They don't take Amex -- What do you do?
Sep 18, 2005, 4:14 pm
#31
Join Date: Apr 2005
Location: Chicago 'burbs
Programs: UA 2P, HHonors Diamond, Hertz Gold
Posts: 873
Actually, if gsilliman would, I'd be interested in a few pieces of data.
1. Total transaction cost on a $50 dinner for AMEX and Visa/MC (or higher if your typical tab is higher).
2. Does this change appreciably for higher/lower tabs?
3. Now, if your also willing to share, your "net per tab" for everything excluding the merchant fees? This gives the margin you're playing with. It might give others on this board more perspective on why you would want to avoid AMEX.
Myself? For me business expenses are significantly easier if I use my corporate AMEX. Basically, for meals I send in no paper if it's on the card, I have to send in paper if it isn't. Do I avoid a place I like because of no AMEX? Nope. Am I less willing to try a new place if (on business) it doesn't take AMEX, yes unless it has come recommended from someone I trust.
1. Total transaction cost on a $50 dinner for AMEX and Visa/MC (or higher if your typical tab is higher).
2. Does this change appreciably for higher/lower tabs?
3. Now, if your also willing to share, your "net per tab" for everything excluding the merchant fees? This gives the margin you're playing with. It might give others on this board more perspective on why you would want to avoid AMEX.
Myself? For me business expenses are significantly easier if I use my corporate AMEX. Basically, for meals I send in no paper if it's on the card, I have to send in paper if it isn't. Do I avoid a place I like because of no AMEX? Nope. Am I less willing to try a new place if (on business) it doesn't take AMEX, yes unless it has come recommended from someone I trust.
Sep 18, 2005, 4:33 pm
#32
Original Poster
Join Date: Dec 2000
Location: Cape Cod, MA USA
Programs: UA, AA, BA, DL, US, SPG, MR, HH
Posts: 164
Our average check is about $85. Amex costs a little over $1 more vs. Visa/MC/Discover for the same transaction. Put another way, it costs 1-1.5% more of the check vs. Visa.
That difference does not change significantly as check size increases. Fixed cost per transaction is pennies. The total cost is driven by the percentage discount, which doesn't change as check goes up (With one anomaly: we now pay LESS for really small transactions -- <$10 -- as processors try and capture this business)
It's not just a question of total margin. This business is chock full of expenses and vendors that cost "just pennies per customer" or "just a few dollars a day". Everyone wants to use our cash flow to set themselves up with an annuity. Our experience is that these expenses require a lot of upper mgmt scrutiny, becaue (a) they add up, and (b) once they're built in to the operation, everyday mgmt and staff can't influence/manage these costs.
To put it another way: We are currently heatedly debating 2 other expenses that would cost about $1 each per table:
- White tablecloths
- something more expensive and more substantial than butter or oil/cheese/garlic to accompany the bread basket -- a pesto or a homemade olive puree.
In the midst of this discussion, we find ourselves wondering about a lot of other things that cost about $1/table and wonder where they fall on the cost/benefit spectrum.
You can also look at the little costs in terms of their aggregate impact. If all Amex transactions could be substituted by Visa, then $12,000 would drop right to the bottom line. We're looking at some $10-12,000 capital improvements right now, and if I could find that kind of money by changing one small thing in our business, then I can't help but look at it.
BTW, my working hypothesis is that most customers think similarly to GOF in terms of their card-usage preferences.
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That difference does not change significantly as check size increases. Fixed cost per transaction is pennies. The total cost is driven by the percentage discount, which doesn't change as check goes up (With one anomaly: we now pay LESS for really small transactions -- <$10 -- as processors try and capture this business)
It's not just a question of total margin. This business is chock full of expenses and vendors that cost "just pennies per customer" or "just a few dollars a day". Everyone wants to use our cash flow to set themselves up with an annuity. Our experience is that these expenses require a lot of upper mgmt scrutiny, becaue (a) they add up, and (b) once they're built in to the operation, everyday mgmt and staff can't influence/manage these costs.
