The leading accountants in Leeds for restaurants, cafes, and takeaways

Many restaurants and cafés are considering going completely cashless, relying solely on card payments and digital wallets. While this can streamline operations and reduce security risks, it’s not without its downsides. Before making the switch, it’s important to weigh the benefits and challenges. Pros of Going Cashless 1. Faster Transactions and Shorter Queues Taking card and mobile payments speeds up service – no more handling change or waiting for staff to balance tills. This is particularly useful in busy cafés or quick-service restaurants where efficiency is key. 2. Reduced Security Risks Cash businesses are more vulnerable to theft, whether from external break-ins or internal shrinkage. Going cashless removes that risk, as there’s no physical money to steal or miscount. 3. Easier Financial Management Digital payments automatically track sales, making bookkeeping and end-of-day reconciliation simpler. There’s no need for manual cash counting or bank deposits, freeing up staff time for other tasks. 4. Lower Risk of Human Error Handling cash increases the risk of mistakes – incorrect change given to customers or till discrepancies. Digital payments reduce these errors, ensuring that every transaction is recorded accurately. 5. Encourages Higher Spending Studies suggest that customers tend to spend more when paying by card or mobile wallet compared to cash. The friction of physically handing over money is removed, making people more likely to order an extra drink or dessert. Cons of Going Cashless 1. Alienating Some Customers Not everyone is comfortable with digital payments. Some older customers or those who prefer using cash may feel excluded, potentially leading to lost business. 2. Transaction Fees Add Up Card transactions come with processing fees, usually between 1-3%. For high-turnover businesses, these costs can become significant. It’s worth calculating whether the benefits of digital-only payments outweigh the added expense. 3. Dependence on Technology If your card reader malfunctions or the internet goes down, your ability to take payments is instantly compromised. Having a backup plan – such as multiple payment processors or an offline mode – can help mitigate this risk. 4. Tips May Decrease Customers tipping with cash often leave more than they would on a card. A cashless system could reduce staff tips, which may affect morale unless you introduce an alternative tipping method. 5. Some Suppliers May Still Prefer Cash If you rely on local suppliers who operate on a cash basis, going fully digital could make payments more complicated. You may need to adjust purchasing arrangements or find alternative suppliers. Making the Right Decision for Your Business If you’re thinking about switching to digital-only payments, consider the following steps: Analyse Your Customer Base – Do you serve a large number of cash users? If so, a hybrid approach may be better than going fully cashless. Review Costs – Calculate how much you’re currently spending on cash-handling versus what you’d pay in card transaction fees. Test a Phased Approach – Start by reducing cash usage rather than eliminating it overnight. You could introduce “card preferred” policies first. Prepare Staff and Customers – Clearly communicate any changes to avoid frustration. Ensure staff can explain why the transition is happening and what alternatives are available. Have a Backup Plan – Ensure you have reliable internet and multiple payment providers in case of technical issues. How We Can Help At MSF Associates, we help restaurants and cafés make smart financial decisions that improve efficiency and profitability. If you’re considering switching to a digital-only payment system, we can help you evaluate the financial impact and find the best approach for your business. Book a call with one of our accounting specialists or call us on 0113 240 4100 to discuss whether going cashless is right for you.

From April 2025, businesses across the UK, including restaurants and cafés, will face an increase in Employer National Insurance Contributions (NICs) from 13.8% to 15%. Additionally, the threshold for employer contributions will drop from £9,100 to £5,000, significantly raising payroll costs for many businesses in the hospitality sector. For an industry already contending with rising energy costs, increased wages, and supply chain challenges, this change presents yet another financial hurdle. However, with careful planning, food businesses like yours can mitigate the impact and continue to thrive. Optimising Workforce Planning Labour is one of the most significant costs in the food service industry. By optimising workforce planning, businesses can reduce unnecessary expenditure while maintaining efficiency. Assessing staff schedules and using data-driven scheduling software can help align staffing levels with demand, ensuring that businesses are neither overstaffed nor understaffed at peak times. Cross-training employees can also provide greater flexibility, allowing team members to handle multiple roles, thereby reducing the need for additional hires. In some cases, flexible contracts, such as part-time or seasonal arrangements, can better match staffing needs to business fluctuations. Streamlining Operations for Cost Efficiency Streamlining operations is another important step in offsetting higher payroll expenses. Automation can help by implementing self-service ordering systems, digital payment solutions, and kitchen management software, which can enhance efficiency and reduce reliance on labour. Reducing wastage through portion control strategies, closely monitoring inventory, and repurposing ingredients can also help lower costs. Investing in team training can improve service speed and quality, leading to higher table turnover and increased revenue. Strategic Pricing Adjustments While raising menu prices should be a last resort, minor adjustments can help balance rising costs without alienating customers. Introducing small price increases gradually can prevent customer dissatisfaction while helping the business absorb the cost increases. Optimising menu offerings by focusing on high-margin dishes and limiting low-profit items that require excessive labour or costly ingredients can also improve financial health. Bundling meal deals and upselling add-ons can increase the average customer spend without significantly raising individual item prices. Leveraging Tax Reliefs and Government Incentives Taking advantage of tax reliefs and government incentives is another strategy that can help ease the financial burden. Small businesses may be able to claim up to £5,000 under the Employment Allowance to reduce their employer NIC bill. Businesses that hire apprentices can access government funding through the Apprenticeship Levy, which can help with training costs. Investing in energy-efficient equipment may also allow businesses to claim tax relief under the Annual Investment Allowance (AIA), reducing overall expenses. Expanding Revenue Streams Increasing revenue streams is another way to absorb additional payroll expenses without cutting staff or reducing service quality. Implementing customer loyalty programmes can encourage repeat business. Expanding into delivery and takeaway services, either by partnering with delivery platforms or offering direct ordering incentives, can generate additional income. Hosting themed nights, happy hours, or seasonal promotions can attract more customers and boost sales. Outsourcing Non-Core Functions Outsourcing certain functions can also reduce payroll costs while maintaining service levels. Instead of hiring full-time cleaning staff, you could consider third-party cleaning services. Accounting and payroll functions can be outsourced to reduce administrative burdens and improve financial management. Marketing and social media management can also be handled by freelance professionals or agencies rather than hiring a dedicated employee. Conclusion It's no doubt that the upcoming increase in Employer NICs presents a real challenge for food businesses, but proactive financial management and operational efficiency improvements can help mitigate the impact. What can also help is speaking to us. We specialise in working with restaurants, cafés, and takeaways, so we understand the unique financial hurdles of the food service industry. No jargon, no fluff – just practical, industry-specific advice to help your business thrive. If you're interested in finding out more about how we can help your restaurant become more profitable, book a call with one of our accounting experts or call us on 0113 240 4100.