Controversial Online Order Processing Fee Imposed by Toast Inc. Draws Criticism

Jul 13, 2023



Toast Inc., a popular cloud-based point-of-sale vendor used by over 85,000 restaurants, has recently introduced a contentious 99-cent “processing fee” on online orders of $10 or more. This fee, which is added to customers’ bills, has sparked outrage among both consumers and restaurant owners.

Restaurateurs are frustrated as they are being blamed by their customers for this additional cost, despite having no control over the fee. The fee is imposed directly on consumers and not on the restaurants themselves, which has led to concerns about transparency and fairness in the industry.

Customers have voiced their discontent on various platforms, including Toast’s client forum, expressing their dissatisfaction with the fee. Business owners argue that the fee is both unethical and potentially illegal. U.S. Representative Mark Alford has expressed concern over the issue and intends to address it with the House Financial Services Committee if necessary.

Toast Inc.’s decision to charge customers the processing fee is part of its updated pricing model, introduced after the company’s partnership with Google. However, this move has generated significant controversy and has raised questions about the company’s financial stability. Toast reported substantial losses in 2022 and is projected to fare even worse in 2023.

The fee, referred to as an “order processing fee,” appears on receipts and is categorized as a taxable amount in states with a meals tax. This places an additional burden on restaurant owners, who are required to report the fee as income, even though the money is directly deducted by Toast.

Toast has defended the fee, claiming that it is necessary to fund research and development and support ongoing innovation in restaurant technology. However, many industry experts and restaurant owners believe that the fee is simply an attempt to increase the company’s revenue.

The 99-cent charge has sparked particular criticism due to its impact on small orders. Restaurant owners argue that it represents a substantial percentage of the total bill, especially for low-value transactions. Concerns have also been raised about the lack of control restaurant owners have over the fee, with fears that it could escalate in the future without their consent.

In conclusion, Toast Inc.’s introduction of the online order processing fee has faced widespread backlash from both customers and restaurant owners. The controversial fee, added to customers’ bills without the consent of the restaurants, has raised ethical concerns and questions about transparency within the industry.

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