To put it another way: We are currently heatedly debating 2 other expenses that would cost about $1 each per table:
- White tablecloths
- something more expensive and more substantial than butter or oil/cheese/garlic to accompany the bread basket -- a pesto or a homemade olive puree.
In the midst of this discussion, we find ourselves wondering about a lot of other things that cost about $1/table and wonder where they fall on the cost/benefit spectrum.
You can also look at the little costs in terms of their aggregate impact. If all Amex transactions could be substituted by Visa, then $12,000 would drop right to the bottom line. We're looking at some $10-12,000 capital improvements right now, and if I could find that kind of money by changing one small thing in our business, then I can't help but look at it.
BTW, my working hypothesis is that most customers think similarly to GOF in terms of their card-usage preferences.
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Last edited by gsilliman; Sep 18, 2005 at 4:36 pm
Sep 18, 2005, 6:45 pm
#33
FlyerTalk Evangelist
Join Date: Feb 2002
Location: San Francisco/Tel Aviv/YYZ
Programs: CO 1K-MM
Posts: 10,762
My Amex is Sterling denominated, yet I only typically spend 20-30 days a year in the UK. Amex adds 2.75% surcharge on the currency rate for any non sterling transactions. Add that to the 3% - 4% they charge the retailer and you can see why it pays both me and the retailer if I get out my Visa card instead!!
1) AMEX's foreign exchange rates are competely uncompetitive. 3-5% range to the consumer, who knows that the merchant loses. I will never use it again overseas.
2) There are many places that take VI/MC but not AX, due to cost. Neiman Marcus ("Needless Markup") only takes Amex. I don't want or need a card that says "snob".
3) There are plenty of good restaurants that have better things to spend money on than amex's fees, like improving their food.
4) The new Platinum Class UA Visa gives double points on restaurants, and all the things that the MR/DL Amexes give. Why bother with amex anymore.
I'm ditching all but my SPG amex.
Sep 21, 2005, 5:27 pm
#34
Join Date: Apr 2005
Location: MEM
Programs: DL Plat, HH Diamond
Posts: 177
To answer your question, my employer make it very difficult (not impossible) to get reimbursed for employee and/or entertainment meals that are not on the Corp AMEX. Even to the point of wanting my $6.99 airport “lunch” on the card. That said, yes, when I am traveling on business – Corp AMEX or going elsewhere.
My business questions to you are:
1) Are you dependent on business travelers for a significant amount of your business?
If you answer Yes – then I suggest you keep accepting AMEX
2) Do you have a competitive advantage over other restaurants in your area such that your repeat business is local traffic?
If you answer Yes – then I suggest you drop AMEX as your repeat customers will understand.
One caveat from my experience with local customers, almost every white collar employee of this town’s largest employer had a Corp AMEX. If you sold food in this town (from pizza to 4 star dining), you took AMEX.
JMHO.
My business questions to you are:
1) Are you dependent on business travelers for a significant amount of your business?
If you answer Yes – then I suggest you keep accepting AMEX
2) Do you have a competitive advantage over other restaurants in your area such that your repeat business is local traffic?
If you answer Yes – then I suggest you drop AMEX as your repeat customers will understand.
One caveat from my experience with local customers, almost every white collar employee of this town’s largest employer had a Corp AMEX. If you sold food in this town (from pizza to 4 star dining), you took AMEX.
JMHO.
Sep 21, 2005, 5:53 pm
#35
Suspended
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Outside the USA and Europe, there are also lots of restaurants and retailers who would not take AMEX, Diners cards. Some even go to the extent of saying they will not take cards or that if you wnat to pay by card, they will charge you the additional card commission fees which to me seems to be double profiteering.
Included in the price is their profit margin and they want to add on card charges.
