Lessons from a cafe's cashless journey

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Bluestone Lane, an Australian-style café and coffee shop chain in the U.S., has been well-served by its move to cashless payments in October 2016. But even the most well-planned transition can encounter problems if customers aren't expecting it.

Overall, the move to cashless payments was a success. By eliminating the hassles associated with bills and coins, cashiers are able to process orders quicker, says JD Methfessel, customer engagement manager at Bluestone, which has more than two dozen locations in markets including New York, Philadelphia and Washington, D.C. “It was a positive change for us and many of other peer brands” that have gone cashless, he says.

Certainly, the shift to cashless isn’t appropriate for every restaurant, but there is a recipe of sorts that includes a well-thought-out cost-benefit analysis, an appropriate communication strategy and detail-oriented execution.

How important is cash anyway?
In Bluestone’s case, cash as a portion of the restaurant’s overall transactions was less than 10 percent at the time it decided to stop accepting bills and coins—making it a good candidate for going cashless, according to an industry rule of thumb. On top of that, dealing with cash was becoming more of a hassle over time, both in terms of queue management and trips to the bank, Methfessel says.

Accepting cash is “a very manual process, and we realized that we were spending a lot of effort and losing efficiencies,” he says.

Bluestone management weighed these factors against other considerations such as additional costs to make its payment processes even more reliable and the extra fees that would come with more customers paying by credit card. After a careful analysis, Bluestone’s management team reasoned that the net effect of not accepting cash would be marginal. In addition to accepting all credit cards, Bluestone offers customers the option to pay and earn rewards through its mobile app, powered by LevelUp, a mobile ordering, loyalty and payments platform.

To be sure, not all restaurants will have such a strong business case, cautions Theresa Dold, vice president of agency strategy at LevelUp. Dold joined LevelUp last year after working as director of product at sweetgreen, another LevelUp client that has gone cashless.

“It sounds alluring on the surface, but businesses need to step back and make sure it’s something customers will be receptive to and that it works for the particular business,” says Dold.

Methfessel says the additional transactions the restaurant is able to complete by not taking cash essentially makes up for the extra credit card fees. Being cashless “improves the guest experience that much more … that it was worth it for us to make the switch,” he says.

If all else fails, offer free coffee
Restaurants need to give customers enough lead time to digest the coming changes.

How far in advance depends on how frequently guests visit. For instance, if most customers come in one or two times a month, then 30 days might be enough lead time, Dold says. But if they come in even less frequently, restaurants may want to give lead time of 60 days or more, she says.

In Bluestone’s case, the customer communication process started about eight weeks before the company made the switchover. Bluestone informed customers of the coming change through its email distribution list, via social media and in-store signage. It posted notices on the front door and by its registers.

For the most part, Bluestone’s communications strategy worked — but even so, a small number of customers were frustrated once the restaurant stopped accepting cash, Methfessel says. In these instances, Bluestone offered free coffee to smooth things over.

Importantly, employees should be trained in how to handle some pushback, so if issues come up they don’t escalate, Dold says. Restaurants might consider other options as well, such as installing an in-store gift card vending machine that accepts cash, she says.

The point of no return
Bluestone did a fair amount of preparation before flipping the switch to cashless, a process that took about 10 to 12 weeks from the time the management team made the decision. Some of that time was spent hardwiring its locations—14 at the time—so its POS system no longer ran entirely on wireless technology.

While wireless connectivity is about 95 percent effective, management wanted that to be close to 100 percent to ensure Bluestone customers always had a way to pay once cash was no longer on the table, Methfessel says.

“The No. 1 rule is don’t let your system go down, if you’re only taking credit cards,” he says.

In addition to hardwiring, which Methfessel says took about two to three hours per location, Bluestone also ensured it had a way to continue processing customer transactions offline, even in an outage.

“You want to be as prepared as possible because even in 2018, there are internet outages all the time,” Methfessel says.

The shift to cashless should also be made on its own; any other initiatives should be rolled out at different time, Dold advises. “Going cashless is a big enough change; it’s worth carving out a dedicated block of time in your operational rollout schedule,” she says.

On balance, the switch to cashless should be about doing what’s best for the restaurant’s business and making the experience better for the majority of customers. One frequent Bluestone customer, George Raptis, says he appreciates moving through the line more quickly because there’s less bottleneck at the register. “It’s faster because I’m not waiting for others to pay in cash. It’s a more seamless consumer experience,” says Raptis, founder of Curated, a Manhattan startup that focuses on project outsourcing.

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