The Shake Shack Cashless Conundrum

 

When fast casual burger chain Shake Shack announced in late 2017 that it would turn one of its locations in Lower Manhattan into a completely cashless store where customers ordered and paid for their food via an automated kiosk, many assumed the concept would take off.

 

But it didn’t.

 

Customers expressed confusion about how the process worked and frustration with the fact that they could not use cash. And then the negative Yelp reviews started rolling in. The experiment was a bust.

 

By early 2018, the restaurant abandoned the cashless kiosk model and reverted back to accepting cash and card payments. It also announced that it would hire additional cashiers based on the customer feedback they received on the kiosk ordering system.

 

Although but one example, the Shake Shack experiment does confirm several assumptions about consumers and the rate at which they will adopt new ways to pay. Of course, not all consumers are alike.

 

Let’s take a look at the three types of consumers, in terms of their approach to payments:

Cash Loyalist: These are people who have an aversion to any kind of payment technology or using anything but cash for their transactions. Their reasons can range from apprehension about payment data security, a case of technophobia or simply a preference for their current payment method or habits.

Tech Friendly: These are people who have embraced and primarily use some form of non-cash payments, usually a debit or credit card. There is, however, a learning curve and comfort level that finds them reluctant to use new payment technology until it has become popular and widely-adopted.

Early Adopter: These are people who are quick and enthusiastic to embrace new and emerging forms of payment, often associated with technology-related gadgets. They tend to skew on the younger side and they often are excited to explore the latest emerging forms of payments.

 

Was Shake Shack ahead of its time? Did it cater to the wrong consumer set? Whatever the case, a key takeaway from their failed attempt is that there is wisdom in a graduated approach.

 

From a payments industry perspective, this means that retailers and software providers must keep a close eye on the cashless trend, so they can balance tech priorities accordingly.

 

Perhaps the most important payments-related question that businesses need to be asking themselves is how they can meet and exceed customer expectations with the adoption of payment technology without scaring off their less technologically-savvy customers?

 

The answer is fairly simple. By interacting with their customers, whether inside a brick and mortar setting, through online shopping or via social media, and listening to honest critique and feedback, just as Shake Shack did. From there, business can course correct based on what their customers prefer.

 

After all, even the most robust and cutting-edge payment technology is wasted if it does not complement and add value to the consumer shopping experience.