With restaurant consultants just back from New York City, we are reminded of how much of the city operates on a cash-only basis. Bodegas, cafés, and restaurants tape signs to the windows, doors, cash registers, declaring "CASH ONLY." It's not as prevelant a practice near our Denver or Phoenix offices; but as citizens turn back to city living, we'll see metropolitan areas begin to mimic some of these big city behaviors.
In some locations--in New York City and elsewhere--some stores and restaurant spots are swinging to the opposite end of the spectrum and are cash FREE. It's caused some backlash among neighborhood residents; but still the businesses state their cases. In this New York Times article, there are several local businesses listed as Cashless, and they will only accept credit or debit cards or various money sharing apps.
Reasons abound, from sanitation claims to human error prevention. And while these are valid concerns, especially in major cities, our restaurant consultants are also eyeing the increasing fees on merchants accepting credit cards. These little cost hikes can add up. According to the Wall Street Journal, this year both Mastercard and Visa stated that they would be increasing merchant fees yet again, "a move likely to inflame already fractious relations between businesses and card networks."
These fee increases are set to take affect this month, and the most obvious move for restaurant owners is to pass those costs onto the consumer.
When budgeting, National Restaurant Consultants CEO Richard Weil says, "Merchant service fees need to be figured into prime costs. This is going to cause customer costs to rise, and is more offset as customers continue to pay with credit cards and also tip on credit cards." Weil adds that the 12 percent factor on payroll tax is now evidenced in the raising labor costs elements as well.
Be on the look out for these increasing fees to go live on your April invoices, and make sure that you've prepared your business budgets accordingly. Our restaurant consultants are experts in the financial matters of the restaurant business and can help to adjust your budgets as necessary. If you're in need of financial reorganization, contact a restaurant consultant today.
Photo by Two Paddles Axe and Leatherwork