The restaurant industry is once again caught amidst unexpected changes, thanks to a policy shift from Toast, the Boston-based restaurant software provider. A recent article by The Boston Globe outlines how Toast has implemented a new 99-cent fee on online orders exceeding $10 for a handful of restaurants, with plans to launch this change nationwide by July 10.
Hidden Fees: A Recipe for Outrage
What's particularly interesting is that the fee itself isn't the main ingredient causing an uproar in the restaurant industry; it's the method of implementation. This extra fee is subtly folded into a line item labeled “Taxes & Fees” at the checkout stage, presenting a lack of transparency that has left many restaurateurs and their customers feeling less than toasty.
The Impact on Restaurants
This opaque inclusion of the additional fee within the “Taxes & Fees” line is causing concerns about customer confusion and dissatisfaction within the restaurant industry. It is not only creating an extra financial burden for the customers but also potentially damaging the trust between the restaurants and their patrons.
In fact, Kathi Turner, who is the owner of two seafood restaurants and also serves on Toast’s restaurant advisory board, voiced her displeasure openly, stating, “They have no right to get between me and my customer.” This remark reflects a deeper concern that such policies can undermine the direct relationship between restaurants and their customers, which is crucial for customer retention and long-term success.
Despite her role on the advisory board, Turner's concerns about the new fee and its possible repercussions have so far not swayed Toast's decision. She has reportedly communicated with top executives at Toast, even offering to absorb the fee herself to prevent her customers from bearing the brunt of the increase. However, her pleas, like those of many other restaurateurs, appear to have fallen on deaf ears.
Scott Plath, another restaurant owner and Toast client, echoed Turner's sentiment, saying, “Nobody needs extra fees and certainly not hidden extra fees,” thereby emphasizing the potential pitfalls of such practices.
Toast's History of Rate Increases
The new fee isn't the first time Toast has raised the temperature on its clientele. In the last quarter of 2022, Toast raised their merchant processing rates by 15% and introduced integration fees of 30%-50%. These hidden fees, though seemingly nominal, add up over time, causing significant strain on the businesses they serve.
A Toast to Profitability?
One could argue that the introduction of this fee could be a move by Toast to reach profitability. Despite processing nearly $27 billion in orders across its 85,000 restaurant locations in the first quarter of 2023, Toast has yet to turn a profit. The company reported a loss of $81 million on revenues of $819 million in the same quarter. By levying this additional fee, Toast could potentially expedite its journey towards profitability.
The Industry Responds
The restaurant industry has been swift and vocal in its response to these changes. Gardy Desrouleaux, the Managing Partner and Owner at Craft Food Halls, penned an open letter to Toast, expressing his frustration over the company's seemingly tone-deaf move.
Moreover, customers have taken to social media to voice their dissatisfaction. Twitter user @mitchjamesb aired his discontent, stating, “Guess it’s time to delete the @ToastTab app - just another $ grab by greedy company. I’ll be happy to call an order in or just order in-person.”
Regulatory Implications on the Horizon?
This new policy from Toast arrives at a time when hidden fees are being increasingly scrutinized across industries. If President Biden’s proposed Junk Fee Protection Act passes, companies may be required to be more transparent and accountable with their hidden fees.
An Appetizing Alternative: Crisp
While innovation undoubtedly carries a cost, the recent controversy underscores the importance of transparency in pricing and communication. This is where Crisp- restaurant management platform, differentiates itself. Unlike Toast, Crisp promises not to burden its users with hidden fees or surprise service charges. Its commitment lies in nurturing transparent and direct relationships between restaurants and their customers. In an era of rising costs and consumer demands for transparency, restaurateurs need a platform that simplifies, not complicates, their operations. Crisp aims to be that refreshing alternative.