Toast defends itself against FTC lawsuit, citing market‑share gains
Restaurant‑technology provider Toast said on Tuesday that its rapid growth in new locations and revenue shows the Federal Trade Commission’s (FTC) lawsuit is unfounded. CEO Aman Narang told analysts on the company’s third‑quarter earnings call that the company’s customer‑success focus and expanding AI‑powered tools are driving share gains across every segment.
What happened?
On Oct. 29, the FTC and state authorities filed a lawsuit accusing Toast of imposing unauthorized charges, misleading businesses about pricing and making it difficult for customers to cancel services. Toast responded the same day, saying it disagrees with the allegations and will vigorously defend itself. Narang emphasized that the Restore Online Shoppers’ Confidence Act (ROSCA) the FTC is invoking does not apply to negotiated B2B agreements, warning that such a ruling would have far‑reaching industry implications.
During the third‑quarter earnings call, Toast reported adding about 8,500 net new locations, bringing its total to roughly 189,000. Annual recurring run‑rate rose 24% to $2.5 billion as of Sept. 30. The company also highlighted the launch of new AI agents in its Toast IQ Grow marketing solution and Toast IQ Team labor‑management platform.
Toast added ~8,500 new locations in Q3, total 189,000.
Annual recurring run‑rate up 24% to $2.5 billion.
New AI agents introduced in Toast IQ Grow and Toast IQ Team.
CEO Aman Narang says ROSCA does not apply to B2B contracts.
Why it matters for the industry
Toast’s defense hinges on its claim that the FTC’s focus on consumer‑facing practices is misplaced for a B2B‑oriented platform. If the agency succeeds, it could set a precedent that forces all restaurant‑tech vendors to overhaul pricing transparency and cancellation policies, potentially increasing compliance costs. Conversely, a dismissal would reinforce the current model that allows negotiated pricing and flexible contract terms.
The company’s growth metrics—especially the 24% jump in recurring revenue—suggest that its value proposition is resonating with merchants. For investors, the data indicates that Toast’s expansion strategy is working, even amid regulatory scrutiny. For restaurant owners, the firm’s AI tools promise better marketing and labor efficiency, which could translate into higher margins.
What this means for you
For investors, Toast’s earnings growth and customer‑success narrative provide a case study of how a niche SaaS can scale in a highly competitive market. The company’s ability to add new locations while maintaining a high run‑rate signals operational efficiency that could support future valuation upside.
Restaurant operators and retail managers might look to Toast’s AI agents as a way to streamline marketing and workforce management. The firm’s claim that its tools “actively deliver results” could help businesses reduce labor costs and improve customer engagement.
Consumers of restaurant‑tech services should note that the lawsuit centers on pricing and cancellation practices. If the FTC’s claims are upheld, merchants may face stricter disclosure requirements, potentially leading to clearer pricing for end‑customers.
What to watch next
Analysts will be monitoring the FTC’s next steps, including whether the agency seeks a settlement or proceeds to trial. Investors should also keep an eye on Toast’s quarterly updates for any changes in revenue growth or customer churn. Additionally, the broader AI‑in‑SaaS landscape may see a shift if the FTC’s approach to ROSCA expands beyond consumer‑facing platforms.
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