, and modules.
Yeah, sure. So A, we're incredibly confident, and if you think about all the growth levers that we talked about today, whether that's we're early in our runway, in our TAM, combined with the monetization opportunity that Michel talked about, that's really what gives us the confidence that we can continue to grow. And we're taking the capabilities that we've built over the last decade, really, and using those with modest investment to, you know, basically invest in adjacent verticals, so applying that strategy to adjacent verticals with really modest investment. And so all of the levers I laid out earlier in this section around growth, really is what gives us confidence in that 20%.
Should we think about the contributions, you know, fairly equally?
... We're gonna be balancing those. So I think as the market unfolds, you know, it'll dictate how those are balanced, but we're constantly balancing those every day, really. And JV, you can talk about how, you know, when a rep goes to a restaurant, they're really balancing, "Should I close this deal now? Is this customer really ready for the breadth of the platform?" As an example.
Yeah, they're skilled, I mean, they, you know, as they get deeper into the territories, they develop deeper and deeper relationships with their customers, and they become really skilled at knowing, you know, what new prospects can take on initially, and what we have to go back and sell in order to either win the rooftop or drive ARPU.
Maybe we'll go to Will over here on the front.
Hey, thanks for taking the question. Will Nance from Goldman Sachs. Wanted to follow up on the cohort chart that you provided. I thought that was pretty helpful, and I think we've been talking a lot for the past two years about the changes in the go-to-market, the lower upfront sale, and then followed by the upsell. And I thought it was particularly notable that that line had actually crossed the prior year's chart already or was pretty close. So just wondering if you could maybe unpack some of the trends you're seeing there, and maybe do kind of a postmortem on that change in the go-to-market, and, you know, maybe what you're seeing from the upsell team. Thanks.
Yeah, sure. I can start, and JV, you can comment on the upsell team. But I think what the chart really showed is, you know, the breadth and depth of our platform is enabling that growth over time. And our team has done a really nice job of balancing what we land up front vs how we grow with the customers, and as we've added more and more innovation, it's given more of a toolkit, really, for the reps to, you know, go back to the customer and upsell at the right time when it's right for them.
Yeah, I think on the upsell, I'll hit that quickly. It's a newer team for us. We're really excited about the performance so far. It's actually different scaling that team vs a field-based team because you're not bound by geography, so it expands our talent pool and allows us to scale very quickly. We're starting to leverage data in a way that really only we can leverage to understand which products to service to customers at the at what time. And we've got a really unique opportunity, because we can combine the on-the-ground relationship with the folks who live in the market with our upsell reps. And so, again, we're still early days, but we're really excited about the performance so far.
There, get Josh over here.
Josh Baer from Morgan Stanley. Wanted to ask one on the long-term margin targets. Nice increase to 40%, in my view. The question is on the assumption embedded in there is that it assumes the current business mix, but the business mix is evolving as you go after international, move upmarket, and move into new adjacencies. So how do each of those new markets impact the long-term margins?
Yeah, no, it's a great question. So I'll start with saying our core business continues to be our primary focus and where the majority of the investment is. But to your point, you know, we're investing in retail and international. I think one of the key assumptions and tenets that we have around our investment is, you know, we've built this platform over a decade, and we've built this go-to-market motion that is, you know, obviously proven to work, and so we're leveraging those capabilities to extend in natural adjacencies where we have a right to win. And in the example of retail, that's a great example where our customers actually have drawn us there as they've evolved their footprint, and so that, that's what sort of gives us confidence, that we can continue to be successful and to win there.
Yeah. Only thing I'll add, Elena, is if you think—think about, like, our strategy and expanding into new TAMs, we're being incredibly intentional about it, and so one thing Elena talks a lot about is managing the payback periods, managing the margins. In retail, what you see is ARPU is actually higher than our restaurant TAM, and as we think about which subset of the retail TAM we wanna go after, that's something we're really closely looking at. And then similarly with international, we're picking parts of the market where we have conviction, the unit economics, the payback periods, the margins will work. And so we're not gonna put the pedal down and say we're gonna be everything to everybody on day one. That's why we're being intentional to pick which parts of the TAM allow us to grow, open up our TAM, but also expand margins.
