Toast’s price hike sparks mixed reactions among restaurateurs

Restaurant management system and POS provider Toast raised its processing fees for small and midsize clients, stating it marked the first such increase in the company’s 12-year history. The adjustment, which took effect in September 2024, increased fees by between 0.05 percent and 0.23 percent for a limited number of clients, translating to less than a penny per $1 transaction.

The Boston-based company described the change as necessary to sustain its processing platform in an environment of rising costs. In addition to the fee increase, Toast said it is expanding its surcharge feature, which allows restaurants to pass credit card processing fees onto their customers.

While the price hike was modest and selective, observers noted, it has triggered mixed reactions within the restaurant community.

Emphasizing that only a small segment of its 120,000 restaurant clients were impacted, Toast claimed that the adjustment was long overdue. Analysts like Stephen Sheldon, a research analyst with William Blair, believe the increase is unlikely to cause significant customer churn, as the surcharge feature helps restaurants offset their rising costs.

Learning from prior misstep

However, some restaurant owners are concerned about the potential impact on their businesses. Kathi Turner, owner and CFO of Turner Seafood Corp. and director of the Massachusetts Restaurant Association, expressed frustration over the lack of choice, recalling how previous fee increases, such as Toast’s controversial 99-cent fee on online orders over $10, were met with pushback.

The 99-cent fee, introduced in 2023, was quickly retracted after criticism from both restaurant operators and rival companies like Square and SpotOn. This misstep contributed to the resignation of Toast’s former CEO, Chris Comparato.

Aman Narang, Toast's current CEO, has faced a delicate balancing act, trying to maintain client loyalty while seeking new ways to increase revenue, observers commented. The latest price hike reflects Toast’s broader strategy of adding value through new features like the surcharge tool, which Toast claims helps clients manage their costs in a tough market.

Though some restaurants may hesitate to pass on additional fees to customers, analysts remain optimistic. On the whole, they expressed the belief that allowing restaurants to decide how to absorb or pass on fees may soften the blow and that Toast’s comprehensive platform, which integrates front- and back-end services, helps keep restaurant clients loyal despite the occasional price increase.

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