The news: Toast’s AI offerings are resonating with restaurants. The POS provider’s subscription services and financial technology solutions gross profit grew 29% YoY to $630 million in Q3 2026.

Toast IQ Grow, Toast’s AI tool that helps restaurants win new clients, is set to hit $10 million in annual recurring revenue, per CEO Aman Narang.

The company plans to expand its Toast IQ series to tackle inventory and bookkeeping services, per Narang.

How we got here: Restaurants run on thin margins, and inflation is weighing on their bottom lines. 

• Total expenses for the average restaurant popped 36% between 2019 and 2026, per a National Restaurant Association analysis.
• With pre-tax margins of restaurants hovering around 5%, most eateries cannot survive these kinds of significant cost increases.

Why this matters: Toast’s IQ lineup could drive loyalty and revenues if these AI tools solve profitability issues and free up owners’ time. 

• Toast said its IQ Team helped reduce overtime hours per employee by 41% on average. 
• Other AI tools help owners manage multiple vendors on one platform: The average SMB uses 2.2 tools to run daily operations, per PYMNTS.

Recommendations for POS providers: AI products can increase merchant satisfaction, but POS players also face the threat of restaurant owners turning to free AI platforms to build their own similar tools.

To defend against merchant attrition, POS players need to show merchants what makes their tools better than a general-use model.

• Underscore proprietary data access. POS providers have knowledge of thousands of restaurants’ cost of delivering goods, which allows them to benchmark and offer recommendations for restaurant management where other chatbots lack visibility.
• Prioritize partnerships. Access to reservations through platforms like Resy helps restaurants get discovered by new clients through their credit cards or maps.

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