The Penny Problem

The ongoing penny shortage has become a challenge for restaurant operators, many of whom are struggling to provide exact change for cash-paying customers. Given that approximately one in four restaurant purchases are cash transactions and a number of states have consumer protection laws that require exact change, the National Restaurant Association is urging action on two fronts to provide relief as we head into the busy holiday season: restarting the circulation of pennies and advancing the Common Cents Act to establish a national rounding standard.

“While the penny shortage isn’t impacting all parts of the country uniformly, this will impact thousands of restaurants if there aren’t changes before the holidays,”  Sean Kennedy, Executive Vice President for Public Affairs at the National Restaurant Association, told Modern Restaurant Management. 

The organization is telling members to find out what their local regulations are on cash transactions and to make a plan on how to communicate with their customers their process if they can’t make exact change.

“But this isn’t ideal for restaurant owners in the busy season,” Kennedy added. “We believe that the government can help address this by starting to circulate pennies again and passing federal legislation that would provide statutory protections for operators rounding to the nearest nickel.”

The Association has two priorities: the restarting of penny circulation and legislative action. 

“First, we need the federal government to resume circulating the penny nationally,” Kennedy explained. “The shortage is happening because the coin distribution centers have stopped accepting penny deposits and orders, holding back pennies from the system. If these distributors would resume accepting penny orders and deposits, that would resolve the availability of pennies long enough that Congress could help with our other issue: a national rounding standard. Restaurant operators need Congress to pass legislation, like the Common Cents Act, to establish national regulations that reflect the reality of a post-penny economy while protecting restaurant owners who rely on cash payments.”

Kennedy added that the Association has been talking with Congress and the Administration about the issue during the shutdown. 

Canada removed their one-cent piece from circulation more than a decade ago, but utilized a three-year implementation timeline to do so, which helped businesses, consumers, and the market adjust accordingly, Kennedy noted. 

“Additionally, Canada adopted a national rounding standard that is reflected within the Common Cents Act if it were passed into law where merchants would round down to the nearest nickel on transactions ending in 1, 2, 6, and 7, and round up to the nearest nickel on transactions ending in 3, 4, 8 and 9.”

Kennedy predicts a decision to stop minting the penny permanently will be a shock to the U.S. commerce system and everyone will have to adjust to a post-penny economy.

“Restaurant operators are going to need to communicate clearly with customers how they will see the new process in their restaurants. But we’re also going to have to rely on the federal government to help educate everyone engaging in the U.S. economy about the change and what it means for how we make cash change. And we would hope that our customers would be patient with us as we all work through the change together.”