Fintech gurus like to prophesize about a cashless society. Now, one fast-casual restaurant chain is doing its part. If the move by Sweetgreen is successful, more retailers could follow suit, potentially making life easier for their treasury groups.
Since January, Sweetgreen, a national restaurant chain with nearly 50 locations, has refused to accept cash at some of its locations. Its reasoning? Cash payments can add to wait time, and that’s a problem when you’re trying to serve customers quickly.
“One of the biggest complaints at Sweetgreen is the line, so by reducing cash, we’re able to serve customers a lot faster,” said Jonathan Neman, Sweetgreen cofounder and co-CEO. His logic is sound; at Sweetgreen’s cashless locations, employees can reportedly perform 5 to 15 percent more transactions per hour.
Interestingly, Sweetgreen’s customers haven’t really noticed. According to the New York Times, when the restaurant chain removed bacon and Sriracha from its menu, Sweetgreen customers voiced their displeasure on social media. But there was no such uproar when some of the retailer’s locations stopped accepting cash.
This didn’t come as a huge surprise for Sweetgreen, which has seen cash payments fall from 40 percent to 10 percent since it opened its first location nine years ago. The retailer now operates 48 locations.
Even more importantly, going completely cashless provides employees with a safer environment, noted Nemen. While there haven’t been many robberies at Sweetgreen locations, going cashless more or less eliminates the problem altogether.
Removing cash altogether is not without its obstacles, and it isn’t an option for retailers whose customer base is largely low-income and/or unbanked. However, it would cut down on one significant expense and headache for many retail treasurers—armored carrier services. As noted at AFP’s last Retail Roundtable (and the previous one), retailers are largely dissatisfied with their armored car services, complaining of bad pricing, poor service, route optimization (making less frequent trips to areas deemed remote or unusual) and carriers simply not showing up.
“I’ve had to literally travel around the country to our armored car company with a list of outstanding items because they haven’t provided us service,” said one retail treasurer. “I went with a folder with hundreds of examples of missed pickups. You can’t do that; you can’t just not come for days in a row. It’s really been a problem.”
Of course, at the moment at least, armored cars are a necessary evil that many retail treasurers will have to deal with for some time. One retail treasurer told AFP that eliminating cash is not an option, as it comprises 22 percent of her company’s tender total. To ease the armored carrier burden, the retailer has adjusted its armored car frequency to coincide with the amount of cash each store receives. “This maximizes the amount of cash in each store at any one time,” she said.
The treasurer is hopeful that some of the issues with armored car services will work themselves out over time, as many retailers have voiced their concerns. “As armored carrier issues have garnered a lot of attention, it will be interesting to see what options retailers have in the coming year,” she added. If carriers refuse to change, however, going cashless is going to be a lot more attractive to retailers who can afford to do it.
Still, as tempting as cutting out cash may sound, Magnus Carlsson, AFP's manager of treasury and payments issued a warning to retailers. “It is important to understand the impact it will have on consumers,” he said. “In a competitive market, consumers who want to keep using cash may just give their business to a competitor.”