American consumers, already burdened in these uncertain times, now face an unexpected cost as they dine out or order their meals online, a hidden fee quietly introduced by a Big Tech player in the food industry.
Many restaurant owners are expressing their frustration over this, feeling unjustly blamed for a charge beyond their control. Among them is Tony Naser, owner of four pizzerias in Massachusetts and New Hampshire, who in an interview with Fox News Digital said, “People are freaking out. Business owners are freaking out.”
Toast Inc., a third-party cloud-based point-of-sale service used by over 85,000 eateries, is imposing a 99-cent “processing fee” on online orders exceeding $10. The charge is applied to customers, not the restaurants using Toast’s services, causing discontent among businesses and patrons alike.
“Toast did us dirty,” declared one irate customer on Toast’s own client forum.
This new fee is appended to orders made even through the individual restaurant’s websites, leaving business owners powerless over this aspect of their sales process.
Matt Wilhelmson, owner of Koehn Bakery in Butler, Missouri, stated his belief to Fox News Digital that this practice is “absolutely unethical and illegal. And if it’s not illegal, it should be.”
“It’s no different than a cashier charging the customer $12 for an $11 item and pocketing the dollar for himself,” Whilhelmson continued.
Point-of-sale services like Toast facilitate transactions for their client companies, such as processing sales when customers order online or pay a bill at a restaurant. These businesses typically offer a range of record-keeping services and are compensated by their clients through a monthly fee and a percentage on every credit card sale.
U.S. Rep. Mark Alford (R-Missouri), who met with Wilhelmson, expressed his concerns, stating, “It’s very concerning on its face. I’m very concerned not only for the retailers but for the consumers.”
“If there’s any financial malfeasance that needs to be dealt with, I’ll be in contact with members of the (House) Financial Services Committee to get their attention on this,” Alford continued.
After testing the 99-cent fee in various locations around the nation, Toast began its nationwide rollout of the feature following its partnership with Google in February.
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Despite the company’s financial troubles, including a net loss of $275 million in 2022 and a projected worse outlook for 2023, COO and co-founder of Toast, Aman Narang, praised the collaboration, saying, “We are thrilled to collaborate with Google to help Toast customers maximize their online presence and take control of their ordering channels.”
The charge, termed as “order processing fee,” appears on the receipts, accompanied by a note: “The Order Processing Fee is set by Toast to help provide affordable digital ordering services for local restaurants.”
However, in states with a meals tax, this fee is included in the taxable bill, forcing restaurants to account for it as income even though the money is directly transferred out of their accounts to Toast.
The move has stirred uproar on Toast’s client forums, where restaurant owners have termed the practice as “bogus, unethical, and a very bad business practice.”
Trent Patterson, a restaurateur from Houston, Texas, went as far as to label the practice as “a back-door way to steal from restaurants.”
Defending their stance, Toast issued this statement: “To help fund ongoing innovation in restaurant technology, we are updating our pricing model to add a nominal $0.99 fee (this is not a surcharge) paid by guests on orders $10 and over on Toast online ordering channels.”
“This change helps fund product investments, such as those highlighted above, and continued innovation in support of helping restaurants maintain the direct relationship with their guests,” the statement continued.
However, this claim has been met with skepticism from industry experts and restaurant owners alike, who view it as a ploy to recover from financial distress.
Restaurateurs like Elias Khoury in Massachusetts argue, “These are my customers. Why are you charging my customers?”
The 99-cent fee, though seemingly insignificant, can amount to a considerable percentage of smaller transactions, such as a $10 pizza order.
As Khoury pointed out, “Today it’s 99 cents. Tomorrow it could be $2 or $3. It’s at their discretion. We have no control over it.”
As consumers and business owners alike grapple with this new reality, it raises important questions about the power and discretion of third-party tech services within the food industry.
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