More restaurants want your money but not your cash
Burdens brought on by cash transactions go beyond the checkout line for retailers
Cash may be king for customers with a wallet full of bills, but a growing number of restaurants find accepting paper money just isn’t worth it anymore.
Starbucks Corp. operates one cashless store in Seattle. Sweetgreen, a seasonal salad spot with about 100 U.S. locations, went cash-free last year. Fast-casual chain Chopt Creative Salad Co., which piloted its first cashless restaurant in January, will have six in Manhattan before the new year.
“We were responding to the consumer demand. They told us over time that speed is of the utmost importance,” said Chopt chief executive officer Nick Marsh. Before going cashless, the cashiers couldn’t keep up with the fast pace of food prep, making a “bottleneck at the registers.”
Burdens brought on by cash go beyond the checkout line. As minimum wages rise across the U.S., paying employees to count, secure and transport cash is becoming a cost that some restaurants say they can’t afford. Meanwhile, convenience-hungry consumers used to instant gratification want to get what they
ordered as fast as possible — and the customer fumbling with a change-purse slows that down.
For Chopt, the cashless model started at the salad chain’s West 51st Street location in Manhattan, where Marsh said less than 10 per cent of transactions were cash previously. As efficiency improved, two other New York City restaurants went cashless in “rapid succession.”
For Hill Country Barbecue Market in Washington, D.C., cash stopped making economic sense. After losing almost $60,000 (U.S.) from several break-ins from the location this year, CEO Marc Glosserman said making the switch was necessary. The chain’s Manhattan and Brooklyn locations currently still accept cash.
“It made sense for us. Less than 8 per cent of our transactions were cash,” he said, noting that handling cash takes about 624 labour hours a year. “Something’s got to give.”
Of course, dropping cash sales means trading the payment method’s costs for digital transaction fees. Morgan Stanley analyst James Faucette said it’s unclear whether a cashless approach can yield higher sales. Still, if a business’s revenue from cash transactions declines as credit card use grows, going cashless won’t be a headwind.
“As a business, you want to get paid,” Faucette said. “Certain businesses will just get to the point where it doesn’t make sense to do cash anymore be- cause of their customer demographic.”
Denying cash-paying customers also raises concerns. Those in opposition say ditching cash discriminates against underbanked populations, who are essentially being denied service at some restaurants because they don’t have credit or debit cards. Washington council member David Grosso intro- duced that “Cashless Retailers Prohibition Act of 2018” this summer in an effort to end the trend.
“It’s not as if our main guests are using cash in significant numbers.”
Older guests also tend to prefer cash. According to a survey of rewards credit cardholders from CreditCards.com released in September, 58 per cent of Baby Boomers prefer to use cash for purchases below $10, while less than a quarter of buyers between 18 and 27 prefer cash transactions for the little stuff. All in all, physical currency is still the most frequently used payment method, a 2016 Fed study found.
Yet, for those companies going cash-free, the pros of stopping the paper trail seem to out- weigh the cons as customers increasingly choose the quicker swipe-and-go cadence of credit cards.
“It’s not as if our main guests are using cash in significant numbers,” Glosserman said. “If my core guests are using cash, I’m not sure I’d be so quick to make the change to go cashless. This was the right thing for us to do for our business.”