Toast, Inc. (TOST): PESTLE Analysis [Nov-2025 Updated]

You're running a business that lives and dies by the health of the US restaurant sector, and right now, the ground is shifting fast. Toast, Inc. (TOST) is sitting on a massive opportunity-their Annual Recurring Revenue (ARR) just crossed $2.0 billion as of Q3 2025, powering around 156,000 locations-but that growth is defintely not guaranteed. While the overall US restaurant industry is projected to hit $1.5 trillion in sales with a modest 4.1% revenue growth in 2025, Toast faces a complex mix of new legal scrutiny on fees, intense competition from Block (Square), and the constant pressure of the restaurant labor shortage. We need to look past the topline numbers and map the real external forces-Political, Economic, Sociological, Technological, Legal, and Environmental-to understand where the next risks and opportunities lie for this platform.

Toast, Inc. (TOST) - PESTLE Analysis: Political factors

Increased federal scrutiny on payment processing fees (interchange)

You need to watch the regulatory environment around payment processing, or interchange fees, because it directly impacts the profitability of every single restaurant client Toast, Inc. serves. The political pressure from merchant groups is intense, and it's translating into judicial action and new proposals.

A major development occurred in August 2025 when a U.S. District Court vacated the Federal Reserve's Regulation II (Reg II) standard for debit card interchange fees. The court sided with merchants, arguing the cap was set too high and included impermissible costs like fraud losses and fixed infrastructure costs. While the court stayed the ruling pending an appeal by the Federal Reserve, the political and legal momentum favors a reduction.

The Federal Reserve itself had already proposed lowering the base debit fee cap for large issuers (those with over $10 billion in assets) from the current 21 cents per transaction to 14.4 cents. This is a potential reduction of over 31% in the base fee. For Toast, a reduction in these swipe fees is a net positive for its restaurant clients, increasing their operating margins and potentially making Toast's platform more attractive against competitors that rely more heavily on payment processing revenue. Lower costs for your clients mean a more stable client base for you.

Potential for new state-level data privacy laws impacting customer data storage

The lack of a unified federal data privacy law means Toast must navigate a growing, expensive patchwork of state-level regulations, and 2025 saw a significant expansion of this complexity. The core issue is compliance with varying standards for customer data storage, consent, and the right to delete personal information (PII).

For a platform like Toast, which collects vast amounts of consumer data for its marketing and loyalty tools, this state-by-state fragmentation is a major operational risk. You have to be compliant everywhere, all the time. Several new comprehensive state laws became effective in 2025, adding to the compliance burden:

• Delaware Personal Data Privacy Act (DPDPA): Effective January 1, 2025.
• Iowa Consumer Data Privacy Law: Also effective January 1, 2025.
• Minnesota Consumer Data Privacy Act: Effective July 31, 2025.
• Maryland Online Data Privacy Act: Due to become effective October 1, 2025.

These laws often apply to businesses that process the data of a specific number of state residents or exceed a revenue threshold. For example, the California Privacy Rights Act (CPRA) applies to businesses with annual revenue over $26.6 million or those processing data for 100,000+ California residents. Toast's size and national footprint mean it defintely meets these thresholds in multiple states, necessitating significant investment in data governance and compliance technology.

Government focus on labor practices and minimum wage hikes affecting restaurant clients

Government actions on labor are a direct catalyst for demand in Toast's core products: labor management, scheduling, and automation tools. The political push for higher wages and better labor practices is a near-term headwind for restaurant margins, but a tailwind for Toast's technology sales.

In early 2025, minimum wage increases took effect in 21 states and over 60 local jurisdictions. These are not minor adjustments; they are structural cost changes for Toast's clients. The most significant increases include:

Jurisdiction	2025 Minimum Wage Rate	Impact on Restaurant Clients
California (Fast Food Workers)	$20.00/hour	Creates intense pressure for automation and efficiency in quick-service restaurants.
Washington (Statewide)	$16.66/hour	Highest statewide rate, forcing menu price adjustments and labor cuts.
New York City, Long Island, Westchester	$16.50/hour	High-cost urban markets see labor costs accelerate, increasing demand for Toast's payroll and scheduling compliance features.
Florida (Statewide)	$13.00/hour	Part of a mandatory, gradual increase to $15/hour by 2026, requiring multi-year labor cost planning.

