Non-Cash Service Fee vs. Price Increases

[cyerges]

Does any food and beverage establishment have an opinion on which worked better for them (i.e. recovering fees while not upsetting customers)...Charging a Non-Cash Service Fee on credit card transactions or raising prices across the board?

[AnnaB]

Are your prices matching your competitors?  Are they charging a non-cash fee? Have you done everything possible to cut waste? Are you paying for convenience ( delivery services etc) or need?  Heck...the simplest things cut cost...i turn off my espresso machine at night, saves $30 a month right there.  What is the reason for the fee ( is that ~3% that much of a drain?)?

With a non-cash fee

1. You're guaranteed to lose customers.  In this day and age, especially Pandemic Era, touchless pay is a plus.  That and how many folks carry cash?  Either of those will create that tiny bit ( or more) negativity to your customer visit.

2.  Do you really want to decrease card revenues?  If you need a quick infusion or build some reserves, the Square Loan Program isn't a bad deal.  The amount is based on card revenues, and the more revenues the quicker the payback ( it truly is a good deal if utilized correctly)

If raising prices, don't do the rookie mistake of across the board.  Do it selectively.  I did a price increase on some items...my oat milk went from a $0.50 hit to $0.65.  Bagels also went up $0.25.  Also the bacon add.  But 75% of my menu stayed pat.  That and we hammered training and quality consistency.  Hammered it.  I also have friends go in and order etc once a month for feedback...not for punishment, but to spot weaknesses in the operation/ quality/ customer environment.  

It's a whole new world out there.  

[cyerges]

Anna, thanks for the feedback. Our prices are just under most in the area. I'm just noticing the trend of charging for non-cash transactions at many local establishments and wondered if I'm missing something. Some are also charging for carryouts to cover the rising cost of to-go containers. I'm inclined to selectively increase the price on a few menu items, especially those that take more staff time to prepare, to cover the increase in hourly wages that I'm paying. 

[GourmetOnWheels]

If you are in California, it is illegal to charge a credit card usage fee. You can only do that if you are offering the cash price at a lower price,  IE Gas Stations. 4.79/gallon cash 4.99/Gallon Credit Card/Debit Card

René

[Donnie-M]

The way people have been doing it is a "cash discount" program, where  a person paying cash gets a discount which fits what you are saying.  You are not charging a higher fee to use a credit card, but you are offering a discount for someone paying cash.  The compliance and record keeping is much much easier with this type of program.  Also, the CC companies do not like surcharges.  Square has it built into the system to add a surcharge/service fee.

Personally, I would just build the cost of taking credit cards into your pricing..it is accepted practice and the simplest way not to make someone mad.

[GourmetOnWheels]

Yes, Donnie charging more for an item when paid by credit card is illegal in California unless you clearly show that cash payment is lower priced. Not sure about other states.

René