If your bar is still taking cash, you're definitely haemorrhaging money. Mike Baxter explains why.
Cash is dead. If you’re still taking it, you’re losing money. Let me explain why. First, the maths. I’m no accountant but I’ve run many venues, calculated endless P&Ls and I speak of GP calculations like a long-lost friend. So how are you losing money? Well the first reason is – and let me put this gently – PEOPLE ARE STEALING FROM THE TILL!
I know this and you know this and if you operate a cash business most of you have worked it into your GP margins. Sure, there are cameras, stock takes and legions of well-intentioned, honest staff who wouldn’t dream of it. However, it’s also a sad fact of a fast-paced, high-turnover business that your till is going to be mysteriously down – or, even worse, up. Either way you’re out of pocket, whether it be a quickly-shifted 20 pound note into a pocket or a more sophisticated sleight of hand at the till meant to fool the cameras with a larger stash of cash to take at the end of night (explained as tips of course).
We all accept that bartenders handing out free drinks is sometimes a cost worth tolerating. If they’re going out to your team or friends of the venue it can be good for business of course, especially in an industry bar, where a little judicious generosity can help stoke the atmosphere. But when it comes down to hands in the cookie jar, there’s a wide gap between fingers in the till and putting a few extra drinks on the wastage tab. Keeping your cashout digital solves this in one swoop. Yes, the drinks will still go out when you’re not looking, but it’s a lot easier to spot a bartender with a belly full of your rum than one with a pocket full of your cash.
But there’s another reason card beats cash and that is that the world has changed since Covid. In our bars’ new cashless world, we saw spend per head go up and overall sales increase 10%. Sales went up and our spend stayed the same.
Consumer data suggests that spend per head via card is significantly higher than that of cash, and data from banks showed that when contactless increased from £30 to £45 the average spend was 30% higher per transaction. Simply put, your customers are likely to spend more on card than they are on cash. So goodbye pints and highballs and hello high GP cocktails.
There is psychology at play here. When the transaction is a metaphysical flick of the wrist or a tap of a phone, it makes impulse spending all the easier. There is no expectation of two drinks from their tenner, or grimacing as they watch their hard earned cash passed from wallet to hand.
To what extent my increase in sales was due to less till tampering, or the change in consumer spending habits, I may never know for sure. But big picture, it doesn’t matter – they point to the same solution.
In the end, whether you proudly pronounce you are cashless or not, the consumer trend is only going one way. If you haven’t noticed, we’ve had a few updates to human interaction lately. Mostly of the “back the hell up and stop breathing on me” variety, but also off the back of Covid, I think it’s dawning on people how dirty cash is. No one wants notes that were stuffed down someone’s jeans placed in their hand. Coins are even worse, carrying germs for up to 72 hours. When I used to cash up from bars (which has its own safety issues, needless to say), I’d get ill about five times every winter. Cash was, and still is, a dirty, dirty, boy.
Also, never underestimate inconvenience. I mean, cash is a system in which you have to keep a personal store of physical money and replenish it when it runs out. Which you do so by using your… card. If that seems logical to you, you’re even older than I am.
Cash is dead. Card is king. Long live the king.