The Cost of Cash

How cash impacts your restaurant in three key areas; Administration, Customer Satisfaction and Access to Finance

Cash has been knocked off its throne. Today, regardless of your target audience’s age, data indicates that most consumers want the option to pay with a debit or credit card. Irish consumers now spend more using cards than they do using cash namely €7,442 on the former versus €5,388 in cash withdrawals. Beyond the obvious benefits, how else does this impact your business for better or for worse?

Handling & Administration

There is a misconception that card transactions are the more expensive method of payment. In fact, cash handling costs are estimated at 2.5 cents per euro of turnover compared to 1.6 cents for a card transaction. Combine that with the estimated 28 minutes per day in back office administration time versus 94 minutes for cash, there is material soft and hard savings to be made. By making a deliberate effort to increase the amount of card payments over cash, restaurants could save thousands annually on cash handling costs, while also reducing the risk of fraud and simplifying time intensive administration.

Digital payments and till systems can help Irish restaurateurs to become more efficient and automated while also accessing data and insights into their business allowing for better and more informed decision making. You do not need to be a large restaurant chain to automate your accounting and inventory control or to offer digital loyalty programmes to encourage card usage and return visits.

Customer Satisfaction

Customers are becoming less likely to carry cash meaning despite the quality of your food, your service, or the extensive marketing you have done to get the customer there, if they are unable to pay they will go elsewhere. There is less of a psychological constraint for people to depart with their money when they use cards and they are more impulsive when compared to using cash. Restaurateurs can use the decreased price sensitivity customers tend to have when paying with a card to up-sell the most profitable menu items.

Studies indicate that customers view the appearance of a line negatively—regardless of how quickly it is moving. For those customers with a limited amount of time, waiting means their departing experience is negative and stressful. Cash payments slow down even the most adequately staffed counter and as queues build, and staff attempt to compensate with speed, room for error increases dramatically.  

Tipping

If you pride yourself on the level of service your staff provides to customers, you will want to ensure that your staff have every opportunity to be tipped. In the food service industry, tips and gratuities are a big motivator for wait staff to serve with professionalism and that important smile. When tipping is not mandatory in Ireland, a customer faced with only the option to pay in cash may have to choose between paying their bill and leaving a tip.

Access to Working Capital Finance

Cash flow is a key indicator and determinant of a business’s ability to access finance, however there are finance products that put specific emphasis on the volume of revenue being generated through cards. Cash Advance facilities allow restaurateurs to access working capital finance by leveraging the strength of their card sales. The more volume of revenue that runs through the card machine, the larger the working capital facility a restaurateur can access. Repayments are made daily using a portion of what comes through their card machine. By encouraging card over cash sales, a business owner can directly influence how much finance they can access and how quickly they can pay it back.