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26 May 2009

A sign of the times

I was in a restaurant yesterday and this sign was plastered over every available surface.

Photo of a sign in a restaurant that says 'We no longer take credit/debit cards Cash only Sorry for inconvenience'

I've decided not to name names at this stage because it can only be bad news for them.  But this is no fly by night, it's a well established restaurant, with a bit of a following, although in a niche sector of the market.  They've been around for years.

And it seems their bank has pulled the plug on them doing any card related transactions.  Cash is king.  That must mean they have a serious cash flow problem.  That means they're likely to have issues paying suppliers and despite the tough times we live in, how long are suppliers going to put up with not being paid.  And what about the staff's pay packets?

I'm certain this establishment is not the only one in to be facing such issues.  Others no doubt will bypass this 'difficult time' and go straight to the wall.  But it says a lot that a restaurant with a long history, a loyal (if not large) following is finding it difficult to convince the banks that they're a safe bet.

I know there are other, seemingly safer bets that have faced far bigger trouble (think Scotland's banking system) but it reinforces the point that if you want the places you like to survive, you need to keep spending money in them.

As an aside, Nick Paumgarten's article in last week's New Yorker on the financial meltdown is brilliant, although long and requires registration to be read in full.  There is also a podcast with him on the New Yorker site.


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Since you haven't named names it's probably not a problem, but you should have at least looked into one other possibility: rather than the restaurant itself it might well be their punters who currently are close to the financial edge. German railways disallowed the use of debit cards a number of years ago because quite a lot of the transactions bounced and I wouldn't expect this to have gotten any better in 2009.

@Hamburg Diner I don't think a bank in the UK would stop a restaurant from accepting cards because the diners are defaulting I just can't see it happening in enough numbers. And let's for argument sake say you're right, if there are that many problem payers, then it bodes worse for the restaurant doesn't it? But as I say, I think your suggestion is pretty wide of the mark.

You are quite right: Since the bank wouldn't have to stand up for the damage it probably wouldn't pull the plug. I merely suggested that THE RESTAURANT has decided to go down that route after encountering a fraudulent customer too many. There is an enormous number of restaurants here in Germany that even cater to a well to do clientele without accepting card payment of any kind. In todays times even the markups for credit card use might be a reason to disallow them. Whatever the reason: It doesn't paint a pretty picture at all.

Yeah I am seeing this a lot as well bt haven't seen many with credit cards not being accepted, thats a strange one. At the end of the day the good places will always survive and if anything the quality will go up while the prices go down which can only be a good thing for all of us consumers!

@Hamburg Diner, thanks for clarifying and I UNDERSTOOD YOUR POINT, no need for the caps.

@Niall I agree it is odd. An at the risk of incurring Hamburg's ire, I think it's a sign of cash flow problems at the restaurant (as opposed to the bank)

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