Operations

Ban on cashless restaurants moves closer to reality in Los Angeles

The City Council directed staff on Wednesday to start drafting an ordinance. It would put LA among a number of other cities and states that require businesses to accept cash.
Restaurant guests' ability to pay in cash would be preserved. | Photo: Shutterstock

Los Angeles moved a step closer Wednesday to banning cashless restaurants, with the City Council voting unanimously to have its staff study the bans that have been adopted by other jurisdictions and then draft an ordinance.

The city would join a number of major metropolises that have already banned cashless restaurants and other retail establishments. Those cities with a cashless ban in place include New York, San Francisco, Philadelphia and Washington, D.C.

Several states, including Massachusetts, New Jersey and Connecticut, have also prohibited retail establishments from refusing to accept cash.

Proponents of the bans argued that the laws protected the “unbanked,” or low-income residents who lacked a bank account that entitled them to a credit card. Nor, the advocates argued, could those individuals afford to pay the fees associated with getting a card.

In mid-August, a motion to have Los Angeles follow other cities’ lead was introduced to the City Council by Councilwoman Heather Hutt.

“Cashless businesses create an economy in our City that is not inclusive and accessible for all people,” Hutt said in a prepared statement at the time.

Specifically, she blasted a refusal to accept cash as a slight against low-income communities, people too young to meet the age qualifications for a credit or debit card, and seniors who aren’t accustomed to paying by card or phone apps.

The move has great significance to the restaurant industry, which has been steadily moving away from cash transactions. Orders placed via smartphone or computer have grown into a major portion of many operations’ sales, and payment by cash is not possible through those channels.

Plus, in-person payments via credit cards or phone app are significantly faster, since the guest need not count out the cash and the order taker is spared having to count out and deliver the change. Service speeds are cut appreciably.

The shift to cashless payment was accelerated during the pandemic, when in-person visits to a restaurant decreased as consumers embraced delivery, drive-thrus and contactless to-go services.

The Sweetgreen fast-casual salad concept decided to discontinue cash transactions at all of its stores starting in March 2017. A little more than two years later, it dropped the policy and began accepting cash again, citing a backlash from certain segments of the population and the spread of cashless bans.

A number of other restaurant brands have experimented with a no-cash policy. A New York City unit of Shake Shack, for instance, was designed to have customers order solely via self-serve kiosks and pay digitally. But the store was located near New York University, and the chain found that many students preferred to pay with cash.

No timeline was revealed for a Los Angeles cashless ban. An ordinance would still need to be approved by the Council and signed by the mayor.

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