Cash money

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How can the ownership of a taco shop discriminate against Mexicans?

“We actually had someone ask us this and it absolutely shocked me,” Chef John Cox, who is part owner of the popular Carmel destination Cultura Comida y Bebida and the new Cult Taco in downtown Monterey writes by email. “Everything we do is to promote the cuisine, culture and art of Mexico.”

Indeed, Cultura is a paean—yeah, playing with the thesaurus app—to all things Oaxaca. Make that an ode, as the restaurant takes inspiration from the traditions of the region, but with an upscale California flare. The just opened Cult Taco again takes a modern, chef-driven approach.

Probably won’t find a roasted cauliflower mole taco from a street cart, but hey—nothing wrong with fusion.

So what caused all the fuss? Cult Taco happens to be a no-cash zone. And there are plenty of people who consider cashless restaurants exclusive, discriminatory or downright bigoted. Just this week, the San Francisco Board of Supervisors voted to ban brick-and-mortar retailers that only accept plastic.

And the city is not alone.

Last year, New Jersey’s government rose to the defense of good old-fashioned currency, requiring stores to allow cash payment, no matter which exit they’re located at. Philadelphia voided cashless joints, as well. The subject has come up in New York and Chicago, too.

It turns out the controversy is hardly new. In response to companies requiring a credit card number to hold a hotel or rental car, Pennsylvania passed a measure preventing the practice—and that was back in 1984.

According to The Inquirer, Chaka Fattah—a convicted fraudster who the good people of the Keystone State decided was a perfect fit for their state legislature—introduced the bill.

Had to throw that in.

Even before that, Massachusetts passed a law banning cashless retail. The state’s 1978 ruling includes the stern phrase no shop “shall discriminate against a cash buyer by requiring the use of credit.”

Of course, those were the days before debit cards, so the d-word sorta fits.

Wait, better check that…Well, what do you know? Debit cards were introduced in 1966. Of course, use of debit cards did not become widespread until the ’90s.

But we’ve already partied like it’s 1999. Hell, we’re almost at 2020 and we can buy things with the swipe of a phone. So does a cashless place discriminate against people?

In fact, the model makes sense, given the growing number of people who do not carry cash (and who grumble when they find out a bar is cash-only. Looking at you—from the outside—Segovia’s) or tend to use plastic for everyday purchases. A 2016 study by TSYS, a credit card service firm, revealed that 75 percent of Americans reach for debit or credit cards first. And while many older people still prefer greenbacks, the percentage using cash drops dramatically for younger generations.

And restaurateurs who go cashless insist it’s not about exclusivity.

“We don’t want to alienate anybody,” Cox says. “We don’t want to exclude anybody. It should be equally accessible.”

Adriana Shuman, owner of Revival Ice Cream in downtown Monterey, took the shop cashless months ago, with hardly a whimper of complaint.

“The feedback has been positive,” she observes, allowing that “there are always people who are not happy.”

OK, a survey by the Federal Reserve Bank of San Francisco found that 60 percent of Americans still use real money for small purchases—$10 or less—of which ice cream and tacos would certainly qualify. But discrimination? Racism?

The backlash stems in part from another set of numbers. While the Federal Deposit Insurance Corp. sets the level of “unbanked” adults at just 7 percent, that figure jumps to almost 20 percent when people who live on such a frail financial edge they must rely on payday loans or other measures to get by are included.

Call them the “underbanked.” “Writers” would be another option. They might have an account, but they aren’t receiving dozens of credit card offers in the mail each week.

So there is justified concern that many poor would be cut out if more places go to an all-electronic format.

Cox counters, “This isn’t about being elitist. At its core, going cashless allows us to provide more value and better pricing to our customers, making our restaurant more accessible to a broader demographic.”

Writing in Eater, Brenna Houck reports that the cash-free model allowed the Bay Area restaurant AlaMar to trim prices by 30 and sometimes 50 percent. Yes, they cut staff.

But more on that in a moment.

Advocates of no-cash restaurants dismiss charges that the system is unfair to the unbanked. People who only use plastic are forced to hit the ATM whenever a friend asks to meet up at Segovia’s. Pre-paid cards are available for the unbanked for use at cashless joints. So it’s no wonder Cox was puzzled when told the model discriminates.

You guessed it. There’s yet another set of numbers that come into play. That same FDIC report points out that 17 percent of black households and 14 percent of Hispanic households lack bank accounts. As for the undocumented labor force—many of whom work in restaurants—it is hard to say.

Just 3 percent of white households are unbanked.

And so, the cashless model can exclude people without access to a bank account. That means the poor, the homeless and a significantly larger percentage of the black and Hispanic population.

The fact that Cult Taco serves a dish from Mexico just raises more eyebrows.

An answer to this week’s Burning Question may seem obvious at this point. Certainly the poor, the undocumented and the homeless have fewer options. It’s unlikely that an unbanked young person working as a restaurant dishwasher would walk into Seventh & Dolores and order their most expensive steak—and that restaurant accepts cash.

Price has always been a bigger barrier to entry than one’s banking status. Yet when an industry relies on a minimum-wage and low-income labor force, the issue of equal access comes to the fore.

At least that young dishwasher would have the option.

Of course, there is a “however” coming. Perhaps more than one.

First of all, while it’s nice—surprising, actually—to see a few cities and states standing up for the poor, especially San Francisco, where it takes a middle-class salary to even reach the poverty line. However (that’s one), the city’s cashless ban exempts pop-ups and food trucks.

