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Toast AI Strategy: Will Agents Drive Restaurant Growth?
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Key Takeaways
Toast launched an AI marketing agent to help restaurants create campaigns and attract more guests.
Pilot users of Toast IQ Grow saw average sales rise 8% versus similar Toast restaurants.
Toast's AI push lifted coding velocity 60% and resolved 40% of customer-support interactions.
Toast, Inc. (TOST - Free Report) is making artificial intelligence (AI) a central part of its growth strategy. In May 2026, the company launched Toast IQ Grow, a marketing product built around its first AI agent. It creates campaigns using restaurant sales data across email, text messages and social channels, helping busy operators save time and attract guests.
Early results appear encouraging. Pilot customers using Toast IQ Grow recorded an average 8% increase in sales compared with similar Toast restaurants. Sahara Bistro Shawarma attributed nearly one-third of its March 2026 sales to Toast marketing tools. Its sales also rose more than 30% from the prior four weeks, suggesting that AI agents can produce measurable returns.
Toast also has a large base for expanding AI services. It ended the first quarter of 2026 with about 171,000 locations, up 22% year over year, after adding roughly 7,000 net locations. Toast IQ already had 40,000 weekly active locations, giving the platform more operating, payment and guest data to generate useful recommendations.
The AI push is also supporting Toast’s internal efficiency. Engineering coding velocity increased more than 60% year over year, helping the company launch its marketing agent three months earlier than planned. About 40% of customer-support interactions were resolved by AI, improving efficiency and enabling Toast to invest more in account management, product development and sales.
Investors need to watch whether AI usage is converting into stronger financial growth. First-quarter 2026 annualized recurring run-rate (ARR) rose 26% to $2.2 billion, while recurring gross profit grew 27%. Adjusted EBITDA reached $179 million, and operating income climbed to $110 million from $43 million.
How Are XYZ & LSPD Integrating AI?
Block’s (XYZ - Free Report) Square has embedded AI into its merchant services through automated marketing, customer insights and operational recommendations. These tools help restaurants personalize promotions, simplify decisions and improve efficiency within the broader Square ecosystem. XYZ reported serving more than 4 million sellers across its global digital commerce platforms.
Lightspeed (LSPD - Free Report) applies AI to restaurant analytics, inventory planning and customer engagement. Its AI-driven features help operators interpret sales patterns, forecast demand and identify practical actions that may improve margins. LSPD ended the fourth quarter of fiscal 2026 with approximately 150,000 total customer locations using its commerce platform worldwide.
TOST’s Price Performance, Valuation & Estimates
Shares of Toast have outperformed in the past three months compared with the broader industry.
Image Source: Zacks Investment Research
From a valuation standpoint, Toast’s shares have a Value Score of C. In terms of forward 12-month P/E, TOST stock is trading at 26.20X, which is at a discount to the Zacks Internet Software industry’s 27.43X.
Image Source: Zacks Investment Research
Toast’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 earnings per share has been revised upward to $1.35 in the past two months. The consensus estimate for the metric indicates a year-over-year increase of 51.69%.
View the Zacks #1 Rank List
Image: Bigstock
Toast AI Strategy: Will Agents Drive Restaurant Growth?
Key Takeaways
Toast, Inc. (TOST - Free Report) is making artificial intelligence (AI) a central part of its growth strategy. In May 2026, the company launched Toast IQ Grow, a marketing product built around its first AI agent. It creates campaigns using restaurant sales data across email, text messages and social channels, helping busy operators save time and attract guests.
Early results appear encouraging. Pilot customers using Toast IQ Grow recorded an average 8% increase in sales compared with similar Toast restaurants. Sahara Bistro Shawarma attributed nearly one-third of its March 2026 sales to Toast marketing tools. Its sales also rose more than 30% from the prior four weeks, suggesting that AI agents can produce measurable returns.
Toast also has a large base for expanding AI services. It ended the first quarter of 2026 with about 171,000 locations, up 22% year over year, after adding roughly 7,000 net locations. Toast IQ already had 40,000 weekly active locations, giving the platform more operating, payment and guest data to generate useful recommendations.
The AI push is also supporting Toast’s internal efficiency. Engineering coding velocity increased more than 60% year over year, helping the company launch its marketing agent three months earlier than planned. About 40% of customer-support interactions were resolved by AI, improving efficiency and enabling Toast to invest more in account management, product development and sales.
Investors need to watch whether AI usage is converting into stronger financial growth. First-quarter 2026 annualized recurring run-rate (ARR) rose 26% to $2.2 billion, while recurring gross profit grew 27%. Adjusted EBITDA reached $179 million, and operating income climbed to $110 million from $43 million.
How Are XYZ & LSPD Integrating AI?
Block’s (XYZ - Free Report) Square has embedded AI into its merchant services through automated marketing, customer insights and operational recommendations. These tools help restaurants personalize promotions, simplify decisions and improve efficiency within the broader Square ecosystem. XYZ reported serving more than 4 million sellers across its global digital commerce platforms.
Lightspeed (LSPD - Free Report) applies AI to restaurant analytics, inventory planning and customer engagement. Its AI-driven features help operators interpret sales patterns, forecast demand and identify practical actions that may improve margins. LSPD ended the fourth quarter of fiscal 2026 with approximately 150,000 total customer locations using its commerce platform worldwide.
TOST’s Price Performance, Valuation & Estimates
Shares of Toast have outperformed in the past three months compared with the broader industry.
Image Source: Zacks Investment Research
From a valuation standpoint, Toast’s shares have a Value Score of C. In terms of forward 12-month P/E, TOST stock is trading at 26.20X, which is at a discount to the Zacks Internet Software industry’s 27.43X.
Image Source: Zacks Investment Research
Toast’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 earnings per share has been revised upward to $1.35 in the past two months. The consensus estimate for the metric indicates a year-over-year increase of 51.69%.
Image Source: Zacks Investment Research
Toast currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.