Boston software company Toast has dropped its 99-cent online order fee after less than two weeks amid backlash from restaurants.
Toast, whose cloud-based software is used by more than 85,000 restaurants, faced fury from businesses for pushing fees onto their customers already hit by inflation.
The company – whose mobile machines are known for allowing restaurants to run bills at the table where customers can easily add tips – quickly backpedaled on the new fee, introduced on July 10, which was mandatory on online orders over $10, branding it a mistake.
CEO Chris Comparato told its customers Wednesday, ‘while we had the best of intentions — to keep costs low for our customers — that is not how the change was perceived by some of you.’
‘We made the wrong decision and following a careful review, including the additional feedback we received, the fee will be removed from our Toast digital ordering channels,’ he wrote in the message.
The decision was not backed by Wall Street, which saw Toast’s stock take a plunge and wipe $2billion from its market cap.
Toast, whose cloud-based software is used by more than 85,000 restaurants, has cut its unpopular ‘junk’ fee
CEO Chris Comparato (pictured) told its customers Wednesday, that implementing the fee had been a mistake and the decision had been reversed
The move was welcomed by many small businesses who felt the company, which raked in $511 million in net profits last year, was simply profiteering at the expense of their squeezed customers.
Tampopo Restaurant in the Washington Heights neighborhood of New York City celebrated the news by posting: ‘The POS company Toast has decided to drop the $1.00 fee they randomly decided to impose for online delivery orders above $10.
‘This is a big win for small restaurants and their customers,’ the store added.
However, the move was less celebrated by investors, as Toast’s stock tanked more than 15 percent on Wednesday with fears the move will dent the company’s profit margins.
The company’s market cap was $14.2 billion yesterday, and tumbled to $11.97 billion today, losing more than $2 billion in a matter of hours after the announcement.
Toast is under pressure to get its bottom line in the black, as it still posted losses in the first quarter of this year despite processing almost $27 billion of orders, bringing in $819 million in revenue but losing $81 million.
Toast has attempted to reassure Wall Street analysts it could be cash flow positive, excluding some expenses for the full year.
Republican Congressman Mark Alford from Texas tweeted in response to the fee removal: ‘I’m pleased to see Toast’s decision to remove this unfair fee, which small businesses had zero say in.
Adding: ‘Without small businesses & entrepreneurship, this country is not the same. We must protect them at all costs.’
Small businesses, including New York City restaurant Tampopo Ramen, welcomed the move
In a public tweet Toast said: ‘We’ve been listening to your feedback and we understand: we made the wrong call.’
Congressman Mark Alford celebrated the fee removal in a tweet, saying it was the right thing for small businesses
In a public tweet Toast said: ‘We’ve been listening to your feedback and we understand: we made the wrong call.
‘We’ve decided to remove the $0.99 order processing fee from our digital ordering suite by the end of this week.
‘We love this industry and we remain committed to supporting restaurants now and in the future.’
Toast did not immediately respond to DailyMail.com’s request for comment.
Hidden and ‘junk’ fees have increasingly attracted political attention in recent months with President Biden introducing the Junk Fee Prevention Act.
DailyMail.com has also drawn attention to their prevalence in the food industry, in particular on food delivery apps.
DoorDash, Grubhub and Uber Eats routinely add extra fees and taxes to food orders, but customers are left in the dark about what exactly the add-ons cover.