Where a Suitcase Full of Cash Won’t Buy You Lunch

Where a Suitcase Full of Cash Won’t Buy You Lunch


Patrons of Sweetgreen are very particular about their salads. When the company recently removed bacon and sriracha from the menu, customers took to social media to complain. But after a handful of Sweetgreen restaurants stopped accepting cash in January, barely anyone noticed, according to the company’s owners.

Even Sweetgreen executives thought going cashless was “a harebrained idea” at first, said Jonathan Neman, a co-founder and co-chief executive of the company. “But we looked around and saw that airlines haven’t been taking cash for a while.” At Sweetgreen’s locations throughout the United States, cash purchases have declined to less than 10 percent today from 40 percent of all transactions when they opened their first location nine years ago, he said. Sweetgreen now has 48 locations.

Although America is far from becoming a cashless society, cash transactions are less frequent than even a few years ago and some restaurant owners are betting that customers will be comfortable doing away with cash for convenience.

Restaurants like Sweetgreen are pushing credit and debit cards and mobile apps for payments. Apps enable restaurants to gather data and feedback, and allow consumers to order ahead and skip long lines.

“One of the biggest complaints at Sweetgreen is the line, so by reducing cash we’re able to serve customers a lot faster,” Mr. Neman said. At the six Sweetgreen locations where cash is not accepted, employees can perform 5 to 15 percent more transactions an hour, he said.

In a cash-free environment, employees are also safer, Mr. Neman said. There have been only a handful of thefts and robberies since Sweetgreen has been in business, but he said he believed that going cashless deterred thieves. “I don’t think anyone’s coming in to steal arugula.”

Forgoing cash is not without obstacles, though. Many Americans still use cash by choice or because they have no alternative. A 2015 study on consumer payment choice from the Federal Reserve found that although credit card use was steadily rising, slightly over 26 percent of purchases were still made in cash. Those transactions tend to be small in value. Mobile payments are expected to continue growing as well. Forrester Research forecasts in-store mobile payments will grow to nearly $34 billion in 2019 from about $4 billion in 2014. Sweetgreen has its own app, which allows customers to order and pay. The company’s in-app purchases make up one-third of the company’s transactions, Mr. Neman said.

Another drawback of cashless restaurants is the elimination of anonymity. Credit cards and apps leave a digital trail that can leave consumers vulnerable to security breaches, which worries consumer privacy advocates. A cashless environment also excludes the unbanked, nearly 8 percent of the population, according to a Federal Deposit Insurance Corporation survey.

Paying with cash can also help customers spend less and assign more value to their purchases, recent studies suggest.

The poor and unbanked are a concern for Sweetgreen, Mr. Neman said. Should the experiment move toward a companywide policy, Sweetgreen is considering solutions to make its products available to those without credit or debit cards. One potential answer is to install gift card machines in select stores where customers could pay cash for Sweetgreen cards, he said.

Consideration for the unbanked was among the chief reasons Bozzelli’s Deli & Pizza relaxed its policy after opening a cash-free location in Washington this year, said the owner, Mike Bozzelli.

A small group of opinionated patrons led Split Bread, a sandwich chain with two locations in San Francisco, to change its cashless policy about two years after opening in 2012. “When we would get negative reactions, they were very, very strong,” said David Silverglide, co-founder and chief executive at Good Food Guys, the company that owns Split Bread. “Customer preferences are really hard to shift when it comes to something as ingrained as cash.”

“I think they were ahead of the trend,” Sam Oches, editor of the quick-service restaurant industry magazine QSR, said of Split Bread. Sweetgreen might have an easier time this year, because of increasing app use and the brand’s popularity. “Sweetgreen is very emblematic of the future of the fast-casual industry,” Mr. Oches said. “If anyone is going to make this work, it’d be them.”

Going cash-free, though, can seem to run counter to restaurant hospitality training. The hardest group to persuade of the benefits of a cashless environment might have been his employees, said Alan Bekerman, the founder and chief executive of IQ Food, a chain of healthy fast-casual restaurants in Toronto. When Mr. Bekerman started discussing his cashless plan with employees, they were aghast.

“We are bred to say ‘yes’ to everything,” said Mr. Bekerman, who opened two cash-free restaurants in February and plans to convert his three other locations by the end of the year. “But when we jumped in and did it, there really hasn’t been nearly as much chaos or hate mail or pushback or that stuff that we’re used to getting when we make changes as we expected.”

Jae Kim, owner of Chi’lantro, a Korean-Mexican fusion chain in Austin, Tex., said his company had always been “tech friendly” since starting a Twitter account so fans could find the location of his taco truck in 2010. After noticing the customers at his trucks and bricks-and-mortar locations gradually switching from cash to cards and services like Apple Pay and Google Wallet, he decided to make his establishments cash-free. “We grew with our customers,” he said.

New technologies often go hand in hand with cashless businesses. Two new locations of the London salad chain Tossed are cashless and cashier-free; customers check out using kiosks with iPads. To avoid confusion, Tossed installed extra lobby hosts, but “people don’t want help,” said Vincent McKevitt, the chain’s founder and owner. Mr. McKevitt has begun retrofitting his other 25 locations for cash-free transactions and self-service checkouts.

For Major Food Group, which owns restaurants throughout New York, going cashless is simply a business decision.

When the restaurant group opened Sadelle’s last year, reviewers raved about the bagels and griped about the prices of sandwiches, but said little about the cashless policy. “It is not an issue and is rarely ever mentioned,” Jeff Zalaznick, a co-owner and managing partner, said in an email.

“I believe very strongly in the cash-free movement,” Mr. Zalaznick said. “There is an immense amount of work, process and error that goes into taking, processing, monitoring and depositing cash. The amount of time and money that this costs is not worth the amount of business that is done in cash. The fees that you pay on the additional credit card sales are far less than the money you spend internally to take the cash.” Less than 8 percent of sales across his restaurant group are in cash, Mr. Zalaznick said.

Sadelle’s isn’t Major Food Group’s first foray into the cash-free movement. ZZ’s Clam Bar, which opened three years ago, is also cash-free.

“It is the way of the future,” Mr. Zalaznick said. “We are just embracing it.”

A version of this article appears in print on July 31, 2016, on page BU3 of the New York edition with the headline: Where a Suitcase Full of Cash Won’t Buy You Lunch.


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