[zappo2938]

A lot of restaurants run a very thin profit margin, around 7%: 33% food cost, 33% labor cost, 30% overhead, and 7% profit. This doesn't account for the ridiculousness that is open table and urban spoon. Often the owner has a salary position which is included in the labor cost. One place where profit can be increased is not throwing out food and portion control. The other way to increase profit is being paid cash. Nobody uses cash anymore. A 2% to 3% fee on all credit card transactions eats into that 7% profit, a lot. If Apple can make it profitable to charge 1% transaction fee or a per transaction fee like ATM transactions, they will do very well in the restaurant industry. Moreover, if their app integrated into the POS system and is used widely, they can step on opentable's toes offering discounts and reservations. I know one chef who instead of opening a 40 seat or 120 seat restaurant, opened a 23 seat restaurant and didn't accept credit cards, cash only. He always had a line out the door and made a lot more money than his previous position as an executive chef at a hotel in Beverly Hills. I would love to have a developer's license to the NCR Aloha POS SDK.

[msellout]

LevelUp helps small businesses aggregate credit card transactions to decrease the fees (https://www.thelevelup.com/). I'm not affiliated with them. It's a nice service that seems to be most prevalent in Boston.

[zappo2938]

My friend developed an online ordering app for busy bars called SpeedeTab.[1] Being able to order a drink and pay at the same time from a phone is very nice. When the drink is ready the phone gets a push notification. The bartender verifies the transaction number of the phone. Because they are doing credit card transactions in bulk they got a very decent discount and they passed that onto the bars and coffee shops like you mentioned with LevelUp. For restaurants, getting the transaction fees at around 1% is a big deal because that is a lot of the net profit. I haven't heard about LevelUp yet, lot has changed in the past 10 years, and I'm out of the loop now.

[1] http://www.speedetab.com/

[tw04]

Wait...

33% food cost

33% labor cost

30% overhead

07% profit

_______________

103%

Er... wat?

[zappo2938]

I forgot to math and oopsied a 3. Here is an example breakdown of prime costs for a restaurant. Prime cost doesn't include non variable overhead like rent, insurance, and utilities.[1]I don't think my lack of math skills takes away from my argument that if Apple Pay can reduce payment transaction fees to 1% of the charge, it will have a major increase in net profits for small and medium restaurateurs.

[1] http://www.restaurantowner.com/public/images/212b.png