No cash? No problem, if you pay by mobile wallet or plastic at certain casual dining restaurants. As the following article reports, one U.S. chain is planning to go cashless in many locations this year, and other restaurants may follow in the years ahead.
Talk about a cashless society has floated around news channels for years. But for many businesses, the concept didn’t become a reality until recently, when mobile payments finally started to gain traction with consumers.
According to eMarketer, 38.4 million Americans used mobile payments in 2016. And many restaurant chains are embracing the mobile payment trend with open arms. For example, fast casual salad chain, Sweetgreen, announced that more than 60 of its locations will go cashless in 2017. But although mobile payments are convenient for both employees and customers, transitioning to a cashless operation also presents a new set of challenges.
In today’s tech-savvy world, restaurants are looking to technology to improve the customer experience. Customers who frequent fast food or quick service restaurants want to be in and out the door in minutes, a goal supported by cashless payments. By offering a series of instant and frictionless payment options (such as card-not-present, contactless or invisible payments) restaurants can cater to consumers’ convenience-first mentalities by speeding up operations and minimizing lines. Customers who have downloaded the restaurant’s app may also have the ability to order ahead, pay through the app and skip the line upon arrival — options that are especially popular for large group orders.
Perhaps most importantly, the elimination of cash transactions creates opportunities for increased efficiency. Managers have more time to properly train and mentor staff, and transaction speed increases, allowing employees to perform more transactions. Sweetgreen co-founder Jonathan Neman reports that employees have been able to perform 5 to 15 percent more transactions per hour since going cashless.
But lost customers aren’t restaurants’ only concern. The processing fees associated with digital transactions are an added expense. Restaurant owners can raise the cost of menu items to compensate for the loss (which could affect sales) or simply absorb the loss per transaction. Either way, processing fees will likely affect the restaurant’s bottom line at the end of the day.
The transition to a fully cashless operation has the potential to positively impact a restaurant’s services and revenue. But without careful consideration of location and fees, restaurant owners could face a bumpy start on the road to the cashless future.
Don’t expect many restaurants to try cashless. While electronic payment transactions certainly provide a more accurate financial reporting system and marketing database, processing fees do eat into the already low profit margins of the restaurant industry. But casual dining establishments can still benefit from cashless sales. They can enable electronic payments via an integrated mobile app with loyalty and remote ordering as ways to generate a new revenue stream. Additionally, they will see an increase in staff productivity as well as higher capacity utilization levels.
Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group
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