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Why more and more LA businesses are refusing your cash

Got some cash burning a hole in your pocket? Don't try to spend it on a salad at Los Angeles-based chain Tender Greens.

Earlier this year, Tender Greens joined the small but growing number of Southern California businesses that no longer accept cash. It says ditching cash speeds up lines and cuts costs — but some worry it might be shutting out certain customers.

Signs of Tender Greens' cashless transition are all over its location in Pasadena — literally. There's a sign at the door. There's a sign where you place your order. There are signs scattered throughout the store. They all make it quite clear: "we're cashless."

All 28 locations nationwide now only accept cards or other forms of digital payment. (Tender Greens is making an exception for its new Boston location; a state law there requires businesses to accept cash.)

Pasadena cashier Wendy Perales said most customers have been cool with the move away from cash. But there is the occasional walkout — like one woman earlier that day.

"She was just staring at me like I was going to change my mind," Perales said. "But I can't do anything about it. So she just left."  

Some customers would rather pay in cash. But they'll pay with their card, if that's what stands between them and their favorite salad.

"I'm a little suspicious about identity theft," said repeat customer Tamara Kim. "So if I can limit the usage of my credit card, I do. Maybe I'm a bit old-fashioned that way."

Old-fashioned or not, Tender Greens president Denyelle Bruno said customers like Kim are few and far between.

“When we made this decision, less than seven percent of our customers were paying in cash,” Bruno said.

Tender Greens wasn’t taking in much cash, but it was spending a lot to handle that cash. It had to pay someone to count out the register, to put cash in the safe and transport it to the bank securely.

And Bruno says cash was doing something Tender Greens never wants to see during its busiest time of day, the crucial lunch rush — it was slowing down the line.

"We’ve actually timed it," she said. The company estimates cash transactions take, on average, four to five seconds longer than card transactions. Especially now that signatures aren't required for orders under $25. 

Bruno says all that extra time can add up, frustrating the kind of busy office workers Tender Greens is trying to serve.

“Even if they like our food better, if our line is extremely long and moving more slowly than a competitor, then there’s a good chance they’ll go somewhere else," Bruno said. "Being able to speed up the line translates directly into more revenue for us.”

A Tender Greens office employee grabs lunch in their downtown Los Angeles headquarters, March 28, 2018.
David Wagner/KPCC
A Tender Greens office employee grabs lunch in their downtown Los Angeles headquarters, March 28, 2018.

Going cashless is still a fairly new trend. But it’s growing. Another LA-based salad chain, Sweetgreen, has also been fully cashless for a while. A few other examples include the restaurant Yellow Fever and blow-out salon chain Dry Bar, headquartered in Irvine.

Mainland Poke owner Ari Kahan says he gave his customers a grace period to adjust when he decided to take his stores cashless. Today, he tries to provide a work-around for those who only have cash.

"We don't carry change. We can't break any bills. But if someone wishes to buy a gift card with cash, they are more than entitled to," Kahan said. "We don't want to shut anyone out." 

Credit cards do charge transaction fees to businesses. That's why many restaurants are still cash-only. They want to maximize their profits by avoiding those fees.

But the Milken Institute’s Jackson Mueller says small to medium sized U.S. companies are paying tens of billions of dollars each year on expenses related to handling cash. And if they're not bringing in much cash to begin with, those card transaction fees are easier to swallow.

"The prices could be at a competitive advantage at this point that makes it worthwhile for a small business to go, you know what, it just doesn't make sense anymore to carry cash," said Mueller. "Let’s switch to digital."

But for customers, going fully cashless only works if they're part of the mainstream financial system — and lots of people in Southern California are not.

Data from a U.S. Federal Deposit Insurance Commission report shows that in 2015, 8.6 percent of people in the Los Angeles area were unbanked. That's higher than the nationwide average of 7.0 percent. And it means hundreds of thousands of people in L.A. don't have bank-issued debit or credit cards. 


UCLA Asian American Studies Center assistant director Melany De La Cruz-Viesca says the unbanked are often lower-income recent immigrants who don't have enough money to open an account. Or they just don't trust banks.

"They pay for utilities, medical services and their children's education needs all through cash," she said.

Not being able to buy a $15 salad is one thing. But De La Cruz-Viesca worries about cash being denied for other goods and services.

"If we keep moving in this direction of a cashless system," she said, "what I see happening is a lot of the low-income immigrant groups in L.A. will fall out of the economy."

Tender Greens president Denyelle Bruno says the company doesn't want to exclude anyone from its business. She hopes they'll use alternative payment options, like pre-loaded debit cards.

Bruno says Tender Greens is on a mission to expand — to bring healthy, high-quality food to as many people as possible. And the company decided cash wasn't helping to achieve that.

"If we weren't making decisions that helped us be a more profitable company, then we wouldn't be able to grow," she said. 

Tender Greens is making adjustments as it goes along. It got rid of its tip jars when it went fully cashless. But it's received feedback from many customers who really like being able to leave tips in cash.

"We are right now actually in the process of bringing it back," Bruno said.