Brewing Profits: How Toast's Coffee Data Brews Gold for Investors

The restaurant industry is a barometer of economic health, and its menu prices are its pulse. Now, thanks to Toast’s Menu Price Monitor—a real-time, AI-powered data tool tracking over 140,000 U.S. restaurants—investors have a crystal ball to foresee inflation’s ripple effects on consumer spending, commodity markets, and corporate margins. The 6.4% YoY rise in coffee prices in April 2025, revealed by Toast, isn’t just a coffee shop problem: it’s a macroeconomic signal investors can’t afford to ignore.

Why Coffee Prices Are the New Oil Prices

Coffee isn’t just a beverage; it’s a commodity chain. From Brazilian coffee bean futures to labor costs in your local café, price hikes here reflect global supply chain bottlenecks, labor shortages, and shifting consumer preferences. Toast’s data shows regular coffee prices rose 6.4% year-over-year in April 2025, while cold brew—a premium product requiring 12–24 hours of steeping—only increased by 4.2%. These divergent trends hint at deeper truths:

1. Supply Chain Squeezes Are Real: Coffee production in the “bean belt” (Brazil, Colombia, Vietnam) faces climate volatility, driving up raw material costs.
2. Labor Costs Are Eating Margins: Restaurants are paying more to staff, and they’re passing it on—first to staples like regular coffee, which lack the premium pricing flexibility of cold brew.
3. Consumer Demand Is Shifting: Cold brew’s slower price growth despite its 73% surge in drinkers since 2019 suggests customers are willing to pay a premium for convenience and quality—but only up to a point.

For investors, this isn’t just data—it’s a playbook. A would reveal how commodity prices and consumer-facing prices diverge, signaling where inflation is being absorbed (or passed along). This gap is a leading indicator of margin pressures for food companies and a red flag for sectors like quick-service restaurants (QSR).

Toast’s Data Monetization: The SaaS Moat with a Side of Gold

Toast isn’t just a payments processor—it’s a data powerhouse. Its Menu Price Monitor aggregates 70 million unique menu items, using AI to standardize categories like “regular coffee” across 50 states. This creates a moated asset:

• Real-Time Granularity: Investors can track price changes monthly, even weekly, to preempt broader inflation trends.
• Cross-Category Insights: Coffee prices correlate with burger, beer, and burrito pricing, giving a holistic view of restaurant economics.
• Competitive Edge: Unlike broad inflation metrics like the CPI, Toast’s data is industry-specific, allowing investors to target sectors (e.g., premium coffee chains) or avoid those lagging in price adjustments.

Toast’s valuation lags behind SaaS peers despite its unique data asset. Investors who act now can capitalize on this disconnect.

How to Play This Trend: Equity and Futures Strategies

Toast’s data isn’t just for tracking—it’s a tool for action. Here’s how to leverage it:

1. Short Commodity Contracts If Pricing Lags: If coffee futures rise but menu prices don’t, it signals restaurants can’t pass costs—bet against their stocks.
2. Buy Premium Brands with Pricing Power: Cold brew’s stable price growth (despite rising demand) suggests brands like Starbucks or local chains with loyal customers can maintain margins.
3. Allocate to SaaS Plays with Data Assets: Toast itself is undervalued. Its $2.5B market cap pales compared to its $14B revenue run rate from 140,000 restaurants. Investors should scoop up TOST before the market catches up.

Risks? Yes. But the Reward Is Bigger

Critics will cite Toast’s limitations: no sales/profitability metrics, reliance on restaurant participation, and AI categorization flaws (e.g., misclassifying “whiskey donuts”). But these are noise. The signal is clear: Toast’s data is the first to spot inflation’s impact on consumer-facing prices, months before official reports. Investors who ignore it risk being left behind when coffee prices (and their economic consequences) hit the headlines.

Final Call: Brew Now or Pay Later

The writing is on the wall—and it’s written in coffee prices. Toast’s data isn’t just for restaurateurs; it’s a goldmine for investors. With a 6.4% YoY coffee inflation signal, the stage is set for margin compression in QSR, rising commodity demand for premium coffee, and a golden opportunity in Toast’s undervalued SaaS stock. Don’t wait for the steam to hit the table—act now.

Investors: Brew in to Toast (TOST) before the pot boils over.