With Increased Merchant Processing and Integration Fees
"Raise a Glass and Toast to Raising Fees!"
It seems like the folks over at Toast have been busy brewing up a new recipe for success, and it's got a hefty serving of increased integration fees! The recent article by the reforming retail site was spot on with its prediction, and now we're all feeling the heat. In the world of cloud-based restaurant management, Toast has been one of the big players, but with this new move, it looks like they're trying to climb to the top of the menu. But what does this mean for the customers, especially the multi-unit operators who are already grappling with the challenges posed by the pandemic? Let's dig in and find out!
The Price of Growth
Toast took on a hefty amount of institutional capital from the get-go, and that meant the company had to come up with new revenue lines to stay afloat. So, they followed in the footsteps of other cloud POS providers and started charging customers for each integration. This was a convenient solution for Toast to increase its fee, but not so convenient for the customers.
Expanding the Menu
Toast has been growing its offerings, but without investing in its infrastructure. The company wants to monopolize every add-on feature and integration in the book, from online ordering and payment processing to payroll, scheduling, and customer loyalty. Toast wants to own it all! This strategy has never worked out for other POS brands, but Toast is convinced it will be a $10 billion company. As the company starts acquiring more solutions, it's logical for the integration fees to go up.
Imposed Tariffs on the Table
Toast is also planning to impose tariffs on its goods, which means that third-party add-ons will come with a hefty fee. For example, if Toast rolls out a customer loyalty platform and you're a customer loyalty program provider, it's likely that the integration rate will go up by 50%. Currently, Toast charges integration fees of around 30%.
Revenue Share Agreement - More Toast, Less You!
According to the revenue share agreement, any lead a third-party partner sends to Toast results in a one-time payment of $500. However, any customer using Toast that integrates with a third-party partner has to share 30% of their ongoing revenue with Toast, in perpetuity. This means Toast is making sure it gets the bigger slice of the pie by demanding 30% in perpetuity. For example, a SaaS business with an 8x revenue valuation will be worth only 1x in annual revenues with a one-time payment business. Toast is making sure it gets the bigger share of the revenue, and the customers get the smaller slice.
Raised Merchant Processing Rates - Toast, Toast, Toast!
In October 2022, Toast raised its merchant processing rates by 0.15%. On a $25 ticket, Toast's merchant processing rates are 3.16%, with 25% going directly to Toast. 80% of Toast's revenue comes from FinTech, or merchant processing fees, and unlike Crisp, Toast doesn't lock in its merchant processing rates into customer contracts. They may offer free or reduced hardware, but in the long run, Toast customers end up paying more in merchant processing fees.
The Impact on Customers
Well folks, it looks like the jig is up for the cloud-based restaurant management platform, Toast. That's right, the writing is on the wall and they've finally decided to raise their POS integration fees. But, let's be real, were we really surprised? I mean, they did take on a hefty amount of institutional capital from the get-go. And we all know what that means – they've got to keep the money train rolling and what better way to do that than by charging their customers for each integration. Genius, really.
But, let's not sugarcoat it, this added cost is going to cause some strain for customers, especially those who are managing multiple units. Sure, it may seem like a small fee for each integration, but those small fees quickly add up and before you know it, you're looking at a hefty bill. And let's be honest, who wants to fork over more money for the same service they've been using? Not us, that's for sure.
So, how can Toast's latest fee frenzy be resolved? Fear not, my friend, as there is a solution for restaurants who don't want to be held hostage by Toast's integration fees. The answer lies in finding a true, all-in-one solution to the POS problem - enter Crisp! With Crisp, restaurants can manage all their operations in one convenient package, without the need for added-on features like employee scheduling, loyalty programs, and gift cards. Crisp has got it all covered, and as the popularity of this platform continues to soar, the traditional POS system may never be the same again. Say goodbye to integration fee headaches and hello to an all-in-one, seamless solution.