BOSTON - For venture-backed startups to acquire existing entities is not unheard of. Especially in the world of software management. But for a seven year old startup whose longevity was doubted to begin with to acquire an established firm with a 20 year track record indicates those initial doubts may have been entirely misplaced.
Boston-based unicorn Toast, Inc., a point of sale and software-based management company in the food service & hospitality sector, announced on Wednesday they would be acquiring StratEx, a Chicago provider of HR automation systems, for an undisclosed amount. The acquisition will mark the first for the company.
“At Toast, we know that for a restaurant to be successful, it often starts with recruiting and retaining a great team, yet many restaurants wrestle with employee turnover that can exceed 70 percent,” said Toast CEO Chris Comparato, the company’s CEO in a press release.
However, as StratEx themselves pointed out recently, part of the problem with retention in the restaurant industry isn’t simply employee burnout or poor training. It can cover a wide gamut of issues, from internal compliance with I-9 employment eligibility requirements and the Fair Labor Standards Act to increased reports of sexual harassment in the workplace - so common that more harassment claims are filed in the food industry than any other sector in the U.S.
“By adding StratEx to the Toast platform, we can better support restaurants of all sizes in simplifying HR, payroll and talent management on a platform that works seamlessly with Toast and our technology partner ecosystem,” said Comparato.
“We’re passionate about the restaurant industry and helping our community of restaurateurs succeed in today’s dynamic—and often challenging—labor market,” added Adam Ochstein, CEO of StratEx. “In Toast, we discovered a partner that is equally as passionate about the restaurant community. Joining forces allows us to accelerate investments in our platform and build new employee-facing products that will allow restaurants running on Toast to attract, hire, and retain great teams.”
Toast, whose clients include Jamba Juice, B. Good and Joanne Chang’s Flour bakery, previously revealed a sales increase by 148 percent for 2018 and an additional 500 employees working both onsite and remotely.
The acquisition comes on the recent news that Toast had secured an additional $250 Million in Series E late stage venture funding from TCV and Tiger Global Management earlier in March, bringing their total amount of funding to $502 Million since their seed round in 2015. The company is currently valued at $2.7 Billion.