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Shake Shack Scraps Cashless Store Experiment

By Daniel B. Kline - Updated May 8, 2018 at 4:34PM

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At one New York location, the only order-and-pay options were digital kiosks or the chain's mobile app.

For many years, the customer experience at fast-food and fast-casual restaurants didn't change much. A diner had two choices: Wait in a line of people inside the restaurant to order from a human, or wait in a line of cars at a drive-through to place an order through a speaker. But now, the industry is evolving at a rapid clip, with options for ordering at unmanned kiosks, via apps, or on websites growing increasingly common.

One popular "better burger" purveyor, Shake Shack (SHAK 3.32%), recently tried to take those changes a step further: At one of its New York locations, the chain went entirely cashless. Customers had the option of paying either through the Shake Shack mobile app or with plastic at an order-taking kiosk -- but there was nary a live cashier to be found.

It was a bold experiment that shifted all the location's employees into food prep or guest hospitality roles (though theoretically, such a setup could require fewer workers). The concept was simple in theory; it would encourage Shake Shack regulars to use the app, and certainly, among occasional visitors, the vast majority can figure out how to order at a kiosk.

In reality, however, the experiment failed, and the chain says it won't expand it to other locations.

A man eats a cheeseburger.

Shake Shack has ended its cashless experiment. Image source: Getty Images.

What went wrong?

Shake Shack CEO Randy Garutti laid out what went wrong during the first-quarter earnings call. Responding to a question from an analyst, he was blunt about customer feedback to the test, according to a transcript provided by Seeking Alpha (registration required). 

"[One] of the things we've clearly seen is that our guests do often want to pay with cash," he said. "In the first rollout at Astor Place, we did not accept cash at all. And there are people who have told us very clearly, 'We want to pay with cash.'"

What happens next?

The cashless store was always meant to be a test. But the results made it clear to the company that it's better off offering more payment options, rather than attempting to limit them and dictate customer behavior. 

"We're going to go ahead and have cashiers as well as kiosks," said Garutti. "And there's going to be a lot of learning for us, too, there. It'll be interesting when you're not forced to use a kiosk like here at Astor, how that works."

As it adds kiosks and other digital options elsewhere, it will adjust staffing to meet demand.

"It's your call," according to the CEO. "And we want to make sure that we're doing that in so many different ways."

Listen to your customers

Shake Shack has learned a lesson -- essentially, the same one many supermarket chains did years ago when they concluded they needed to keep taking personal checks, a form of payment that has become increasingly outdated, particularly in face-to-face transactions.

If a company wants to serve the largest possible cross-section of the market, it has to make as many customers comfortable as it can. At some point, of course, folding money may become as outdated as barter for such transactions. But for chain eateries, it appears it will be better to lag back and let the customers show them when that time has come, rather than forcing the issue.

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