The political shift away from the tip credit in some areas, like Chicago, also forces a complete overhaul of restaurant pay structures. This environment makes Toast's software, which helps manage complex, multi-jurisdictional compliance and optimize staffing, a necessity, not just a luxury.

Trade policies and tariffs impacting hardware supply chain costs

Toast's business model requires a constant supply of hardware-point-of-sale (POS) terminals, handheld devices, and kitchen display systems (KDS)-which are largely manufactured in Asia. The current US trade policy, characterized by high and expanding tariffs, directly increases the cost of goods sold (COGS) for this hardware segment.

The U.S. administration's use of tariffs as a geopolitical tool has caused a structural increase in 'landed costs' for imported electronics and components. Specific measures impacting the 2025 fiscal year include:

• A 50% tariff increase on imported steel and aluminum derivatives, effective June 2025, impacting the chassis and internal components of POS systems.
• The elimination of the de minimis threshold (the $800 duty-free limit) for low-value commercial shipments from China and Hong Kong, effective August 29, 2025. This means even small, direct shipments of replacement parts or components are now subject to duties, taxes, and formal entry procedures.
• Reciprocal tariffs on a broad range of Chinese-origin goods, including electronics, which add layers of duties (e.g., existing Section 301 tariffs of 7.5% or 25%).

Here's the quick math: higher tariffs mean higher COGS for the hardware Toast sells or leases to its clients. While the company is actively diversifying its supply chain to countries like Vietnam and Mexico, the immediate effect is a margin squeeze until those new, complex supply chains are fully mature and cost-optimized. You must factor in this geopolitical risk to your hardware cost projections.

Toast, Inc. (TOST) - PESTLE Analysis: Economic factors

Persistent high inflation driving up restaurant client operating costs

The biggest economic headwind for Toast's client base remains the persistent, cumulative inflation that has fundamentally reset the cost structure for every restaurant operator. This isn't just a 2024 problem; the compounded effect continues to squeeze already thin profit margins, which average only about 5% pre-tax for the industry. Labor and food costs have been the primary drivers, with both categories seeing a roughly 35% increase since 2019.

This cost pressure means operators must prioritize efficiency, making Toast's technology, which is designed to streamline operations and manage labor, a necessity rather than a luxury. Menu prices for full-service restaurants, while rising more moderately than in prior years, are still projected to climb by an average of 3.6% in 2025, which is a significant pass-through to the consumer.

Here's the quick math on the operational cost landscape since 2019:

Expense Category	Cumulative Cost Increase (Since 2019)
Food Costs	+35%
Labor Costs	+35%
Utility Costs	+18%
Occupancy Costs	+14%

US Federal Reserve interest rate policy affecting capital expenditure for new restaurant tech

For much of 2024 and early 2025, elevated interest rates created a barrier to capital expenditure (CapEx) for restaurant owners. High borrowing costs delayed expansion plans and new technology investments, especially for smaller, independent operators who rely on commercial loans. This is a direct headwind for a tech provider like Toast, Inc., which relies on new system sales and expansion.

However, the monetary policy landscape has shifted in late 2025. Following a series of cuts, the Federal Reserve's target federal funds range now stands at 3.75% to 4.00% as of October 2025. This move is defintely a positive signal, as lower rates directly translate to cheaper borrowing costs. This should encourage foodservice operators to finally move forward with delayed investments in new equipment, point-of-sale (POS) systems, and automation technology to combat their high labor costs.

