Restaurateurs Blast Big Tech Vendor for Unexplained Surcharge on Diners: ‘Toast Did Us Dirty'
Something worrying is happening to people who eat at restaurants in America. A cloud-based restaurant management software company based in Boston, Toast Inc. is causing frustration by adding a new fee to online and other orders. This fee of 99 cents goes directly to customers who order $10 or more worth of food and not to the restaurants that use Toast's services, per Fox Business. The charge from Toast appears as a line item on receipts under the term 'order processing fee' and the receipts also have a note at the end, added without input from the shop owner, saying, "The Order Processing Fee is set by Toast to help provide affordable digital ordering services for local restaurants." This has angered both restaurant owners and customers.
Unethical business practice
Restaurateurs are expressing their discontent with Toast's decision to impose the fee as they have no control over it. This lack of control highlights the issue of ceding control over sales mechanisms to third-party vendors like Toast, thereby giving rise to concerns about the violation of ethical and legal standards. Toast processes the sale for client companies when a customer orders food online or pays a bill in a restaurant. Matt Wilhelmson, the owner of Koehn Bakery in Missouri, argues that the fee is not only unethical but should also be deemed illegal. U.S. Representative Mark Alford shares these concerns and plans to address the issue with the House Financial Services Committee to protect retailers and consumers alike.
Toast's financial situation and partnership with Google
The introduction of the new fee comes at a time when Toast appears to be facing financial distress. The company reported a net loss of $275 million in 2022 and is projected to fare even worse in 2023, with an $81 million loss in the first quarter alone. In February, Toast partnered with Google, and the new fee was tested in various locations across the country. Despite the financial challenges faced by Toast, the decision to pass the fee on to customers has been met with widespread dissatisfaction.
Implications for restaurants and customers
Restaurant owners are dismayed by the inclusion of this charge as income, even though the money is deducted directly from customers' bank accounts by Toast. Massachusetts restaurateur Elias Khoury asked of Toast, “These are my customers. Why are you charging my customers?” in an interview with Fox News Digital. "Today it's 99 cents. Tomorrow it could be $2 or $3. It's at their discretion. We have no control over it," added Khoury. He emphasized that the decision to charge customers should be the responsibility of the restaurants themselves, not a third-party vendor.
In states with meal taxes, the fee is subject to taxation, compounding the financial burden on restaurants. The resentment toward Toast's decision has been echoed on the company's client message forums, with restaurant owners expressing frustration at being punished for a decision they had no control over. Many of the consumers who are being charged these fees have never heard of Toast nor agreed to do business with them. “Toast did us dirty,” one Toast customer fumed on the company’s client forum. Even orders placed through restaurants’ websites are being charged this fee, per New York Post.
Toast's justification and industry concerns
Toast defends the new fee as necessary for funding research and development initiatives, claiming that it benefits all parties involved. The company asserts that the fee will support product investments and innovations to enhance restaurants' relationships with their guests. However, many industry experts view the fee as an attempt to bolster Toast's financial position at the expense of restaurants and their customers. Restaurateurs argue that if Toast's business model is unsustainable, the company should renegotiate contracts or seek alternative solutions rather than burdening their customers.
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