The Pros And Cons Of A Cashless Restaurant

At first glance, a cashless restaurant may seem impossible from an operational and customer service standpoint. But as mobile payment technology improves and makes substantial gains in popularity, it may not be a completely unattainable goal.

Between 2011 and mid-2016 alone, a Gallup survey found that the number of Americans using cash for nearly all purchases dropped from 36, to 24 percent. In addition, 12 percent reported that they don’t use cash at all.

As more restaurants make the switch to cashless, like Chicago’s Bonci Pizzeria did just last month and six Argo Tea locations did in April of this year, the pros and cons of going cashless has become a hot topic among restaurateurs. 

 

Pro: Theft and Robbery Deterrent.

Restaurants, unfortunately, can be susceptible to employee theft as well as robberies, prompting many operators around the globe to turn to a cashless system. Making the switch not only acts as a theft and robbery deterrent, but can also help shield your employees and customers from experiencing the fallout of such crimes.

 

Con: Higher Processing Fees.

In a mixed payment system, credit card processing fees can account for a significant portion of your expenses. But in a cashless system, that percentage can be amplified as it applies to every single transaction. While you may be able to negotiate a more favorable fee structure, you should be prepared to either take a hit to your bottom line, raise prices to cover the expense, or find another way to balance the cost.

For some, Visa’s new program may help offset the expenses associated with going cashless. Called the Visa Cashless Challenge, it’s a program in which 50 U.S.-based small businesses in the food service industry can receive $10,000 if they commit to going cashless.

 

Pro: Faster Transactions.

Cashless transactions have the potential to be faster than cash transactions. Pull out the card or phone. Tap, swipe, slide or scan, and be on your way. While there can be fumbling with the card, counting out cash and change can slow down each transaction, causing unnecessary service delays. Sweetgreen, a fast casual salad chain, has reported a 5 to 15 percent hourly increase in transactions since going cashless.

 

Con: Alienating Customers.

Depending on the demographics of your market, taking such a bold approach may alienate some of your customer base. Between those who prefer to pay solely with cash — (10 percent of customers) according to the Gallup survey mentioned earlier) — and those who do not have access to payment cards, you may unintentionally tie your customers’ hands. While there are workarounds for this type of issue, such as having a backup company credit card to use, it’s still worth considering the impact on your customers.

 

Pro: Improved Hygiene.

When you eliminate the need for employees to handle cash or payment cards or count daily deposits, you can also eliminate a good chunk of the germs that tend to hitch a ride on those items. From mold and yeast to traces of fecal matter, cocaine, and heroin, paper money can be downright filthy. Even with proper handwashing (and it’s extremely difficult to do this with 100 percent effectiveness), the possibility of cross-contamination and the resulting negative impact on food safety remains a major concern for restaurateurs. And when employees become ill from those germs, it can wreak havoc on scheduling too.

 

Con: Technology Failure.

We have all experienced it. When a point-of-sale terminal goes down and the entire restaurant seems to come to a halt. Being completely reliant on technology to process every transaction all day long can be great when everything works seamlessly. But when technology fails — whether it’s only for a few minutes or a few hours — you run the risk of lost sales and unhappy customers.

 

Insider Opinions

I recently broached the topic of cashless systems with my LinkedIn network. They had some fantastic insights regarding the pros and cons of such a system — much more than I could cover above. Check out the full comments here (and leave one yourself!)

“For safety purposes, it’s a plus as your business and employees are less of a target for crime. You no longer have cash on premises (for store runs and C.O.D. vendors maybe), with no cash transactions the opportunity to pocket cash sales is eliminated.” — Mario Vega, Director of Operations at Sculpture Hospitality

“The biggest barriers are CC fees and low income consumers without access to CC or bank debit card.” — Ali Nemat, Manager Operations, Strategic Initiatives at Taco Bell

“I work for a large chain. This idea is wonderful and I think in 5 years the technology might be more stable. But I see credit card terminal issues all the time. Lots of issues with people disputing charges, etc. I think this may be more realistic down the road.” — Jim Brookhart, Area Operations Manager at RGT Management, Inc.

“Depends on your market, too. The US, several Asian countries and Northern European countries are pretty open to ‘cashless’ if not almost there already (Scandinavia!!!). Very different in Italy and Greece, for example.” Peter Schwarzer, Managing Director at LeOS Franchise Consulting

And Rick Tasman, president of BonciUSA, summarized all of the advantages that going cashless has afforded Bonci Pizzeria. Here is an excerpt from his own LinkedIn post on the topic. “It just makes ops so much more streamlined. No local bank, no change orders, no armored cars, no managers staying ’til 2 am looking to balance the drawer, no false accusations of innocent employees or managers, no safe, no wrong change, no counterfeit bills, etc. If all they have is cash, we sell them a gift card and put it on our personal card and put their cash in our pocket. It works surprisingly well. Cash has become only 10 to 15 percent of sales so your rates are not too much higher. I would never do it another way.”

Follow me on Facebook, LinkedIn, Twitter, Instagram, and YouTube for more HR and leadership insights. For speaking engagements and consulting services, visit me here. Or check out my company, Restaurant HR Group, to learn how we help restaurants manage their greatest assets.

 

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