Restaurant industry revenue growth projected to be around 4.1%

The overall US restaurant and foodservice industry is projected to reach approximately $1.5 trillion in sales in 2025, reflecting a year-over-year revenue growth of about 4.1%. This topline growth is positive, but it hides a critical detail: most of the gain stems from higher menu prices, not increased foot traffic. Customer traffic has actually declined slightly, meaning the growth is inflationary, not volume-driven.

This means the market is growing, but competition for each actual guest is intensifying. Operators need systems that can maximize the value of every transaction while also driving efficiency to preserve that revenue as profit. That's a clear opportunity for Toast's integrated platform.

Consumer spending shifts toward value and quick-service dining models

Consumers are becoming highly strategic and value-conscious with their dining dollars. The cost of dining out has become significantly more expensive compared to cooking at home, with the gap between restaurant and grocery price inflation being about five times wider than the long-term average. This has created a 'two-tier economy' where lower-to-middle income households are pulling back on frequency.

This cautious spending has led to a major shift:

• Casual dining chains (like Applebee's and Chili's) are outperforming by pushing aggressive bundled value meals and promotions.
• Premium fast-casual brands are struggling with softer demand as budget-conscious diners trade down.
• Limited-Service Chains (QSR and Fast Casual) are facing pressure, with visits slowing, as consumers shift spend to value-oriented grocery and convenience stores.

The takeaway is simple: value is king. Toast's clients, regardless of segment, must adapt by offering loyalty programs, targeted discounts, and streamlined ordering to capture the discerning consumer. If onboarding takes 14+ days, churn risk rises.

Toast, Inc. (TOST) - PESTLE Analysis: Social factors

Strong, sustained consumer preference for digital ordering and off-premise dining

You need to see the restaurant industry not as a dining-out business, but as a food-fulfillment business now. The social shift toward convenience is defintely the biggest tailwind for a platform like Toast, Inc. Today, nearly 75% of all restaurant traffic happens off-premises, meaning almost three out of four orders are takeout, drive-thru, or delivery. This isn't a temporary trend; digital ordering and delivery have grown 300% faster than dine-in traffic since 2014.

The financial gravity of this shift is immense. The U.S. online food delivery market is projected to reach approximately $429.90 billion in 2025. While third-party platforms like DoorDash and Uber Eats are powerful, the consumer still values the direct relationship: 67% of diners choose to order directly from the restaurant, which is a clear opportunity for Toast, Inc.'s native online ordering tools. Mobile ordering is mainstream, used by 57% of adults recently, with Millenials at 74% and Gen Z at 65%. This preference for digital interaction is a core driver of Toast, Inc.'s Gross Payment Volume (GPV), which increased 24% year-over-year to $51.5 billion as of Q3 2025.

Ongoing labor shortage (The Great Resignation effect) driving demand for automation tools

The labor shortage in the restaurant industry is not easing in 2025; it's simply evolving into a permanent cost-management problem. 70% of restaurant operators report having job openings that are tough to fill, and 89% expect labor costs to increase in the upcoming 12 months. This pressure is forcing technology adoption from a 'nice-to-have' to a 'need-to-have' for survival.

The clear action for operators is automation, which is exactly where Toast, Inc.'s platform approach shines. Here's the quick math on automation adoption, showing the market demand for tools like Toast, Inc.'s payroll, scheduling, and self-service kiosks:

Restaurant Segment	Expected Tasks Automated by 2025	Implication for Toast, Inc.
Quick-Service Restaurants (QSR)	51%	High demand for self-ordering kiosks and AI-powered order taking.
Full-Service Restaurants (FSR)	27%	Strong demand for back-of-house (BOH) management, inventory, and automated scheduling.

The labor crisis is essentially a massive, forced digital transformation, and Toast, Inc. is positioned as the operating system for that change.

Public debate and regulatory action around tip pooling and service fee transparency

The regulatory landscape around staff compensation is a complex minefield for restaurant owners, but it represents a clear opportunity for integrated platforms to offer compliance as a service. Federal law (FLSA) and varying state/local regulations govern tip pooling, gratuity, and service charges, creating significant administrative risk.

