In today’s environment, it is more important than ever for restaurants of all types to accept credit and debits. According to a 2008 study by Hitachi Consulting, about a 1/4 of all transactions made at fast food restaurants are made with a credit/debit card. If you have a quick service restaurant (fast food), how do you keep your fees to a minimum? When fast food restaurants have a very low average ticket, in the $5 to $10 range, everything matters. The percentages and transaction fees can add up to a big percentage and pennies matter a lot. When your average ticket is so low, the percentage you pay is as important as the transaction fees.
Lets assume we are dealing with Interchange plus pricing. If your processor charges you 10 cents per transaction, that is 1% on a $10 ticket amount. You would then have to add the Interchange per item fee which can range from 4 cents on up depending on the type of card you process. You will also have a percentage to pay as well. When you have a restaurant such as Jimmy John’s that does close to a million a year in revenue, this becomes even more critical. The best advice I can give anyone with a low average ticket is as follow:
- Get setup using the Interchange plus pricing model instead of 3 tiered. It is much easier to control your cost by knowing how low your processor can go as you are dealing with costs.
- Process your transactions over IP instead of dial up. IP processing is having your transactions submitted using a high speed Internet connection. Not only does this speed up your checkout, but most processors can offer you lower transaction fees than if you were to use dial up.
If you have any questions, feel free to leave your comments.