Oh, wait.
Jason, over there.
Jason.
Thank you. Jason Kupferberg from Bank of America. I just had two questions. The first one was, can you just clarify the timing on achieving the GAAP rule of forty? It looked like it was starting in 2026, but I wanted to make sure I saw that right. And then just as a follow-up, what kind of SaaS ARPU growth is embedded in the longer-term guidance for gross profit? And is there any material contribution from food and beverage or other adjacent verticals in there? Thank you.
Okay, that's three questions. Let me start with the first one.
2.5.
So the first question... Sorry, remind me of the first question.
Timing on GAAP Rule of 40.
Oh, timing. Yeah, that's within two to three years. That's, that was on the slide.
Okay. And the second question was just the SaaS ARPU growth-
Oh, yeah, so
-embedded in the gross profit outlook.
Yeah, I would point you back to the overall minimum 20% gross profit as an anchor, because really, it's a function of, you know, when we think about the business, it's the growth algorithm that's really across locations and ARPU. And so we're gonna be balancing those always ongoing. So I would point you back to that, and we feel confident, as Michel laid out, all of the monetization opportunity we have, whether that's through our upsell team, through ongoing pricing over time, that's gradual. So we have a lot of levers that give us confidence we can drive that growth algorithm. And then the third question?
... The third question was just anything from food and beverage, retail, or any of the other adjacent verticals. Is there anything in the gross profit guide for that, anything material?
The majority of our business will continue to be our core business. Of course, retail and international will have an impact over time.
Thank you.
Michael.
Yeah, Tim, in the back.
Tim. Tim, in the back.
Thanks. Okay.
Thanks a lot. Tim Chiodo at UBS. So I want to talk a little bit about the SaaS ARR per location as well. I think many investors, as they think longer term, are hoping for or modeling something like a low to mid-single-digit SaaS ARR per location, as we go out into, you know, 10, 15 years from now. I think that's super reasonable if you just think about the pricing and upsell and new products, but there's a pressure with the front book or the new customers coming in a little bit lower, and you've outlined many reasons for that recently in terms of enterprise or international or a little bit of shift down market. With some of the mix shifts and whatnot changing, how should we think about that front book or new customer ARPU?
Yeah.
Will it eventually flip and be higher than the total average, to roughly 6k or so that it is today?
Yeah. Tim, I think first off, first of all, thanks for the question. I think first off, in terms of timing of new customers coming on, I think that's largely a timing thing, because back to what JV talked about earlier, it's about balancing locations and maximizing the upfront attach of the platform. But if you talk to these customers, the thing that you see is, back to what we talked about throughout the presentation, they want more from Toast, because an integrated platform is just easier. And just like on the point of sale, it's taken us a decade to build out the platform to support all the different restaurant types that we serve today. When we first started the business, we only supported a subset of restaurants.
All these platforms, our products, if you think about our, you know, Commerce and Guest, and FinTech, and employee, and supplier line of business, all these products are in a similar evolution, where gradually, over time, we're adding capabilities to support the broader TAM. And that, combined with our go-to-market effort, we believe, you know, gives us convic-- That's, that's what gives us conviction that in the long term, there's lots of opportunity, 'cause the customers are telling us that. I think that last thing I'll add is in terms of mix, if you just think about-- if you think about the restaurants that are added to the platform, there's so many of our customers that are still in our core U.S. SMB business. We talked about this flywheel concept that's really driving our growth.
And so any changes to mix, whether it's retail with higher ARPU and higher GPV, or international with slightly smaller, all those things are incredibly gradual, and we don't think they're gonna be material in the long term in terms of impacting the potential ARPU of the business. Maybe Stephen, try and get over to him.
Stephen. Good. All good.
Thanks. Hey, Stephen Sheldon from William Blair. On the enterprise opportunity, you've become a little more flexible there on requiring payments adoption.
Mm-hmm.
So could you also consider becoming more flexible from a product perspective and maybe not require the POS, at least initially? You've rolled out a few notable capabilities there that I think could be in high demand up market, benchmarking analytics being one of them. Have you or would you consider kinda leading with some of those capabilities, selling some à la carte products, and then just to kinda get your foot in the door, and then selling a more comprehensive software suite over time? How, how are you generally thinking about it?
