Toast AI agents lift restaurant sales 8% in early pilot results

Toast Inc. is betting that artificial intelligence agents can solve one of the restaurant industry's oldest problems: filling empty seats. The company's first AI agent, Toast IQ Grow, launched in May 2026, generated an average 8% sales increase for pilot customers compared with similar Toast restaurants that did not use the tool, according to data the company shared with investors.

"AI agents are moving from experimental to operational in the restaurant vertical, and early data suggests measurable ROI for operators who adopt them," Alex Nguyen, enterprise SaaS analyst at Edgen, said. "The question is whether Toast can sustain this advantage as competitors like Block and Lightspeed integrate similar capabilities."

Sahara Bistro Shawarma, a pilot customer, attributed nearly one-third of its March 2026 sales to Toast's marketing tools, with total sales rising more than 30% from the prior four weeks. Toast ended the first quarter with about 171,000 locations, up 22% year over year, after adding roughly 7,000 net locations. Its Toast IQ platform already had 40,000 weekly active locations, giving the company a growing data pool to refine its AI recommendations.

The AI push is also improving Toast's internal operations. Engineering coding velocity increased more than 60% year over year, helping the company launch its marketing agent three months ahead of schedule. About 40% of customer-support interactions are now resolved by AI, freeing resources for account management and product development. First-quarter annualized recurring run-rate reached $2.2 billion, up 26%, while recurring gross profit grew 27%. Adjusted EBITDA hit $179 million, and operating income climbed to $110 million from $43 million a year earlier.

How Toast's AI Stacks Up Against Competitors

Block Inc.'s Square has embedded AI into its merchant services through automated marketing, customer insights and operational recommendations, serving more than 4 million sellers globally. Lightspeed Commerce Inc. applies AI to restaurant analytics and inventory planning across about 150,000 customer locations. Both pose competitive threats, though Toast's restaurant-specific focus and 171,000-location base give it a vertical data advantage that horizontal platforms may struggle to match.

The Investment Case for Toast

Toast shares trade at 26.2 times forward earnings, a slight discount to the Zacks Internet Software industry average of 27.4 times. The consensus estimate for full-year 2026 earnings per share has been revised upward to $1.35 over the past two months, implying year-over-year growth of 51.7%. If AI agent adoption drives higher subscription revenue and improves customer retention, Toast could justify its premium. But the stock's valuation leaves limited room for error if AI monetization falls short of expectations or if competitors close the feature gap.

This article is for informational purposes only and does not constitute investment advice.