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Should Your Restaurant Go Cashless?


With more and more of society making the transition to cashless living, many restaurants are likewise making the move to including cashless payment options. Soon enough, the industry might see the extinction of cash only establishments all together. But does it make sense to go cashless right now? This article from Toast will discuss some of the many pros and cons associated with going cashless.

The Pros: Why Restaurants Should Embrace a Cashless Culture

1) Quicker Transactions

For quick-service restaurants in particular, going cashless speeds up the line during packed lunch rushes. This has been demonstrated in real life by Sweetgreen which reported seeing up to 15% more transactions with their cashless model.

2) Safety

Whether it's a masked thief or a restaurant staff member skimming from the register, no one will be able to empty the cash register if there's no cash in it.

3) Data Collection

It's difficult to understand an individual's buying patterns or reward them for their loyalty when they always pay with cash. If they use the same card every time, your machines will remember them. The same is true if customers pay with their smartphone using an app like LevelUp, which also helps them accumulate rewards points (plus, mobile payments are forecasted to grow to $142 billion by 2019). You'll gain a better understanding of your individual customers with this data, which will drive your business insights.

4) A Stable Pricing Model

Most restaurants offer both cash and credit card payment options. When this is the case, your bottom line is dependent on the rates and the amount of credit card transactions. A few cents are lost to each card swipe, which adds up as the days, weeks, and months go by. This would be easy to plan for if you knew that on any given day, 40% of your transactions would be credit and 60% cash. But this number can change at any moment. When you declare that all transactions are card based, you'll be able to plan for that percentage and more accurately forecast what your monthly and yearly credit card fees will be.

5) More Efficient Employees

Daily bank runs to make change and refill a register takes up your employees' valuable time, especially when some restaurants see up to 90% of their transactions take place with no cash involved.

The Cons: Why Restaurants Should Not Embrace Cashless Society

1) People Still Pay With Cash

Some people choose not to carry a card because the urge to overspend is too great, and instead prefer to use cash so they can limit themselves. Similarly, children and some adults cannot get credit or debit cards. Going cashless will put a cash only customer in a very awkward position if they've ordered only to discover they can't pay for it. Society has not gone completely cashless yet. Therefore, to cut yourself off entirely could damage your business.

2) Higher Costs

Credit card companies charge processing fees. If your restaurant wants to keep prices low, you'll have to accept a cut to your profit margins by eating that fee. If you don't want your bottom line affected, you'll have to price your items higher. If guests notice the higher prices, they might not return.

3) When Tips Are Impacted So Is Employee Morale

Servers tend to prefer cash tips to credit tips. Not only can cash be used immediately, none of the tip is lost to credit card processing fees. Plus, tip jars are an important source of income for both high-school and college students. In a cashless society, both of these revenue sources are affected. This could impact the morale of employees and ultimately hinder their performance.

4) It Might Not Be Legal

The Federal Government has clearly stated that private companies may choose their own guidelines when it comes to accepting coins or cash, as long as the state in which that private company operates, also allows it to so. It just so happens that Massachusetts is one of those states, with a law that states "no retail establishment...shall discriminate against a cash buyer by requiring the use of credit by a buyer in order to purchase such goods and services." When The Boston Globe asked Sweetgreen about the issue, the healthy-eating chain started accepting cash in their five Massachusetts locations. It appears that most (if not all) of the other 49 states allow the option of going cashless. Some Massachusetts restaurants, like Amsterdam Falafelshop in Kenmore Square, are ignoring the law despite its clarity. Owner Matt D’Alessio switched to cashless in December 2015 upon seeing 85% of sales were made without cash. He went on record saying "I think it’s not fully legal what we’re doing. But it’s something not really enforced, either.” Reportedly, both D'Alessio's business and Sweetgreen have seen minimal complaints upon going cashless.

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