It's funny, Steve and I were just talking about this yesterday, actually. Look, I think we've built this business over the past decade, where the point of sale is the anchor, and we've expanded on top of it, and that's, you know, that strategy has served us well because if you think about what are the value propositions we have, is that these products work better together, and they're integrated. And so as we and the POS is the central nervous system that drives that. Certainly, there's a lot of, you know, interest. We've seen actually inbound interest from folks that say: "Hey, we love certain parts of your platform.
Could we start, then grow over time?" That's not something we're looking at closely today, just because I think if you look at the investment areas that we feel maybe are ahead of that, it's to build out. Like, if you look at all the focus we've got going up market, it's about building out the capabilities we have to, to, to continue to gain share. So as an example, when you talked about QSRs, you know, building the drive-thru capabilities, leveraging AI for innovation with voice AI as an example.
And so those are probably those are our higher priorities in the near term, but it's something we discuss all the time, because to your point, there's, you know, the TAM that we have, if it's 112,000 restaurants that are live on Toast today, it's very different than the global TAM for restaurants that exist.
I would just say we're constantly exploring new things, right, that we don't necessarily talk to all of you about because they're not ready to talk about. I think we're being very disciplined about how we do that, and to use Elena's capital allocation framework, I think that's very accurate on how we think about not just the product team, but certainly the whole company, exploring different business models, exploring different product opportunities. You know, we're gonna explore a lot. We're gonna be very disciplined about what we see. We're gonna be very, very disciplined about what we scale.
We have DJ right...
Hey, thanks. David Hynes from Canaccord . Aman, for you, I have two questions. Number one, do you think the business could grow faster if you were to moderate kind of the EBITDA margin expansion goals over the next couple of years? And if the answer is yes-
Mm-hmm
... why not run that faster growth playbook? And then, JV, for you, what are the signals you're looking for in international markets to kind of tell you it's time to step on the gas?
Yeah. Thanks for the question, David. Look, I hear you. It's a question, again, we talk about internally all the time. The reason I think it's important to manage the business to the unit economics, is because it's very hard to go down a path and then change years later. And so we've built this discipline in the company across payback periods, gross margins, and that's what's really fueling the EBITDA margin expansion in the business. I think if we were to see, you know, whether it's international or enterprise or retail, we saw opportunity that said, "Look, this is a subset of the TAM." That's why we invested in retail, for example, where driving more go-to-market capacity can allow us to grow faster.
We're absolutely gonna do that, because to your point, like, if you just zoom out and think about what we're trying to do, we want to be the market leader, serving small businesses with core technology, starting with point of sale. And so it—while the margins are great, and it's really important, it's never at the expense of growth.
On the international question, you know, I think I'd say we're already starting to see that signal. I think we're 2,000 live customers. It took us maybe a quarter of the time it took Toast to get to 2,000 live customers here domestically. That's because we haven't had to—like, we already have the playbook, right? And the dynamics that we talked about that are the drivers of that playbook, which are density and social proof, exist in London, in Canada, and elsewhere. And so we have a lot of confidence in our ability to scale a team. Like, we can do that for sure, and we're starting to see great signal as illustrated by, you know, the number of live customers that we've already achieved.
Yeah. The only thing I'll add to JV's comment is the, in international markets, I think there was a slide up there that showed what % of our product, of our platform is available internationally. And so as more of that platform comes online, in fact, customers are telling us they need... The online ordering was a good example. The uptick has been amazing because customers want integrated online ordering. So as more of the platform, Handheld is another example of something that comes online, that's also going to allow us to expand ARPU and drive win rates. And so that's another factor that I think is just as important as go-to-market to put the pedal down internationally.
Okay. So I'm going to make you walk back around. Tien-Tsin Huang, maybe we can...
Thank you. Yeah, Tien-Tsin Huang from JP Morgan. Just, I was hoping you can expand on the consumer opportunity. I heard you mention going into another ecosystem, and then I've heard the transaction life cycle comment. Is the goal to maybe have a billing relationship with the consumer? Just curious where you see that.