The public debate centers on transparency, especially with the rise of non-tip service fees. For example, some restaurants use a 'kitchen admin fee' (often 5%) to legally supplement non-tipped Back-of-House (BOH) wages in states where BOH staff cannot participate in a traditional tip pool. Toast, Inc. directly addresses this complexity with its Toast Tips Manager and Payroll Suite, which automates the calculation and distribution of pooled tips and mandatory gratuity/service charges, ensuring compliance and transparency for both the owner and the employee.

High churn rate among restaurant staff necessitates simpler, faster POS training

The high churn rate in the industry is a hidden, massive operational cost that a well-designed Point of Sale (POS) system can mitigate. The average restaurant employee turnover rate topped 75% in 2025, with Quick-Service Restaurants (QSRs) seeing rates exceed 130%. This constant churn means constant training. Replacing a single hourly, non-management employee can cost more than $2,300, including approximately $821 just for orientation and training.

Toast, Inc.'s simple, intuitive, and mobile-first hardware and software directly reduce the time and cost associated with this churn. The system's ease of use is a core competitive advantage because it lowers the barrier to entry for new hires, who are often in a Front-of-House (FOH) role with an annual turnover rate of around 41%. The quicker a new server can confidently take an order, the faster the restaurant stops losing money on lost productivity.

• Average annual turnover rate: 75%.
• QSR turnover rate: Over 130%.
• Cost to replace one employee: Over $2,300.
• Training cost per employee: Approximately $821.

A simple POS system is the most effective retention strategy for a new hire. That's a powerful selling point.

Toast, Inc. (TOST) - PESTLE Analysis: Technological factors

Intensified competition from Block (Square) and established players like Oracle

The restaurant technology space is a continuous battleground, and Toast's technological edge is constantly challenged by two very different types of competitors. On one side, you have the legacy giants like Oracle Corporation, which holds a significant market share, estimated at around 18% in late 2025, largely through its MICROS platform in enterprise-level restaurants. On the other, the fintech disruptors like Block (Square) aggressively target the small and mid-sized business (SMB) segment, competing directly with Toast's core market.

Block's Square for Restaurants platform is favored by many small operators for its lower initial cost and versatility, but Toast, with its restaurant-exclusive focus, is rapidly gaining ground. As of late 2025, Toast, Inc. holds approximately 15% of the restaurant technology market share. The fight is not just for new customers; it's about platform stickiness. Toast's strategy is to win on depth of features, pushing its all-in-one platform to make switching costs prohibitively high for its growing base of 156,000 total locations globally.

Competitor	Core Technological Strength	Target Market Overlap	2025 Market Share (Approx.)
Oracle Corporation (MICROS)	Enterprise-grade stability, complex back-office integration	Large chains, Enterprise restaurants	18%
Block (Square)	Affordable, versatile hardware, strong payment processing	Small to Mid-sized Restaurants (SMB)	Higher than Toast in some SMB segments
Toast, Inc. (TOST)	All-in-one, restaurant-specific cloud platform, integrated payments	SMB, Mid-market, and growing Enterprise	15%

Rapid integration of AI for personalized marketing and kitchen operations (KDS)

AI is not a buzzword here; it's a core investment driving operational efficiency and customer engagement. Toast is integrating artificial intelligence across its platform to move beyond simple transaction processing and into true business intelligence. The launch of Toast IQ in 2025, a conversational AI assistant, is a key move. This tool proactively surfaces insights and allows operators to make changes-like optimizing menus or editing staff shifts-using plain language commands.

In the kitchen, new features like the KDS Runner Fulfillment, launched in August 2025, use technology to enable item-level tracking at expo stations. This small change dramatically improves order accuracy and speed, especially for multi-course or family-style dining. For personalized marketing, the platform now uses AI-powered Guest Feedback tools to organize and prioritize customer comments, giving restaurants actionable summaries. Plus, they're exploring voice AI integration for drive-thru capabilities, a clear signal that the technology spend is focused on high-impact operational bottlenecks.

