Your Favorite Restaurant is in Trouble
Swipe Fees are the Fastest-Growing Expense
- It was reported this week that only 38% of Texas restaurants were profitable last year according to the Texas Restaurant Association
- They aren’t the only ones. The Washington Times recently reported that 40% of DC-area restaurants are likely to close this year
- Why are times so hard for your favorite restaurant?
- Well, the top three restaurant costs are food, labor, and credit card swipe fees and in the last 4 years:
- Food costs are up 29%
- Labor costs are up 31%
- Credit and debit card swipe fees are up 70%!
- The credit card industry keeps pretending it doesn’t raise prices, but it does. Last year, the average percentage rate businesses were charged on Visa and Mastercard credit cards leaped from 2.26% to 2.35%.
- And that’s on top of the fact that charging a percentage creates automatic price increases with every penny of inflation.
- The credit card industry has acknowledged that inflation is "positive" for them, as Visa's then-CEO admitted on an earnings call in 2022
- So next time your sandwich costs more, know that the restaurant might not be making any profit – and all the while, Visa’s and Mastercard’s profit margins of 52.86% and 45.21%, respectively, look safe.
The market is clearly broken
COMPETITION IS BETTER FOR EVERYONE
IT'S TIME TO PASS THE CREDIT CARD COMPETITION ACT