Yeah. Great question. We spend a lot of time thinking a little bit about it. So maybe let me zoom out, and I'll come back to the exact specifics of your question. I think the biggest opportunity for us is at the scale we've gone, is that to be able to drive this better experience across the entire ecosystem. So 112,000 restaurants, 130 million unique cards from whom we take card payments every month. And then we actually also are in the early innings of that ecosystem, so we have the Toast Takeout app, discovering, and we also launched Toast Tables last year. And what we really are trying to do is to be the remote control for the best dining experience.
So that's a frictionless, personalized experience that you can only get to because we have both the ecosystem and are integrated into the POS. And the four, you know, if you want, use cases we're focused on are discovering, booking, ordering, and paying at a restaurant. And what this opens up is new monetization streams. So driving new demand to a restaurant, as well as providing alternative payment methods, which opens up basically the next S-curve.
Hey, Bryan.
Yeah, my question's for Bryan Keane, Deutsche Bank. Michel, can you just talk a little bit about the back book on the pricing? I think you talked about certain products, but how do those conversations go when you, when you go to the back book? Because obviously, restaurant margins are so thin when you talk about raising price or how do you get those price increases?
Yeah, I think at the core of it, it's about driving better customer outcomes. That, that's really our promise, is that we talk to customers about basically improving their revenues, improving their profit margins, making them more efficient. And most of our product innovation, to not say all of it, is typically led by our customers. Customers ask for this better together platform. Virtually, every single one of our customers ask: Why do you choose Toast? Well, one, it just works, and the second, I'm more efficient, I've increased my average check size, I've driven new demand, and that's what really drives the monetization. It makes the pricing discussion a lot simpler.
It's a lot harder for us to do, "Oh, by the way, you had something, and we're gonna give you this new product, and we're gonna make it 10% more expensive." That's actually, we never win that way. We go first with: We drive better customer outcomes, ask your neighbors, ask the people that you trust, and then ultimately, that's how we charge for our products, and very often our products are at a premium.
So, Dave?
Yeah, thanks, guys. Dave Koning at Baird. And that was really good guidance, I thought, on diluted share count, less than 2% growth per year or, yeah, per year. What should be, once you turn GAAP profitable, which might be the next couple of quarters, what should the diluted share count base kind of start out at? And I guess secondly, tax rate over time, within a few years, you'll probably pay taxes. Which tax rate should we put in our models?
Yeah. So, once we get to profitability, you know, our tax rate is in, what, the 20%-25% corporate tax rate is sort of what we're thinking about. But we're—you know, I won't comment on our timing on GAAP, but it's definitely a high priority. In terms of our diluted share count, I'll come back to you on the specifics.
Kartik?
... Thank you. Yeah, Kartik Mehta from Northcoast Research. Just two questions. One, what, what's happened to the sales force growth over the last 12 months, and what has to happen so you can achieve your goals over the next two to three years? And then when you look at the international business, can it be as profitable as the domestic business? And if so, how long would that take?
Sure. So I'll talk for your first question around sales capacity. You know, we've invested in that sales capacity and, and because we believe in the flywheel market, that gives us the opportunity to grow and compound our ARR without significant growth in our sales headcount. That said, keep in mind, we're investing in international, as well, so, you have to balance that, and we're investing in our upsell team because we've seen the benefit of that in terms of our ability to grow our ARPU over time. So in terms of the economics of international, you know, we're early, but what we've seen is really positive signal with just the core elements of our platform, and so as we, you know, as Aman mentioned, we're gonna continue to add to the platform some of the guest-facing products that we see here in the U.S..
That gives us the opportunity to grow that ARPU. And so over time, you know, I think you'll start to see, and we have ambition for the unit economics of international to be similar to that of the U.S..
The only thing I'd maybe add is just as we think about going global beyond these markets that we're in today, I think some of the elements we're thinking about is like, how is it gonna work in markets that have different GPV characteristics? So as an example, in the U.S., we've gone with a very direct motion because it's worked really well. As you think about going broader, and it's not something we're doing today, you know, it's like, okay, what are the things that matter? It's like, well, e-commerce experience, more of an e-commerce led experience matters, so people can buy and onboard on their own. And if you look at, you know, just the evolution of technology, it's getting easier and easier. It's something we're doing here in the U.S..