Need to expand beyond core POS into payroll, lending, and supply chain management

The technological opportunity for Toast lies in becoming the single operating system for a restaurant, expanding its Total Addressable Market (TAM) far beyond the Point of Sale (POS) terminal. This is less about new software and more about monetizing its massive data moat. The company's financial technology solutions and subscription services are the growth engine, with full-year 2025 Non-GAAP subscription services and financial technology solutions gross profit expected to be in the range of $1,865 million to $1,875 million, representing 32% growth over 2024.

The platform already offers modules for payroll, scheduling, and team management. The next logical step, which they are actively pursuing, is deeper integration into the restaurant's financial and supply chain needs. The new growth segments-enterprise, international, and food & beverage retail-are on track to top $100 million in ARR by the end of 2025, demonstrating the success of this platform expansion strategy. This expansion creates a powerful network effect: the more services a restaurant uses, the harder it is to leave.

• Payroll & Team Management: Streamlines labor compliance and scheduling.
• Lending (Fintech): Leveraging Gross Payment Volume (GPV) data, which was $51.5 billion in Q3 2025, to offer capital to restaurants.
• Supply Chain: Integrating inventory and procurement directly with POS data for automated reordering.

Obsolescence risk from faster, cheaper Android-based hardware alternatives

Toast's proprietary hardware, like the new Toast Go® 3 handheld released in 2025, is a key differentiator, designed to be durable and restaurant-grade. However, this proprietary approach carries an obsolescence risk. Competitors like Block (Square) are pushing the use of cheaper, off-the-shelf, Android-based hardware and even enabling contactless payments using a standard mobile device. The cost of Toast's dedicated hardware can be a barrier for very small businesses.

The core trade-off is durability versus flexibility. Toast's hardware is built to withstand the heat and spills of a commercial kitchen, but the rapid evolution of consumer-grade mobile technology means that faster, cheaper alternatives are always emerging. This forces Toast to continuously invest in its hardware line, like the new Toast Go 3, to justify the premium cost. If onboarding takes 14+ days, churn risk defintely rises, so the hardware must deliver superior reliability to offset its higher price point compared to a simple tablet-based system.

Toast, Inc. (TOST) - PESTLE Analysis: Legal factors

Class-action lawsuits related to platform fees and mandatory subscription models

You need to be a trend-aware realist about legal risk, and for Toast, Inc., that risk is shifting from just pricing to data security and intellectual property. While the controversy over the mandatory $99 platform fee subsided after Toast reversed the charge in 2023, the legal threat hasn't vanished; it's just changed focus. The most immediate legal exposure in the 2025 fiscal year comes from a significant data breach and an intellectual property dispute.

Specifically, a data breach involving the Toast Payroll application was reported in July 2025. This incident exposed sensitive Personally Identifiable Information (PII) for employees of a subset of customers, including Social Security numbers, dates of birth, and financial account numbers used for direct deposit. This has led to an active investigation for a potential class-action lawsuit, which represents a major financial risk. Here's the quick math: based on 2025 data, the average cost of a data breach is estimated at a whopping $4.44 million, so this is defintely a material event.

Also, Toast must face a trade secret theft lawsuit filed by a business partner, Gratuity Solutions LLC, as ruled by a federal judge in November 2025. This case alleges Toast stole customer-specific features from a rival gratuity management system, which threatens to increase legal defense costs and potentially result in a significant settlement or judgment.

Compliance burden from Payment Card Industry Data Security Standard (PCI DSS) updates

The compliance burden from the Payment Card Industry Data Security Standard (PCI DSS) is a constant, but Toast has positioned itself to absorb most of that risk for its customers, which is a smart value-add. As a Level 1 Service Provider, Toast is annually assessed and certified as PCI-DSS compliant, meaning they meet the highest level of security standards for handling cardholder data.

This is a huge competitive advantage because Toast is responsible for nearly all PCI requirements on its platform. This all-but-eliminates the need for additional PCI-related costs for the approximately 156,000 restaurant locations using the platform as of Q3 2025. You avoid the heavy lifting of compliance, which is a big deal for a small business owner.

