Restaurant Supply Chains May Boost Account-to-Account Momentum

Matching supply and demand is both art and science, and the restaurant supply chain is all about “just in time” inventory management.

After all, food spoils.

Misjudge the crush of the lunchtime crowd, and you might get stocked out of the day’s most popular dishes.

The net result is lost sales, lost cash that might otherwise be headed into the corporate coffers.

Supply chains, of course, are built link by link.  For restaurants — especially the mom and pop organizations that line Main Street and where the National Restaurant Association estimates that 9 in 10 restaurants have fewer than 50 employees (and qualify as small businesses) — strong vendor relationships are key.

While PYMNTS Intelligence data has noted that most sectors have overcome the volatility and the vagaries of the pandemic, efficiency is an ever moving target, and there’s been a continued shift to digital conduits to get things done, and to pay and be paid (naturally).

There may be a groundswell for account-to-account payments in the restaurant sector.

We noted in our latest “Restaurant Edition” of the “Small Business Real-Time Payments Barometer” that a full three quarters of restaurant SMBs, generating less than $10 million in annual top lines, sent instant payments last year. Instant PayPal and debit cards are the two most common instant payment methods at around 40% each.  Instant pay-by-bank trailed a bit, at 20%.

Familiarity Breeds Satisfaction

There’s at least some lack of familiarity at work here. Separate PYMNTS Intelligence research showed at the end of last year that more than a third of consumers — and business owners are, of course, consumers, as trying new payment methods in everyday life lends itself well to using them in a business setting — did not know how account-to-account payments (A2A) payments work.  Those that tried it tended to like it, at 84% of consumers surveyed.

The A2A model moves funds directly from a sender’s bank account to a recipient’s bank account — through both “push” and “pull” scenarios — with no additional parties in the mix.  Our data shows that 76% of restaurant SMBs that opt for A2A instant options as a preferred payment method have healthy balance sheets, at a majority of all revenue “levels.”  For the firms that have top lines of between $250,000 to $1 million, the “healthy balance sheet” population rises to 86%.  For these smaller players, the relatively lower fees tied to the direct-bank options can be attractive to margin. That’s especially true when managing daily operating expenses such as utilities and other recurring payments — which can of course include deliveries from suppliers. The suppliers have cash in their own accounts rather than waiting to “settle up.”

There’s a positive ripple effect for the local banks that are the mainstays of Main Street businesses. Our data show that instant payment options are most important to the small restaurants that opt to bank locally, at 47% of SMBs in the food space.