A small but growing number of restaurants are cashless

NEW YORK – The lunchtime lines at Dos Toros move faster these days — customers don't fumble for bills or coins, and employees don't make change. Since around New Year's, the Mexican food chain has been cashless.

"For the vast majority of customers, there's no reaction at all; they are already paying with their cards. And the significant majority of cash customers don't have any problem with it either," said co-owner Leo Kremer, who has 14 stores in New York and one in Chicago.

If people do try to use cash, employees explain the reasons for the change — faster service for customers, saving the business time and money.

The trend toward cashless small and midsize businesses is fairly new. Many of the companies adopting the policy are restaurants with menus and prices more upscale than fast-food chains, but service that aims to be almost as quick as a McDonald's or Subway. During a busy lunch hour with customers lined up at ordering stations and cashiers, forgoing cash means faster transactions.

Many business owners would rather be cashless. Cash actually costs money — banks charge fees for cash deposits and to handle coins. If businesses take in enough cash to justify pickups by armored car services, that's another cost, and given that restaurants can be a target for holdups, not one that can be eliminated.

And counting and checking cash and preparing it for deposit takes up time a manager could spend with staff or customers.

"We feel a manager's time is so valuable, and it was being spent on what is only 10 percent of our revenue," said Kremer, who also said revenue at Dos Toros hasn't been hurt by the transition.

But going cashless isn't a slam-dunk. Some customers who want to use cash point to a statement on paper money: "This note is legal tender for all debts public and private." However, the Federal Reserve notes on its website that private companies can make their own policies about cash unless there is a state law saying otherwise. Massachusetts does have such a law.

Thomas Nguyen switched two of his restaurants to no-cash — and then had a change of heart.

Nguyen, who has three Peli Peli South African fine dining restaurants and a Peli Peli Kitchen fast-casual location in the Houston area, transitioned one restaurant at the end of 2016 and the other last August. Less than 7 percent of his revenue was coming from cash, and he believed customers would largely be OK with the change.

But last month, Nguyen heard from staff at both locations that they were getting daily complaints. That, he said, goes against the idea of running a hospitality business.

"It's too common of an occurrence when somebody every day is getting surprised or inconvenienced," Nguyen says.

One concern about cashless restaurants is that they exclude would-be customers who don't have bank accounts or credit cards. The Federal Deposit Insurance Corp. found in a 2015 survey that about 9 million households didn't have bank accounts.

Nearly 60 percent of households without bank accounts or cards said they didn't have enough money to keep in an account.

Customers will be more understanding if store employees explain the rationale for going cashless, and how it might benefit them, said Utpal Dholakia, a marketing professor at Rice University's Jones Graduate School of Business.

"I think customers are very happy to trade off their ability to use cash to get this service in return," he said, and notes the popularity of apps that let people order and pay for food online or on their phones and bypass the line completely to pick it up.