Toast Says Controversial $0.99 Consumer Fee Had No Impact on Pricing, Win Rates

Less than a month after restaurant point of sale (POS) provider Toast rolled back its decision to add a $0.99 fee for consumers on online orders of $10 or more, company executives have reiterated — following similar remarks in a July 19 statement — that adding the controversial order processing fee was a wrong move on their part.

Speaking to investors on the company’s second quarter 2023 earnings call Tuesday (Aug. 8), Toast CEO Chris Comparato acknowledged that despite the best of intentions to keep costs low for customers, the company erred in how it approached monetizing the value of its digital ordering suite.

“Listening to our customers is a core ethos for how we operate, and our day-to-day efforts are guided by a relentless focus on being the restaurant community’s trusted partner. It was on this basis and after extensive constructive discussions with our customers that we decided to remove the $0.99 consumer facing fee from Toast digital ordering channels,” Comparato told analysts on the call.

He added that the company will be “more thoughtful” on how pricing is adjusted moving forward, and recognizes “the importance of considering the impact to all stakeholders as we do that.”

The decision to remove the fee, which came just a month after it was announced, followed intense outcry from restaurants, which are already facing significant pressure from the macroeconomic environment.

It led to rivals in the hyper-competitive restaurant industry to capitalize on the Toast debacle and advertise different promotions and campaigns to win over angry customers. However, the company said it has not experienced any significant attrition following the introduction and reversal of the fee, with no churn or impact to location adds.

“Competition’s always throwing campaigns and targets against Toast, but […] we’re in execution mode in our core business, and the competitive dynamics in our opinion remain the same. Our win rates look good and we’re just plowing forward on execution,” Comparato said.

Driving Location Growth

The restaurant technology platform said it surpassed $1 billion in annual recurring revenue (ARR) in Q2 and posted positive adjusted EBITDA and free cash flow for the first time as a public company. Gross profit of $208 million was also up 84% year over year (YoY).

Additionally, the company said driving location growth is a focus area, with a record-breaking number of net new locations — 7,500 — added in Q2, bringing the total to about 93,000.

The company highlighted the advancements made in its product offerings, such as Toast for hotel restaurants, Toast tables, and the recently announced catering and events product to help restaurants manage catering orders and plan events.

“As restaurants look to diversify revenue streams, catering and events are top of mind as attractive growth areas,” Toast Co-Founder and Chief Operating Officer Aman Narang said in a release earlier this month, adding that the new tool brings the complete catering and event order management cycle into one platform, letting restaurants save time and transform their businesses.