Would another 3 percent or more to your bottom line help your business? Of course, it would.
By now you know that owning a restaurant can be fun, fulfilling, and rewarding. But what you also know is it can be hard, and the margins can be very slim. Margins across the small to medium size business market average around 15 percent, while in the restaurant industry alone they average a stunning 4 percent!
It’s no wonder that almost 60 percent of privately owned restaurants fail in the first 3 years.
Many things factor into these small margins, from high food costs to labor and equipment repairs, all the way down to those annoying but seemingly so necessary credit card fees you pay every month.
As a restaurant owner, you fight for every inch of margin you can get, because this is the key to your survival and ultimate success as a restaurateur. There is now a quick, and (I hate to say it) easy way to increase your margins by at least 3 percent.
By implementing a Cash Discount program at your business, you can immediately eliminate your credit card processing fees, and at the same time increase cash payments at your business.
What is a Cash Discount Program?
A Cash Discount Program is a system designed to eliminate your credit card processing fees. The program does so by allowing your customers to pay their own fees. The program automatically adds a small service charge to your customers every time they pay with a card. This service charge is used to directly pay off the fees associated with accepting cards ( I won’t bore you with all of the details) thus eliminating your fees as a merchant and you receive a $0 bill at the end of the month.
For example, Instead of you getting one large bill of say $800 at the end of the month, your customers might pay $0.80 extra when they check out with a card. If your customers pay with cash they still pay the standard price.
The program creates a true WIN-WIN scenario for the business owner. Either customers pay in cash, OR the customers pay with a card and cover the processing fees for the business.
Let’s clarify with an example, in this example let’s assume the meal being bought is $20 on the menu and the service fee is $.80.
Scenario A: Joe walks in and buys a meal and pays with his card. Joe will pay $20.80 total.
Scenario B: Joe walks in and buys a meal with CASH. Joe pays only the $20.
Is this Legal?
This program is 100% legal in all states due to a change in legislation. The Durbin Amendment to the Dodd-Frank Act changed the way you as a business owner can accept and charge for cards.
Will I lose customers?
Statistically speaking, you will not.
There have been numerous case studies done on businesses implementing a cash discount program and the results have been consistent, customers don’t mind.
That’s the best part of the program. Customers are accustomed to fees, they enjoy the convenience of paying with a card, and for those who don’t they pay with cash and get the discount. When is the last time you walked into a gas station to pay cash so you could save money?
To determine if Cash Discount could work for your business, consider asking yourself the following questions:
- Could customers get the same type and quality food within driving distance of your restaurant?
- Could customers get the same experience at a similar restaurant within driving distance?
- Would your customers pay a little extra to help keep your doors open?
If you said yes to at least 1 of these, then a Cash Discount program is likely to be a good option for your business.
Owning a restaurant can be tough, but it can also be one of the most rewarding ventures out there. Those of you looking to increase those tight margins and put more money back into your business might want to consider looking into a Cash Discount program.
Turnkey Processing has been helping businesses with their merchant services since 2009 and has successfully launched hundreds of cash discount programs. If you would like to setup a free consultation for your business or have any questions, please contact us via the form below, and we’ll give you a call.