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Can You Survive as a Cash-Only Restaurant?

business.com editorial staff
business.com editorial staff

Can you go cash only and thrive?

  • Running a cash-only business reduces expenses by avoiding credit card fees, which your clients may not be willing to bear.

  • Running a cash-only restaurant has the advantage of reduced overhead because you do not have to pay for a merchant account or buy equipment.

  • Cash only may have a higher risk of theft.

If you have ever wondered if your restaurant can survive, let alone thrive, as a cash-only business, the answer is, it depends. A lot of variables determine whether a restaurant can survive and thrive; whether or not it accepts card payments is just one of them. It is true that the vast majority of restaurants accept card payments, but do you really have to follow the trend? Not necessarily.

What are the benefits of being a cash-only restaurant?

  • No fees on credit and/or debit card transactions
  • Simplified bookkeeping
  • Reduced risk of credit card fraud
  • No costly card processing equipment
  • Access to immediate funds
  • Ability to cater to those without traditional bank accounts or credit cards

Factors that determine whether you can survive as cash-only

The primary factor that influences whether you can survive as a cash-only business is the quality of your food. While some cash-only critics claim that having to take out cash is an inconvenience, the reality is that if the food is good enough, customers won't mind the supposed inconvenience.

Another factor to consider is your customer base. If business deals take place in your restaurant or busy professionals stop by during their lunch breaks, you may struggle if you're cash only. On the other hand, if you're a more informal establishment or you offer something unique, you'll find only accepting cash to be less problematic.

Potential pitfalls for a cash-only restaurant

As nice as it is to imagine that people will flock to your eatery and form a line around the block every night even though you don't accept cards, it's important to be realistic. If you don't accept card payments, you'll lose some customers. That's not necessarily a terrible thing. If you've got an established clientele that keeps coming back for more of your fabulous food, people passing you by for the eatery around the corner that doesn't serve the same high-quality food as you but does accept cards isn't that much of a big deal. But if you can't get people in the door to begin with, you're in trouble. It isn't good either if you do get people through the door but they end up having a bad experience because they try to pay for their meal with a card but can't.

Some restaurants try to combat this by adding an ATM to their venues so customers can withdraw the cash they need without the inconvenience or embarrassment. As a bonus, some ATM companies give restaurants a per-transaction fee.

Other eateries take a more informal approach. Pomodoro, an Italian restaurant with multiple venues in and around Boston that only accepts cash, writes down the names of customers who can't pay and keeps them on file until those customers come back and pay their tabs. The manager says that some come back that same day, others the next day, and some the following week. The company believes that by trusting people in this manner, you foster loyalty and encourage them to come back and eat with you again. Going cash only can be a gamble, but for the right kind of restaurant, there are some real benefits to it. Carefully consider if this option is right for your restaurant and customers.

Risks of being a cash-only restaurant

  • It can cause you to lose business. The goal of every business enterprise is to make profits. To achieve this, you must ensure your customers are satisfied with your products and services. While many of your customers may comfortably pay for meals in cash, a larger number of them may prefer using other alternatives, such as credit cards. It can be an inconvenience to request cash payments, and they may opt to visit other restaurants that approve credit cards.

  • You become a target of theft. Operating a cash-only restaurant makes you a target of theft. Burglars are assured they will find cash in your restaurant any time it is open. Many cash-only restaurants have additional safeguards in place, such as video surveillance systems. Another potential concern is that your employees may steal from you. Since your waiters are receiving cash payments, they are likely to pocket some funds. Employees who have access to the till may also be a source of theft. Receiving payments through electronic means reduces the chances of theft and makes it easier to transfer funds to your financial institution immediately.

  • It could negatively impact your accounting practices. Receiving cash payments makes it hard to work out the financials of your restaurant. Most of the accounting is dependent on what you remember, and cash-only transactions could result in loss of funds or incorrect data being reported.
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