A diner places an order on a restaurant's own website and pays a fee the owner never set. The charge is $0.99, tucked inside a line marked "Taxes & Fees." Every cent goes to Toast. A small tooltip tells the diner the fee helps "provide affordable digital ordering services for local restaurants." The restaurant owner cannot turn it off.

That owner signed a zero-dollar vendor contract to keep overhead low. Late in October 2026, the FTC and eight state attorneys general filed suit against Toast Inc. The charge: Toast used that zero-dollar entry to build switching costs around restaurants, then harvested revenue straight from the restaurants' own customers.

There is a name for this in the literature. Paul Klemperer, the Edgeworth Professor of Economics at Oxford, studied what happens when a vendor gives away entry and builds switching costs around a customer's operation. He and economist Joseph Farrell called the pattern invest-then-harvest. The vendor invests by giving low or zero entry terms. Once the switching costs stack high enough, the vendor harvests.

Toast ran this at a scale that makes the mechanics hard to miss. Its Pay-as-you-Go plan covered hardware and software at zero dollars a month. The costs came back through higher fees on every card swipe. Restaurants on Toast's paid plans averaged about $900 a month once terminals and add-on tools were counted. The Pay-as-you-Go tier started at zero. But the real extraction did not come from the contract the restaurant signed. It came from the fee on the restaurant's own checkout page.

The restaurant's name was on the order page. The restaurant's brand sat at the top of the screen. The money went somewhere else. The $0 plan did not fail those restaurants. It did what it was built to do.

And the numbers prove it. In 2025, 82 percent of Toast's $6.153 billion in revenue came from payments and financial services. Not from software. The software was the lure. The payments were the extraction layer. Across 189,000 locations, the model ran the same way. The point-of-sale system got the restaurant in the door. The payment layer kept the money moving to Toast long after the contract felt like a settled cost.

The pattern held because the switching costs grew faster than any operator could track them.

Toast's early termination fee runs $150 for each month left on the contract. One restaurant cancelled before it received any hardware or ran any software. The invoice came to $17,030.74, set to draft straight from the business bank account. No equipment shipped. No orders processed. The bill arrived anyway.

Restaurants that took a Toast Capital loan faced a second lock. Cancelling the point-of-sale system triggered a full loan default. The full balance came due at once. Toast could block a switch to a new provider, in its own words, "in its sole discretion."

The problem is not that the vendor charges fees. Every vendor charges fees. The problem is that the zero-dollar entry price hides the full cost of the cycle until leaving hurts more than staying.

Price the full cycle before you sign the first page. What you think you want is a zero-dollar entry. What will actually work is a contract you can leave. Those are not the same thing. Once that is clear, three moves follow from it.

Before you sign any vendor deal, ask for the full termination schedule in writing. Multiply the monthly penalty by the number of months in the term. Then add any loan clause that ties repayment to the contract. That total is your real entry price. The zero on the cover page is not it.

Most operators skip this step because the number on the front page looks like a gift.

Read the fee schedule your customer sees, not the one shown to you. If the vendor adds a line item to your checkout page, find out who keeps the money and whether you can turn it off. Your customer does not know the vendor exists. They see your brand and assume you set the price.

Run a side-by-side quote from a second vendor once a year. Know the cost of moving your data, your menu, your payment records. If the number is too high to act on, you are already in the harvest phase. Use that number to plan the move on your own terms.

Running this for one contract cycle does something the platitude never did.

You spot the gap between the stated price and the total cost of the deal. Fees that touch your customer without your approval stand out. The real switching cost shows up, not the one the sales rep quoted. And it becomes clear whether the vendor's revenue comes from selling you tools or from selling access to your buyers.

At the end of the contract's first year, ask three things.

→ What did the vendor charge my customers that I did not set?

→ What would it cost me, in dollars and in lost data, to leave right now?

→ Which part of the vendor's revenue comes from my operation, and which part comes from their product?

That is the difference between advice that sounds right and a system that proves itself.

A zero-dollar vendor plan is not low overhead. It is the invest phase of someone else's harvest. The pattern has a name in the economics literature and a federal case number to go with it. The operator who reads the exit clause before signing the entry page already sees the cycle.