One of the last things a quick-service restaurant manager wants to do at the end of a long shift is count down registers and fill out reports. They’ve been on their feet all day, helping customers, prepping food and putting out fires (only the figurative type, hopefully).
And then there’s that one $20 bill they have to track down. Did it get misplaced? Did a customer short the cashier during the lunch rush? Did another employee take it? Did it slip under the register? With the over/short thresholds most restaurants are subject to, employees are eager to account for that $20 or else they’re stuck filling out reports for the district manager. But at what cost?
While quick-serves should strive for an accurate count of store funds and a close eye on shrink, they should also aim to keep employees’ focus on tasks that support the business, like managing food costs, developing and training employees, ensuring safety, and fulfilling online and delivery orders. The headaches surrounding cash can easily be remedied with better controls and visibility—letting staff return to more important tasks.
Yes, cash is still a thing—and it’s expensive
According to a 2018 study of cash by IHL Group, 41.1 percent of quick-service transactions are in cash. While debit and credit might prevail in other areas of retail, the Federal Reserve reports that cash is still the payment of choice for transactions under $25—certainly within the sweet spot for average quick-serve tickets. Shake Shack learned this lesson recently as its customers demanded the ability to pay cash at a previously cashless location.
The IHL Group study also revealed that quick-serves have the one of the highest costs of cash for any retail segment at a whopping 11.4 percent. That means that for every dollar restaurants bring in, they’re immediately losing more than 11 cents of it—before they’ve bought any food or paid a cent of rent.
Why cash costs so much
With the cost of cash outpacing the cost of credit or debit by as much as three times, why haven’t more quick-serves addressed the issue? Cash is often an afterthought, falling behind higher-priority issues like customer experience and food quality. But not addressing the cost of cash puts the company’s funds at risk.
Much of the cost of cash comes from tasks safes and recyclers don’t cover, like reconciliation (40.1 percent of the cost of cash), deposit transportation (6.9 percent), and bank fees (4.3 percent).
Manual cash handling is risky business
Counting, reconciling and depositing money manually causes unnecessary inefficiency and risk in the business. Managers and staff remain on the clock at the end of the day, making the simple act of counting and reconciling cash costly in itself. Other risks include:
Weak cash handling policies can cost operators a lot more than $20 here or $50 there. Chipotle recently found that out when it was ordered to pay a former employee an $8 million settlement after it fired her over a missing $626 deposit. The chain’s lack of proper communication tools, poor surveillance and investigation policies, and absence of deposit tracking meant it couldn’t prove exactly what had happened to the cash, costing the burrito chain far more than the original amount in question.
Ripple effects of manual cash processes
The issues caused by manual cash handling don’t stop at store closing. Productivity at store opening can be greatly affected if the previous night’s count is off, causing a manager to put other vital tasks on hold to research and report exceptions.
At corporate or for a district manager, it’s often incredibly time-consuming to research exceptions like over/shorts, high comps, and high deletes/voids, digging through reports received days or weeks before to establish a pattern. Most chains use a “suspect and validate” approach instead of adopting real-time reporting and alerts. This approach requires that leaders identify and research potential sources of loss manually, allowing more loss to occur in the interim and taking far too much time from the schedule of a valuable, high-salary employee.
What to do about it
Understanding the problem is only half the battle—the real challenge is finding ways to address it. Quick-service leaders who want more efficient cash operations, less loss and more time for guests should:
Asking questions like these is the first step to reducing loss and increasing employees’ focus on guests. What operators do with the answers can make a big difference in the bottom line.
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