Across the restaurant industry, new cashless payment options are popping up left and right.
Dozens of restaurant chains, including Chick-fil-A, Chili’s, and KFC, accept Apple Pay. Mobile payment processing apps such as Square and Clover enable credit and debit card swiping with just an iPhone or iPad. And with Venmo, PayPal, or the OneDine Consumer App, the card is taken out of the equation altogether. These options are ideal for pop-ups and food trucks, and are even used by brick-and-mortar restaurants for their convenience.
With so many electronic payment options, going cashless seems more practical than ever. Many restaurants go cashless because it increases operational efficiency, and the staff appreciates not having to handle cash, balance tills, or go to the bank. Plus, it eliminates the risk of cash theft. And today, 70% of consumers prefer paying with a card over cash, anyway.
But restaurants considering going entirely cashless might want to think twice.
- It disservices underbanked people — those who have limited or no access to credit and/or debit cards or other electronic payments (only 76% of consumers have a credit card)
- Many prefer cash for its anonymity
- 10% of consumers use only cash
- Refusing to accept cash payment is illegal in some states and cities: The State of New Jersey, Massachusetts, New York City, Philadelphia, and San Francisco — and this list is likely to grow if the protective legislation trend continues
So for now, going cashless, despite its benefits, might create more problems than it solves.
Where are cashless models found?
Across the restaurant industry, cashless payment models are most commonly found in fine dining establishments. It’s common practice for upscale restaurants to require a credit card to book a reservation, anyway.
The next wave of cashless restaurants will likely be fast-casual chains aiming to offer faster service. Dos Toros, a NYC-based, 14-store Mexican chain, operated this way without major issue, according to co-owner Leo Kremer, starting in 2018 (until New York passed its law making cashless-only illegal).
Epic Burger, which has eight cashless locations, has justified the model despite common customer complaints by emphasizing increased employee safety and operational efficiency.
Other restaurant chains have attempted to go cashless but reverted back after consumer pushback. Sweetgreen rolled out cashless stores in 2016, but pulled back after customers expressed dissatisfaction. Houston’s Peli Peli, a South African-style restaurant chain, did the same in 2017 for similar reasons.
In sum: There are substantial pros and cons to consider for restaurants mulling going cashless.
For now, refusing to accept cash payment remains a controversial, alienating customer disservice. Restaurants that do refuse cash will almost certainly experience a loss of patronage from cash-preferring customers and a damaged brand image.
But reduced operational costs could offset resulting revenue losses. And as electronic payments become more universally accessible, the attractive benefits to operating cashless restaurants will begin to further outweigh the cons.
Of course, the restaurant industry’s bedrock is its commitment to customer service and experience. Going cashless clashes with those core values. So as long as there are cash-paying customers, restaurants will feed the demand.