However, the compliance umbrella doesn't cover everything. While Toast handles the technical security of the platform, the restaurant customer still holds responsibility for certain physical and administrative controls, like restricting physical access to devices and maintaining secure network configurations. The risk exposure is shared, even if the primary technical burden is on Toast.

Antitrust scrutiny over market share dominance in the US restaurant POS sector

Antitrust scrutiny is a near-term risk that grows directly with Toast's success. The company is not yet the undisputed market leader, but its aggressive growth trajectory is putting it squarely in the sights of regulators. As of March 2025, Toast held approximately 24.30% of the US POS market, sitting just behind Block (Square) at 28.01%. That's a powerful duopoly forming.

Toast's long-term vision is to reach $10 billion in Annual Recurring Revenue (ARR) and double its market share in the core US Small and Mid-size Business (SMB) segment. This ambition, combined with its integrated, closed-loop model-where it controls the POS, payments, and software-is the exact kind of vertical integration that attracts regulatory attention. The risk is that the Department of Justice (DOJ) or Federal Trade Commission (FTC) could investigate whether the platform's structure or pricing models, like the mandatory payment processing, unfairly restrict competition or harm smaller rivals.

The key metrics to watch that will fuel this scrutiny are:

• Total Locations: Approximately 156,000 as of Q3 2025, up 23% year-over-year.
• Gross Payment Volume (GPV): Surged 24% year-over-year to $51.5 billion in Q3 2025.
• Total Take Rate: Up seven basis points year-over-year, reflecting greater capture of value per transaction.

The company's ability to capture more value from each transaction, coupled with its market expansion, increases the probability of future antitrust inquiries.

New state laws governing third-party delivery platform integration and data sharing

A patchwork of state and local laws is creating a complex compliance environment, especially around third-party delivery platforms, which directly impacts Toast's integration strategy and its partnership with Uber Technologies, Inc. (Uber).

These new regulations are primarily aimed at protecting restaurants from the high commission fees and data hoarding practices of major delivery apps. For example, New York City has a permanent commission cap of 20% for third-party delivery services. More critically for Toast, cities like Seattle have enacted data sharing requirements, mandating that delivery platforms must provide restaurants with customer information like names, phone numbers, and email addresses upon request.

This regulatory environment presents both a risk and an opportunity for Toast:

Regulatory Area	Impact on Toast's Business Model	Actionable Insight
Commission Fee Caps (e.g., NYC 20% cap)	Limits the revenue potential of third-party delivery platforms, making Toast's direct-ordering and in-house delivery tools more attractive and profitable for restaurants.	Promote Toast's own digital ordering and delivery features as a high-margin alternative.
Data Sharing Laws (e.g., Seattle)	Forces third-party platforms to share customer data, which can reduce the competitive advantage of Toast's own integrated customer relationship management (CRM) tools if a restaurant can get the same data for free elsewhere.	Emphasize the integration and actionability of the data within the Toast platform (e.g., automated marketing campaigns) versus raw, unorganized data from a third party.

The key here is that as the US online food delivery market grows-projected to reach $74.0 billion by 2033-the regulatory focus will only intensify. Toast must ensure its platform remains compliant with every local data-sharing and fee-cap law, which is a significant, ongoing legal and technical cost.

Toast, Inc. (TOST) - PESTLE Analysis: Environmental factors

Growing restaurant client demand for energy-efficient hardware and paperless operations

The environmental factor is a clear opportunity for Toast, Inc. to deepen its value proposition, especially as the restaurant industry focuses on operational efficiency and sustainability. Honestly, for most operators, the 'E' in ESG (Environmental, Social, and Governance) is still about the bottom line, so energy and paper savings are compelling. Our 2025 Voice of the Restaurant Industry Survey shows that consumers are putting their money where their values are: fully 73% of respondents consider a restaurant's approach to sustainability an important factor when deciding where to eat.

