Toast Vertical Edge Over Square
Diving deeper into
Matt Brown, Co-Founder of Bonsai, on the rise of vertical ERPs
Toast is also a very large and very successful business that's gone even more vertical and even more exclusive
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Toast shows how big a software company can get when it picks one messy industry and builds almost everything that industry needs. In restaurants, the hard part is not just taking cards. It is handling menus, tabs, tips, shift pay, online orders, kitchen flow, and next day cash. Toast built around those exact jobs, while Square kept a broader SMB platform that can stretch across many business types.
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Toast is unusually exclusive because it centers the full restaurant operating loop. Its product set spans POS, online ordering, payroll, tip management, pay cards, instant payouts, capital, and multi location tools, all tuned for restaurant workflows like pooled tips and employees working different roles at different pay rates.
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Square runs a similar payments plus software playbook, but with a more horizontal design. Square for Restaurants includes payroll, banking, invoicing, websites, and partner integrations, yet the product is positioned as tech that can flex across many food formats and, more broadly, across many SMB categories beyond restaurants.
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That focus creates different competitive edges. Toast can replace more of the restaurant back office and charge for more attached products. Square keeps a wider top of funnel and can reuse the same banking, payroll, and commerce rails across sellers in restaurants, retail, services, and other verticals.
The next phase is deeper financial and labor tooling inside restaurant software. Toast is likely to keep winning by owning more restaurant specific money movement, from tips to payroll to short term capital, while Square keeps extending a cross vertical operating system that can bring restaurant features into a much larger seller base.