What's Happening?
The National Restaurant Association has raised concerns over a nationwide penny shortage following the U.S. decision to stop minting the coin on November 12. Despite the penny remaining legal tender, its
scarcity is causing significant issues for the restaurant industry, where over 25% of transactions are cash-based. The shortage is leading to operational challenges at points of sale, as restaurant operators struggle to provide exact change, resulting in customer frustration and potential loss of sales. The Association is advocating for two main solutions: collaboration between the U.S. Treasury, Federal Reserve, and the coin supply chain to ensure penny circulation, and federal legislation to establish nationwide rounding rules. This legislation would offer a safe harbor for restaurant operators when exact change is unavailable, thereby reducing friction at checkout.
Why It's Important?
The penny shortage poses a substantial financial threat to the restaurant industry, which operates on slim profit margins of 3-5%. The inability to provide exact change could lead to an estimated loss of $13-$14 million per month due to rounding down transactions. This financial strain could impact the industry's overall profitability and competitiveness. The proposed legislative solutions aim to mitigate these losses by providing clear guidelines and legal protections for businesses, ensuring smoother transactions and safeguarding small business owners from potential liabilities. The situation underscores the broader economic implications of currency supply issues and the need for adaptive measures in a cash-reliant sector.
What's Next?
The National Restaurant Association is actively working with Congress to pass legislation that addresses the penny shortage and provides long-term solutions. The Association is coordinating with bill sponsors to ensure the legislation aligns with industry priorities, such as national rounding guidance and safe harbor provisions. Additionally, the Association has requested Treasury Secretary Scott Bessent to issue temporary rounding guidance to offer immediate relief to restaurant operators. The outcome of these legislative efforts will be crucial in determining the future operational landscape for restaurants and their ability to manage cash transactions effectively.