This consumer sentiment translates directly into a demand for the digital tools Toast provides. The shift to digital menus, ordering, and payment via Toast terminals and handhelds cuts paper waste, which is a tangible cost saving for restaurants. For example, the 'Packaging Preferences' feature, which helps customers opt out of unnecessary packaging on to-go orders, led to over 2.3 million opt-outs in a single year, based on the company's FY2024 reporting.

Here's the quick math on customer willingness to pay, which drives restaurant adoption:

• 72% of diners are willing to pay more at a restaurant that prioritizes sustainability.
• Of those, 18% would pay an additional 6-10% more.
• This willingness to pay creates a clear ROI for restaurants investing in Toast's efficiency-focused, paper-reducing technology.

Increased investor focus on Toast's own Scope 1 and 2 carbon footprint reporting (ESG)

Investor scrutiny on Environmental, Social, and Governance (ESG) metrics is no longer a fringe concern; it's a core valuation driver. For a technology company like Toast, Inc., this means transparently managing its own carbon footprint, particularly Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased energy). Toast has responded well here, having disclosed its full Scope 1, 2, and 3 greenhouse gas (GHG) emissions since 2021.

The company has achieved net-zero Scope 2 emissions from electricity in its workplaces for the third consecutive year, a strong signal to the market. More importantly, they are linking emissions to financial performance, showing a 10%+ reduction in emissions intensity (emissions generated for every dollar of revenue) between 2023 and 2024. This shows a defintely positive trend of decoupling growth from operational carbon impact.

The following table summarizes the company's core carbon performance metrics from their latest ESG disclosures:

Metric (FY2024 Data)	Performance/Commitment	Significance
Scope 2 Emissions (Electricity)	Achieved Net-Zero for the third consecutive year	Mitigates risk from rising utility costs; strong investor signal.
Emissions Intensity Reduction (2023 to 2024)	Reduced by over 10%	Demonstrates improved operational efficiency and sustainability alignment with revenue growth.
GHG Emissions Disclosure	Full Scope 1, 2, and 3 disclosed since 2021	Meets Task Force on Climate-Related Financial Disclosures (TCFD) and SASB standards.

Supply chain vulnerabilities due to climate events impacting hardware manufacturing

What this estimate hides is the physical risk to the hardware supply chain. Toast, Inc. relies on a global network to manufacture its point-of-sale (POS) terminals, handhelds, and peripherals. The biggest near-term risk here is climate-driven supply chain disruption, which is a major concern across the entire electronics industry for 2025.

Everstream Analytics, a leader in supply chain risk analysis, assigned a 90% risk score to 'Climate Change and Extreme Weather' as the top supply chain risk for 2025. This high-risk environment means increased exposure to:

• Flooding and extreme heat events disrupting manufacturing hubs in Asia.
• Logistical bottlenecks from extreme weather impacting shipping routes.
• Higher costs for rare metals and minerals, which also face a high risk score of 65% due to scarcity and geopolitical lockdown.

Any delay in receiving hardware directly impacts Toast's ability to onboard new customers and generate subscription and payment processing revenue. This is a critical risk to monitor and mitigate through diversification and inventory management.

Pressure to manage e-waste from rapidly replaced POS terminals and peripherals

The rapid evolution of POS technology-like the launch of the new Toast Go® 3 Handheld in 2025-creates a significant e-waste challenge. As a hardware provider, Toast, Inc. faces mounting regulatory and public pressure to manage the end-of-life for its devices. If you're pushing new tech, you have to deal with the old stuff responsibly.

Toast addresses this pressure by offering a clear, no-cost path for customers to recycle retired equipment. They partner with third-party recyclers who have zero-waste commitments to ensure responsible disposal. Crucially, they cover the logistics, providing customers with free zero-waste recycling and carbon-neutral shipping labels for newly retired hardware. This program is a necessary cost of doing business, but it successfully transfers the physical disposal burden from the restaurant operator to Toast, Inc., which then manages the environmental compliance through specialized partners.