The restaurant industry faces financial strain due to inflation and economic downturns, with sales growth projections for 2024 cut to 3.8% from earlier estimates.
As establishments contend with cash flow issues and shifting consumer demands, real-time payments emerge as a tool for improving financial stability and customer satisfaction, according to the PYMNTS Intelligence report “Real-Time Payments: The Cash Flow Spice Every Restaurant Needs.”
Real-time payments systems are proving to be a game changer for small restaurants, offering boosts to profits and operational efficiency. Small- to medium-sized restaurants using instant pay-by-bank and platforms like PayPal reported higher net profit margins — over 50% — compared to those that rely on traditional methods like checks or automated clearing house (ACH) transfers, which are linked to lower profit margins, the report found.
Specifically, 40% of independent U.S. restaurants generating $10 million or less annually now use real-time payments, citing ease of use and speed as advantages. The swift processing of transactions also reduces administrative burdens and frees up time, further enhancing operational efficiency.
But adoption hurdles remain. Many restaurant owners view real-time payments as complex or risky. About 34% of non-adopters cited perceived difficulty in implementation, while 32% expressed concerns over fraud risks — misconceptions that industry experts argued are overstated. Overcoming these barriers through education and better integration could broaden real-time payments’ appeal among restaurant SMBs. Enhanced vendor support and clear guidelines could help address these concerns and facilitate wider adoption.
Cash flow issues are a persistent challenge for restaurants, often leading to missed payments and financial instability. For instance, Ohio’s Melt Bar & Grilled and Chicago’s Kuma’s Corner filed for bankruptcy, highlighting the sector’s vulnerability to economic pressures. Real-time payments offer a solution by improving cash flow and reducing transaction fees. PYMNTS Intelligence data found that 76% of restaurant SMBs that used instant pay-by-bank payments reported strong financial health, compared to 58% of those who did not.
Additionally, 68% of real-time payment users benefitted from healthier balance sheets. This technology allows for immediate access to funds, aiding in daily expense management, reducing the risk of overdrafts and enhancing overall financial stability. By ensuring timely payments, restaurants can better manage supplier relationships and avoid disruptions.
Today’s diners expect faster and more convenient payment options, pushing restaurants to adapt. While digital menus via QR codes received mixed reviews, QR code payments shortened average restaurant visits by 15 minutes and increased tips by 10%, PYMNTS Intelligence found. By integrating real-time payments with these digital solutions, restaurants can further streamline the dining experience. Investments in payment technology are on the rise, with 52% of restaurant operators planning to upgrade back-office tech, 41% focusing on contactless ordering and payments, and 25% on self-order kiosks.
By accelerating transactions and improving customer satisfaction, real-time payments systems not only streamline payment processes but also enhance table turnover rates. This can drive higher revenue and bolster customer loyalty in a competitive market.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More