Toast announced Wednesday that it will remove its 99-cent fee for orders over $10 after receiving a wave of negative feedback from the restaurant community.
CEO Chris Comparato said the decision came after "extensive discussions" with clients. The fee will be gone by the end of the week.
"While we had the best of intentions—to keep costs low for our customers—that is not how the change was perceived by some of you," he said in a message posted on Toast's website. "We made the wrong decision and following a careful review, including the additional feedback we received, the fee will be removed from our Toast digital ordering channels."
The additional fee was first reported in mid-June. The Boston Globe said at the time that Toast would implemented the cost at a small contingent of restaurants before adding it nationwide on July 10. Restaurants were not given a choice to opt out of the 99-cent fee. Toast explained it as a change that "helps fund product investments and continued innovation in support of helping restaurants maintain the direct relationship with their guests.”
Nadav Solomon, president and co-founder of restaurant POS platform Tabit Technologies, said companies managing a restaurant's money shouldn't be able to lock customers into "impossible contracts and then suddenly impose fees that can trickle down to the consumer." He compared it to a bank raising a homeowner's mortgage just because they can.
"In reality, POS companies are either payment or product players; they can’t play on both sides," Solomon said in a message to QSR. "Businesses with major operations can’t expect payment players to stay agnostic. From sales and support to implementation and product development, their priorities have been made clear. That’s why Tabit decided from the start that we would stay payment processor agnostic, allowing us to cater to our customer’s needs and build our business around product value instead of processing fees."
Comparato noted that Toast hasn't made any "broad-based price increases" in the past 12 years. That remained true through COVID, when it provided $35 million in software relief for its customers.
"Many of you selected Toast because of our commitment to transparency and focus on helping you take control of the guest relationship," Comparato said Wednesday. "You hold Toast to a high bar and we remain committed to meeting that expectation. In that same spirit of transparency we also must acknowledge that innovation requires investment. Like any business, as we add new capabilities to our existing product suite we will adjust pricing thoughtfully to help fund product investments and unlock innovation that delivers value to help you thrive."
There were approximately 85,000 locations on Toast's platforms at the end of Q1, up 40 percent year-over-year. The company swung a net loss of $81 million in the first quarter.