Penny for your thoughts? These days it’ll cost you a nickel.
Last month, the U.S. Mint produced its final penny, the ultimate effect of a February request by President Trump to remove it from circulation. It set the stage for the gradual end of the coin’s 230-year run as a crucial part of domestic currency.
To the government, doing so makes sense. It costs a mint to produce the penny—3.69 cents for each one, to be specific—so why make it?
Yet such federal penny-pinching is leaving restaurants and other retailers feeling short-changed.
A quarter of restaurant transactions are in cash right now, and pennies are already difficult to find. The Retail Industry Leaders Association said that more than 1,000 store locations of 25 major retailers do not have a penny to spare, literally. Some McDonald’s locations in certain pockets of the country are penniless.
As such, restaurants must change the way they treat cash customers, rounding to the nearest 5 cents when they do not have the exact amount. This is expected to cost restaurants a pretty penny: The National Restaurant Association estimates that rounding will cost restaurants an estimated $13 million to $14 million per month, or up to $168 million per year.
Restaurants are also concerned they could be left holding the bag when customers get angry that what they pay and what they’ve been charged are two separate things.
“It can be a little frustrating if they are now learning that some restaurants round up, some round down, things like that,” Sean Kennedy, EVP of public affairs for the National Restaurant Association, said in an interview. “The last thing that a restaurant wants is to discourage or frustrate a customer for something that’s completely out of their control.”
There are two issues that have restaurants feeling spent. First is the lack of pennies. The coins have not been in adequate circulation for some time, long before the U.S. Mint stopped making them. Pennies have not been circulating the way nickels, dimes and quarters are circulating. The federal government could step in to change that.
“This is a fixable problem,” Kennedy said. “There are 2.5 billion pennies in circulation. The reason there’s a penny shortage isn’t because they’ve stopped minting them. The reason is because they’ve stopped circulating them.
“It’s like you’ll see 15 Lime scooters and Lime bikes in some neighborhoods all piled up, and in other neighborhoods you won’t see any.”
Michelle Korsmo, CEO of the National Restaurant Association, asked U.S. Treasury Secretary Scott Bessent and Federal Reserve Chairman Jerome Powell to reopen the penny order and deposit system to increase penny circulation.
Restaurants aren’t asking the federal government to start minting more pennies. It just thinks recirculating what’s already out there can help them buy time while they work with Congress on the Common Cents Act.
That act would provide guidance for restaurants and other retailers on rounding prices. Other countries that have ridded themselves of the smallest denominations have used such rounding strategies to ensure an effortless change into the new system.
The bill would also provide a “safe harbor” for restaurants that could help them avoid the legal jeopardy from potential nuisance suits that can inevitably arise when someone says they’ve been cheated out of a few cents.
“The restaurant industry transacts more than $1 trillion in sales annually, and more than one in four of those purchases are paid for in cash,” Korsmo said. “When operators can’t provide exact change, it creates friction at checkout, frustrating customers. In a highly competitive industry like restaurants, any change to the hospitality our customers expect could mean a lost return sale for an operator.”
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.