Toast's marketing is excellent. "Free hardware!" they say. "Simple pricing!" they promise. But once you're locked into a contract, the real costs emerge. Here's what every restaurant owner should know before signing.
Toast is a legitimate company and their system works well for many restaurants. This article isn't anti-Toast—it's pro-transparency. Know what you're signing up for.
The "Free" Hardware Trap
Toast often offers "free" hardware to new customers. Here's what that actually means:
What "Free" Really Costs
- Hardware is free if you sign a 2-3 year contract
- Early termination means paying back the hardware cost (often $1,500-3,000+)
- You're locked into Toast's payment processing (no shopping for better rates)
- Monthly software fees start at $69/month and scale quickly with add-ons
The math: "Free" hardware worth $2,000 over 36 months = $55/month in hidden cost. You're paying for it—just not upfront.
Processing Rate Reality
Toast's standard processing rates are competitive but not exceptional:
- Card present: 2.49% + $0.15 per transaction
- Card not present: 3.50% + $0.15 per transaction
- American Express: Higher rates apply
For a restaurant doing $50,000/month in credit card sales, that's roughly $1,250-1,500/month in processing fees. With a competitive processor, you might pay $1,000-1,200. That's $250-300/month in savings you're leaving on the table.
The catch: You can't use another processor with Toast. Their hardware only works with Toast Payments. This is a key difference from systems like SkyTab or SmartTab that let you shop processors.
Software Add-On Costs
Toast's base package is lean. Most restaurants need these add-ons:
Common Add-On Costs
- Online Ordering: $75/month + commission per order
- Toast Delivery: Commission-based (adds up fast)
- Payroll: $50/month base + per employee
- Team Management: $25/month per location
- Marketing: $75/month+
- Gift Cards: $50/month + per card fees
A "full-featured" Toast setup often runs $300-500/month in software fees before you even process a transaction.
The Contract Gotchas
Auto-Renewal
Toast contracts auto-renew. If you don't cancel 30-60 days before your term ends, you're locked in for another year. Miss the window? Too bad.
Price Increase Clauses
Most Toast contracts allow them to increase processing rates with 30 days notice. You can't leave (contract), but they can charge more.
Equipment Return
If you leave, some equipment must be returned. If it's "damaged" by their standards, you pay. The definition of damaged is... flexible.
When Toast Actually Makes Sense
Despite all this, Toast is a good choice for some operators:
- Simple operations: If you just need basic POS and don't need advanced features
- Cash-strapped startups: If you genuinely can't afford $2,000 upfront for hardware
- Multi-location chains: Toast's enterprise features and reporting are solid
- Restaurants (not bars): Toast was built for restaurants, not high-volume bar operations
Alternatives to Consider
Before signing with Toast, compare:
- SkyTab: Often truly free hardware, competitive processing, no long-term contract required
- SmartTab: Better for bars/nightclubs, more flexible processing options
- Square: No contracts, transparent pricing, though less restaurant-focused
Questions to Ask Before Signing
If you're considering Toast, get these answers in writing:
- What's the total cost if I cancel at month 18?
- Can processing rates increase during my contract?
- What's included in base pricing vs. add-ons?
- What's the auto-renewal policy and cancellation window?
- What happens to my data if I leave?
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