Toast: Undervalued, Founder-Led Compounder With First-Ever Buyback

Chris Crawford of Crawford Fund Management presented his investment thesis on Toast (NYSE: TOST) at Wide-Moat Investing Summit 2026.

Thesis summary:

Toast is the leading integrated operating and payment system for restaurants, and Chris frames it as a rare combination of growth, moat, and value. The company blends purpose-built hardware, cloud software, embedded AI, and a lending arm (Toast Capital) into one system that touches every restaurant function: order management, kitchen workflow, payments, scheduling, inventory, marketing, and financial reporting. Two MIT classmates, Aman Narang and Steve Fredette, founded the business in 2011 and still run it.

Over the past several years TOST has grown sales roughly tenfold, from about $700 million to over $7 billion, with gross profit compounding at a 72% CAGR. EBITDA and FCF both inflected positive over the past 18 months. Payments are two-thirds of revenue and the higher-margin SaaS platform one-third. Toast holds about 15% of a fragmented US market, ahead of cloud rivals Clover and Square and taking share from legacy donors Micros and Aloha.

Chris locates the moat in switching costs, the largest factor, reinforced by proprietary data and network effects, purpose-built hardware suited to a harsh restaurant environment, and a strengthening brand. Once Toast is embedded across menus, suppliers, payments, and staff training, displacing it is hard. Growth should come from new-market penetration, international and retail expansion, higher module uptake per customer, AI adoption, and mix shift toward the SaaS platform. The TAM spans roughly 1.1 million restaurants in current markets and 15 million globally ex-China.

The founders own about 9% (~$1.3 billion) and draw modest pay. The balance sheet holds $1.7 billion of net cash and no debt, which funded a first-ever buyback in Q1 at roughly a 6% annual run rate. ValueAct raised its stake, and TOST is set to join the S&P 400. Chris views AI as a tailwind rather than a disintermediation threat; other watch items are macro and consumer softness, restaurant failure rates, and interchange economics.

On valuation, the shares recently traded near $26 against Chris’s $48 blended appraisal, roughly 80% upside. His three DCF scenarios, all discounted at 10% with risk carried in the operating assumptions, span a $24 bear case, a $45 base case that already assumes growth fading to 5%, and a $64 upside case. At 2.1x EV/revenue, TOST sits near its post-IPO low; a 3.2x historical average implies $42 and a 3.75x peer multiple implies $49. No credit is given for buyback accretion.

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About the instructor:

Chris Crawford is the Managing Partner and Chief Investment Officer of Crawford Fund Management, LLC, a Boston-based Investment Partnership. The firm manages a long/short fund that invests in equities and options with an emphasis on underfollowed public companies. Prior to co-founding Crawford Fund Management in 2009, Chris was Managing Director, Portfolio Manager and head of the Boston office with Stark Investments, a $10B multi-strategy global hedge fund. At Stark, Chris built the firm’s equity long/short team and managed $1.5B in equity long/short assets as well as a $200M short-biased portfolio. From 2003-2006, Chris was Senior Vice President and Portfolio Manager with Putnam Investments, and co-Portfolio Manager of the $3B Putnam International Capital Opportunities Fund and related client accounts. From 2000 to 2003, Chris was a Partner and Senior Analyst with ABRY Partners on a team managing a $400M TMT-focused hedge fund. From 1996 to 2000, Chris was with Wellington Management Company, where he served as a Global Industry Analyst covering the media industry and as a Portfolio Manager for $600M in client sector-fund and institutional assets. Chris holds an MBA from The Wharton School of Business and graduated magna cum laude from University of Pennsylvania with a BA in Physics, BS in Economics, BAS in Systems Engineering and an MA in International Relations.

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