Can You Survive as a Cash-Only Restaurant?

Business.com / Finance / Last Modified: May 15, 2017

Can you go old-school cash-only and thrive? Find out here.

If you have ever wondered if your restaurant can survive, let alone thrive, as a cash-only business, the answer is that 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 1 to 4.3 percent credit card transaction charge
  • Minimized bookkeeping
  • Simplicity
  • 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, a customer will take two minutes extra en route to your establishment to stop by an ATM. If you're offering an exquisite meal that's a real treat, people don't mind the supposed inconvenience.

Hand in hand with the quality of the food is the atmosphere and decor. If you create an atmosphere that really fits with your target customer and deliver beautiful food, your customers will be more willing to stop for cash.

Another factor to consider is your customer base. While affluent millennials may be willing to pay in cash for a great meal paired with nice atmosphere, it's going to be a harder sell if you're aiming at the older generation, youngsters or the less affluent (who Forbes dubbed "The Unbanked"). 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 simply 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 next 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. It acknowledges that the occasional customer may not return to pay their bill, but believes that the loyal case it builds up outweighs the few losses.

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.

Image from sbw18/Shutterstock

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