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Feb 16, 2008 04:19 PM

Cash only?

What are people's thoughts on a restaurant's cash-only policy? We're talking sit-down, waiter service restaurants here, not delis or fast food, where the average check is at least $20.

I think it's poor service, in 2008, to impose a specific form of payment on diners when many diners reasonably expect--and would prefer--to use a credit card; the fees for accepting credit cards aren't terrible for transactions of that size, and 90%+ of restaurants (as well as grocery stores, which have much tighter margins) accept them with no problems--in some ways, handling cash is also somewhat expensive, though the costs are less and hidden.

The ones with ATMs inside the restaurant (with a $3 transaction fee or whatnot) deserve special scorn for what amounts to profiteering.


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  1. >>in some ways, handling cash is also somewhat expensive, though the costs are less and hidden.<<

    In one very, very big way it is less expensive by such a huge amount that it may make it all worth while for the restaurant to do this.

    8 Replies
    1. re: Servorg

      What might that be? Just curious.

      1. re: hsk

        The advantages of a "cash only" operation is that there are no chargebacks from the credit card company, no credit card fees, no bounced checks and the like. Also, if the owner wants to underreport his income to the state and federal tax authorities, it is much easier than if you do most of your business in credit cards. (Please don't say that this "never happens." I am a CPA and I have encountered this on several occasions over the years and I don't take clients like that.)

        The disadvantages of a cash operation include the fact that you have a lot of cash to deposit and either have to hire an armored car service or run the risk of getting robbed on the way to the bank. (Happened to my uncle once - he handed them the bad with the eggplants and they ran off with that.) Also, cash is much more likely to be stolen by employees. Also, as noted above, the IRS and local tax authorities audit cash businesses more carefully.

        1. re: hsk

          Oh one more disadvantage of "cash only". I don't carry cash so I won't come into your place.

          By the way, does anyone in New England accept credit cards because 90% of the cash only operations that I have encountered have been in New York and New England. (and I rarely travel in that direction).

          1. re: jlawrence01

            'Cash only' to me always smacks of reporting less to the government than those that take credit cards. They're not high on my list of repeat favorites.

            One of my favorite places (closed, sadly) places did not take credit cards but did take checks. I would have washed dishes to continue eating in that restaurant.

            1. re: dolores

              Assuming that cash-only automatically makes the management tax cheats is no more valid than saying that a restaurant that accepts credit cards must be completely above board. Any restaurant with a decent volume of business that takes credit cards will also take in a fair amount of cash--there are plenty of people out there (including contributors to this thread) who prefer to pay by cash even when the restaurant takes CCs.

              Accepting credit cards can actually make it easier to shield you from the authorities by creating two sets of books--one for credit card, one for cash. I can assure you that there are just as many restaurants accepting credit cards that don't share the cash books at all as there are cash-only operations that under-report.

              The biggest restaurant tax cheat in my area in recent years was an owner who managed to skim $2 million in collected sales taxes, and all his restaurants accepted credit cards.


              1. re: tubman

                That is all absolutely true. However, if you are an all cash restaurant and you don't go crazy with under reporting your sales then it is virtually impossible for the Government to catch you at it, (unlike your linked example above).

                1. re: tubman

                  I am not assuming that ALL cash operations are tax cheats, However, having said that the Internal Revenue Service and many of the state tax authorities have identified cash operations as having a greater risk of underreporting in their letters to tax professionals.

                  I can tell you that it is a whole lot easier for tax auditors to identify fraudulent underreporting when 80% of your revenues are coming through a credit card service.

                  Who is more likely to understate wage income on a personal return? The guy who gets a paycheck each month and who received a W-2 from an employer or a guy running a cash landscaping business? That is why you will see the latter audited more often.

                  1. re: jlawrence01

                    Largely agree, and the increased risk of audit is something that restaurant management needs to weigh before deciding to go cash-only. Point remains that truly dishonest operators will find a way to cheat the taxman, whether they're collecting payment in cash, credit card, puka shells, huge stones, whatever.

                    The bulk of the cash-only cuisines in my area reflect the ethnicity of their clientele, many of whom are largely on a cash-only basis for other aspects of their daily lives. It doesn't make a lot of economic sense to set up a CC account to accomodate 5% of your patronage used to paying by CC when that 5% would still visit anyway if you were cash-only.

                    There are some great meals not to be missed in many of these, and it would be a shame to miss them because of a self-imposed boycott rooted in blind speculation about the owners' honesty.

                    FWIW, the guy who's most likely to understate income (and get away with it) on a personal return is the one you don't mention--the one who gets a W-2 from an employer AND runs a cash business on the side. Plenty of those out there.

        2. I suppose it doesn't really bother me that much as long as the prices are reasonable. I like cash better than credit cards anyway. But it also depends on where the restaurant is and the availability of ATMs. While a restaurant is popular enough that it won't take reservations, it can get away with a cash-only policy. Less hassle, less chance of refused payment after the fact, less chance of mistakes, etc. Cash is cash, and once they have it, it's theirs. Waiters prefer cash tips, etc.

          As with any cash-only business though, it raises the possibility of sketchy dealing.

          5 Replies
          1. re: egit

            For $20/person type of restaurant -- I have no problem paying cash. If it was something more like $50/person, I think a restaurant should probably accept credit cards. Not everybody carries that type of money with them. I did have a problem when we had to pay cash for a banquet we held at a restaurant. There were over 70 people at the banquet. We had to bring a ton of cash. I'm definitely sure they're doing this to avoid paying taxes on it.

            1. re: Miss Needle

              Caterers frequently ask for cash/certified check because they don't want to get stiffed with a bad cc or a chargeback because the customer dissatisfied the next day. They also don't want to wait 30-60 days for the bank to settle with them, many don't have credit arrangements with suppliers so they need the money now. Wehn I ran a resto I had a large party that when it came time to settle the bill the card wouldn't cover it, I eventually had to split it across 3 cards.

              I'm with you on the sub $100 per couple cash is no problem, beyond that though I expect to be able to pay with a card.

              1. re: Scrapironchef

                While it would be nice to give the restaurant the benefit of the doubt, the restaurant has had IRS trouble, and was in danger of being shut down on the day of the banquet. It wasn't our choice to hold it there.

                For other catering events, I've always been able to leave a deposit and pay the remainder by credit card.

                1. re: Miss Needle

                  They were probably worried about having their bank accounts frozen and / or sized, if that wasn't already the case at the time of your interaction with them.

                  1. re: Servorg

                    Well, they didn't close down and I had to go to another banquet there a year later. They only accepted cash payment at that point as well.

          2. As long as it's clearly posted at the door (and maybe on the menu), I have no issues with it. I wouldn't call it poor service, but poor marketing, I'd expect they would lose more business than they make up by saving the cost of the credit card machine and discount. Maybe it's an old established restaurant that never had a merchant account and it's busy enough that they don't feel they need one.

            1 Reply
            1. re: hsk

              hsk, you make a good point. We have a lunch restaurant here in town that takes only cash, no checks or plastic. Their food is great, though, and while we all fuss about having to bring cash, it hasn't stopped us from eating there. To your point, it's busy enough that I suppose they don't see the need to accept cards.

            2. If a resto doesn't take credit cards, I don't go there - no problem.

              For the Church Fish Fry I'll pay cash but otherwise, fuggedabotit