Seems a bit unfair. According to the Associated Press, the supes argued that food trucks do not have the staff or resources to deal with cash.

Yeah. However (two), handling money happens to be the reason restaurants choose to go cashless.

At Cultura, just 5 percent of their take at the end of a night comes in cash. But they must devote 14 hours a week of employee time to balance the amounts and make bank runs. Shuman witnessed the same thing at Revival, where staff members spent seven hours a week away from the counter because of cold, hard cash.

“Bank runs several times a day—it didn’t make sense,” she explains. “We did the math.”

Even though restaurants owe card companies 3 or 4 percent for each swipe, the cashless equation still works in favor of the venue’s bottom line. At least that’s what their research shows.

“Every time there is a new decision, it’s the result of a lot of thought,” Shuman adds.

Restaurant owners cite several other reasons, including theft (cash is easy for unscrupulous employees to misplace), safety (wads of Benjamins can be the target of the criminally-minded) and efficiency.

Cox tells of a clunky ordering experience at a coffee shop, where he waited while the barista finished another customer’s drink, placed his order, watched her tap it into the system, handed her a card and then waited as she prepared his cup.

Sounds vaguely familiar.

“This is a waste of time,” he points out. “I haven’t had a lot of kiosk experience, but I looked at it and thought ‘What if a customer could walk up to a tablet and place an order?'”

Fast-casual franchises have been moving in that direction. Industry data indicates that kiosks shave seven seconds from the ordering process. No, it doesn’t sound like much. However (three), when you multiply it by, say, 100 customers in a lunch rush that amounts to…um…

Once again, a writer is stymied by math. But you get the point.

All that said, there’s an issue that may be bigger than critics’ perceptions of exclusivity, classism or racism.

As a chef, Cox cares about sustainable ingredients. He also applies the sustainability concept to brick-and-mortar restaurants. In other words, he wants Cultura and Cult Taco to stick around awhile.

Already the pool of available labor with the aptitude for a service industry career is thin. Meanwhile, minimum wages are on the rise in some places—finally—and Cox believes California will adopt a $15-an-hour line from its current $12, and perhaps eliminate tip credits.

“What’s the future of restaurants? What’s going to happen with the labor market?” he asks. “It would be foolish to set up a restaurant that didn’t take that into account.”

For decades, the standard model for a profitable restaurant was to keep food costs—the cost of ingredients—at 30 percent, labor at 30 percent and all other expenses at 30 percent, making for a handy 10 percent profit.

On paper, anyway. And, yes, someone helped with the addition.

“Now labor is 50, and you still have the other costs,” Cox says. “It’s not sustainable. The profit margins are just so narrow, if costs go up all of a sudden you’re looking at a lot of red numbers.”

At Cult Taco, the cash-free process gets rid of interaction at the register, but they keep a host to greet customers.

We could go on with this—there are many aspects to the cashless/kiosk discussion. But we seem to have settled on a troubling reality. The concept eliminates the need for a full complement of staff members.

In other words, it cuts jobs. Yet that just may be the future.

Not even Cox is particularly satisfied with the outcome of this week’s Burning Question.

“I love service—the food, the smell,” he explains. “I can’t say I’m 100-percent excited at the way restaurants have to adapt. A lot of middle-of-the-road restaurants are not going to be in a good position. My goal is to embrace technology without compromising what I love about restaurants.”

That's all…Wait—one quick note for those who might have actually read our currency and noted the bit about “legal tender for all debts.” Doesn’t that mean a restaurant has to accept your cash?

Hah. This is the U.S. government we’re talking about. The Feds take the d-word seriously (which is why they keep racking up debt). According to the Federal Reserve, “this statute means that all United States money…is a valid and legal offer of payment for debts when tendered to a creditor.”

Unless you pay up front for your meal, the restaurant is not a creditor. Clever, huh?

As the Federal Reserve website concludes, “Private businesses are free to develop their own policies on whether to accept cash unless there is a state law which says otherwise.”

Money? They don’t need your stinkin’ money.

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(2) comments

Diana Lydical

Mr. Cox may keep his plastic, and we will not keep our cash; we will spend it. There are plenty of wonderful restaurants around here who gladly accept money. My personal reason: some years ago, my bank account was hijacked. It was finally traced to (guess what) an unscrupulous server who copied my debit card. In Europe, they are using only equipment AT the patron's table. Do not let your card out of your sight.

Charles Saves

Well done presenting many side of what could be characterized as a wicked problem. This is still a decision that the business owner gets to make...period. Government should stay out of this and quit working against entrepreneurs who want to be successful in business. Think about this: progressive politicians impose high taxes, “living” wage and, wait for it, mandatory cash acceptance laws. What do business owners do? They raise prices or make it a service charge on a receipt. Use a credit card? Pay an additional fee. Mandatory minimum wage? Here is a payroll fee. Prediction: Use cash? Pay a cash handling fee.

“A wicked problem is a problem that is difficult or impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognize. It refers to an idea or problem that can not be fixed, where there is no single solution to the problem. The use of the term "wicked" here has come to denote resistance to resolution, rather than evil.[1] Another definition is "a problem whose social complexity means that it has no determinable stopping point".[2] Moreover, because of complex interdependencies, the effort to solve one aspect of a wicked problem may reveal or create other problems.” Wikipedia

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