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The Green Sheet Online Edition

January 22, 2024 • Issue 24:01:02

Why restaurants need us

By Allen Kopelman
Nationwide Payment Systems Inc.

Restaurants were once the darlings of all merchant level salespeople (MLSs). These merchant accounts outperform all other categories because they have high transaction volume and high dollar volume. Few businesses bring these two things to the table. Dry cleaners might accept thousands of payment card transactions monthly, but their average tickets are small. Restaurants, with $50 to $100 average tickets, might do thousands of transactions daily.

That’s a winning formula not many businesses can deliver. So why are so many restaurants going out of business? Following are top challenges facing fine dining, fast casual and quick service restaurants:

Staffing shortages

Many restaurants are failing because they don't have enough employees. Many haven’t figured out how to use advanced self-service technology, like online and mobile ordering and kiosks, to solve their labor shortages.

Health department issues

Health inspections continue to roil the industry. Here in Florida, news outlets have been reporting on the “dirty dining” trend, which is killing the restaurant business. The health department has been raiding places and shutting them down because they need to be cleaner.

Rising prices

Inflation has placed undue pressure on restaurants, and the cost of food keeps rising. Many restaurant owners are managing this issue by passing price increases onto their customers. The National Restaurant Association’s 2023 State of the Restaurant Report, published February 2023, found rising food prices a top concern for 92 percent of restaurant owners and operators.

Free POS

Some MLSs are buying POS systems and offering them free to restaurants in exchange for new residual streams. Unfortunately, when these restaurants go out of business, they disappear and take the free equipment with them. This creates huge losses for MLSs who bought the equipment upfront, at the advice of their ISOs.

Predatory POS companies

Large merchant acquirers or POS technology companies that acquire new merchant portfolios have advised restaurants that their POS systems will only be supported if they switch to the new processor. This has wreaked havoc in the field. I’ve even heard colleagues and competitors say they will never sign another restaurant account.

Ghost restaurants

We’re also seeing a spike in small delivery and takeout places, such as Chinese restaurants with one or two tables or ghost kitchens that operate in the shadows, offering takeout and delivery only, without a single table in the house. That’s another result of the staffing shortage.

Tough times

Last month while visiting my daughter in Iowa, I went to a pizza place, ordered at the counter and sat at a table. Then a robot rolled up with my meal. It even offered to get me a drink by inviting me to scan a QR code to order and pay for additional items. Will we see more of these in the future?

Another restaurant near my office was so popular you had to reserve a lunch table. Today, I could throw a baseball through there and not hit a soul at lunchtime. I met somebody there for lunch recently, we were the only diners in the entire 400-seat restaurant. The owner told me they have hardly any waitstaff, and more people in the area are working from home. They're praying the giant apartment building going up across the street from them will open soon and generate some business.

The manager said construction crews are ripping down office buildings left and right and replacing them with apartment buildings. All the restaurants, even the ones in the shopping center that are just doing takeout, can’t wait to see the new residents and be back in business.

Tough actions

Merchant services is a relationship business. We can’t walk away from relationships. We promise to support our merchants in good times and bad. We fought the good fight during Covid, helping them upgrade their technology to stay in business. Today, they’re facing smaller challenges that may seem more challenging than one big challenge, like a pandemic. However, they need us just as much as they did before. We’re still the best people for the job. end of article

Allen Kopelman, a serial entrepreneur is co-founder and CEO of Nationwide Payment Systems Inc. and host of B2B Vault: The Payment Technology podcast. Email him at allen@npsbank.com and connect on LinkedIn https://www.linkedin.com/in/allenkopelman/ and Twitter @AllenKopelman.

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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