Similarly, with the hardware, you know, one of the things we do in the U.S. is we offer this purpose-built hardware, but if you've got an operation where you wanna complement that with your own hardware, the ability to tap your phone to a card is really valuable. So we're thinking, again, very early, not some things we're doing tomorrow, today, but we're thinking hard about what are ways in which Toast can be a global platform.
Awesome. Right over here.
Hi, good morning, Charles Nabhan from Stephens. You had touched on a few initiatives in the embedded finance space, including banking, bill pay, and insurance. I was wondering if you could comment on the timing of those initiatives and how we should think about any potential financial contributions, as well as any partnerships, to the extent that you've commented, you have in place to enable those solutions.
Yeah, it's a really good question. Our customers really love Toast Capital. It's actually the highest NPS or one of the highest NPS products that we have, and it comes from like a couple of things. One, we provide a better experience, and we have a right to win and a unique advantage. And very similarly, they come to us, and they ask us to help in a bunch of other areas. I gave, like, the three examples, you know, the around banking, bill pay, and insurance, and those all, if you want, fit. We can provide a better experience as well as really just provide a superior product to what they have in the market. The balance is we are very disciplined about scaling them.
So, all those products are in pilot today, and once we actually make, for example, Elena touched on unit economics and making sure the scales and that it's not just a few customers that are gonna like it, but you know, I don't wanna say the totality, but call it the totality of our customers, that's when we decide to gate it, then move past the gate and GA them. It's a very large opportunity. Like, I think the estimates are about, it's a big TAM, $12 billion, and we're very, very early into it, and we believe we have a compelling opportunity and right to win.
Thank you.
Okay. Maybe we'll take our last one right over here. Last question.
Hey, thanks. Andrew Harte from BTIG. When you think about the opportunity to move into retail, I guess, how is the go-to-market a bit different there? You know, what does the sales team look like? How broad is it today? And then you talked about there's a lot of product overlaps, you know, with restaurants going into retail. Is there any additional lift from the R&D perspective to kind of tweak those to an extent and any gaps you're looking to fill? Thanks.
Sure. Maybe I'll start, and you all can build on top. If you look at, like, just the past year, it's been phenomenal to see, you know, the progress teams made. We got to 1,000 locations. It's a meaningful TAM expansion for us, and we've done this while expanding margins, and the reason is because a lot of this platform really is reusable. Things like payments, payroll, scheduling, capital, they apply almost 1-to-1, and then the things that are customized, that need to be customized, things like the inventory management that Steve talked about, those are these complex workflows, and if you think of point-of-sale for restaurants and what we've been doing, all the 1,000 little things that Steve talked about, that's in our D&A, like, building these custom workflows to get it right.
And so that capability in the company is really the foundation for what allows us to expand into retail and why we're seeing, you know, really good initial. It's early, I know it's still 1,000 locations, but seeing really good initial early uptick. And Steve- JV you can talk about the go-to-market motion.
Sure. You know, I think, just like we talked about earlier, these are local businesses, so that the density, inherently local nature, social proof aspect certainly applies to these verticals. And from a go-to-market perspective, you know, still early, we're still learning quite a bit. We have, we have both right now, so our SMB reps are selling into retail locations. We also have a small standalone team that's helping us penetrate the vertical as well, which is really meant to help accelerate the learning. Right? We want to learn as fast as we can, and begin to scale when appropriate.
Cool. I'll ask-
Can I set up-
Aman, you wanna wrap it up?
Okay, great. Well, listen, first of all, thank you all for coming. This wraps up our first Investor Day. Hopefully, the session was informative. I also want to be remiss if I don't thank the team behind the scenes that did a lot of amazing work to make this possible. You know, we come up and present these slides, but behind the scenes, there's so much amazing work that happens without which this session wouldn't be what it was today. And I'll, I guess one thought I'll leave you with is, and I shared this in my presentation, you know, while we started in U.S. restaurants, as you think about the next decade, that's not our only ambition.
But as we go after the broader opportunity, we're going to be incredibly disciplined to make sure that we're growing both in terms of maximizing the potential TAM, but also, continuing to drive margins. Thank you all!