Toast

Toast is the highest scoring company we have rated that still lands in a caution band, and the reason is worth stating up front. We looked for regulatory actions against Toast and found none. No Federal Trade Commission action, no Consumer Financial Protection Bureau action, no state attorney general action. We swept the federal docket and found no merchant class action, no antitrust case and no consumer class action. Toast’s own annual report, filed under securities law exposure, records no reserves for material claims.

That is a genuinely strong record and this rating credits it heavily. What pulls the score down is not what Toast has been caught doing. It is what Toast’s contract permits it to do, what Toast declines to publish, and how difficult the platform is to leave once your restaurant runs on it.

If you operate on Toast, the useful question is not whether Toast has behaved badly. It is whether you know your effective rate, and what happens if it changes.

Section 6.2 of the Toast Merchant Agreement, in the version dated 10 September 2025, reads in part: “Toast reserves the right to change (i) Card processing rates and other non-Software Fees at any time during the Term upon thirty (30) days’ prior written notice”.

If you do not accept the change, the contract gives you one route for a card rate increase: end the agreement. And if you do nothing, the same section decides for you. “If Merchant does not provide written notice … or if Merchant otherwise continues to use the applicable Services subsequent to the effective date of any change in Fees and/or Card processing rates, then Merchant shall be deemed to have accepted such change(s).”

Read that as an operator. A notice arrives. To refuse it you must send written notice before the effective date and then take your entire point of sale estate out of your restaurant. To accept it you do nothing at all. The path of least resistance is the price increase, and the contract is built that way on purpose.

The part that is fairer than you would expect

Three things pull in Toast’s favour here and this rating counts all of them.

Your software subscription price is contractually frozen for the initial term. Toast can only reprice that at renewal. Second, the notice must state the effective date, so you are not guessing. Third, and most significantly, if you terminate specifically because Toast raised your card processing rate, the early termination fee does not apply, other than any processing fee on software financing. That is a real concession and most of the companies on this board do not offer it.

The bite is not the exit fee. It is everything else about leaving.

We swept every federal case naming Toast, Inc. from 2016 to 2026. Patent suits, trade secrets, copyright, accessibility, employment, a vendor contract dispute, and one restaurant suing over a contract. No antitrust case. No merchant class action. No consumer class action. No securities class action, despite three plaintiff firms announcing investigations in August 2023.

That record is real and Toast is entitled to it. It is also, in part, engineered. Section 16.2 of the merchant agreement sends every dispute to confidential binding arbitration in Boston, Massachusetts before a single arbitrator. Section 16.3 adds that each party may bring claims “only on an individual basis and not as plaintiff or class member in any purported class or representative action.”

A restaurant in Phoenix with a four thousand dollar billing dispute has no economically rational way to pursue it. Individually, the arbitration costs more than the claim. Collectively, it is barred. Confidentially, nobody else learns it happened. The absence of class litigation against Toast is therefore weak evidence of good conduct and strong evidence of good drafting, and this rating treats it that way.

The same mechanism ran in Toast’s own house. The 2022 settlement covering more than 450 Toast sales associates over overtime classification, reported at $2.3 million, was resolved in arbitration, not in court. Toast denied violating any wage laws.

In late June 2023 Toast began adding a 99 cent order processing fee to diners’ online orders of ten dollars or more at its restaurants, rolling it out nationally on 10 July. Toast kept the money. The restaurants whose names were on the checkout page had no opt out. One operator asked to absorb the fee herself so her customers would not see it, and was refused.

A member of the House Small Business Committee took it to the committee chair on 13 July. On 19 July, then chief executive Chris Comparato announced Toast was removing it, and wrote: “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.” He announced his departure on 1 September 2023.

We include this for both halves. A company put a charge on its customers’ customers with no way to decline it, and that is the conduct. A company then reversed it in about three weeks, in public, in the chief executive’s own name, with an unqualified admission and no lawyer’s hedge. Very few companies in this series have done the second thing even once.