The worst thing is that very often outside of Europe and USA, in terms of shopping, you often have little shopping options. If you want that nice bag that only a certain shop sells, the shop will only take cash or at most Visa and MC, no AMEX, no Diners card, no JCB card.
In smaller asian markets like Hong Kong and Singapore, im also aware that travel agents tend to pull a card charge like 3% or 2% if you pay for your air ticket by card. Very often, when one agent does it, teh rest follows suit soon after.
I would be interested to know from an american standpoint, how one would deal with such a situation.
Included in the price is their profit margin and they want to add on card charges.
The worst thing is that very often outside of Europe and USA, in terms of shopping, you often have little shopping options. If you want that nice bag that only a certain shop sells, the shop will only take cash or at most Visa and MC, no AMEX, no Diners card, no JCB card.
In smaller asian markets like Hong Kong and Singapore, im also aware that travel agents tend to pull a card charge like 3% or 2% if you pay for your air ticket by card. Very often, when one agent does it, teh rest follows suit soon after.
I would be interested to know from an american standpoint, how one would deal with such a situation.
Sep 28, 2005, 6:51 am
#36
Join Date: Apr 2004
Location: NYC
Programs: Avis PP, Hertz 5*, HH Gold
Posts: 167
Originally Posted by Wallstreet10006
I won't not patronize a restaurant that doesn't take AMEX, but I won't become a regular at that restaurant because of it.
I eat out almost every night. AMEX is the first card out of my wallet. I am real whore when it comes to points. I am also obsessed with iDINE. Between both I have earned many, many, many points/miles. Enough to fly quite a few people to my wedding (first class) in a couple of months. In South America. Those points add up.
I ate last week at a restaurant called Les Enfants Terrible on Canal Street in NYC. Good French/African food.
ANd how did I pay? AMEX. Why? That's the ONLY card they take.
I eat out almost every night. AMEX is the first card out of my wallet. I am real whore when it comes to points. I am also obsessed with iDINE. Between both I have earned many, many, many points/miles. Enough to fly quite a few people to my wedding (first class) in a couple of months. In South America. Those points add up.
I ate last week at a restaurant called Les Enfants Terrible on Canal Street in NYC. Good French/African food.
ANd how did I pay? AMEX. Why? That's the ONLY card they take.
As for those who use Discover - there is a Restaurant version of Discover card, which gives 5% cashback for dining out (tiered though...)
Sep 28, 2005, 1:17 pm
#37
Join Date: May 2003
Posts: 6,359
Originally Posted by KevAZ
Miles? I am no mileage nut..... I don't and will not carry a card that markets to me on airline miles.
What?!?!?!?!??! 
Say it ain't so!!!!!! How can you post such blasphemy on FT? That's it, you're banned from Flyertalk for life!!! 
Sep 28, 2005, 1:49 pm
#38
Join Date: Apr 2004
Location: Alpharetta, GA
Programs: Ex-Northwest; Delta PM, Hertz Gold, Marriott Gold,
Posts: 43
My corporate card is an Amex, but I frequently eat on the run, and so if you are a MacDonalds, I will grab a chicken sandwich and and Iced Tea and pay in cash and put down $5 on my expense report. However, if I am taking 10 clients out for dinner and a few bottles of a nice Cabernet I have to use my corporate card.
So, which customer do you want to serve?
So, which customer do you want to serve?
Sep 28, 2005, 1:54 pm
#39
Join Date: Sep 2003
Location: Brooklyn, NY & Medellin, Colombia
Programs: CO Platinum, Avianca Platinum Exec
Posts: 439
Originally Posted by pjtraynor
My corporate card is an Amex, but I frequently eat on the run, and so if you are a MacDonalds, I will grab a chicken sandwich and and Iced Tea and pay in cash and put down $5 on my expense report. However, if I am taking 10 clients out for dinner and a few bottles of a nice Cabernet I have to use my corporate card.
So, which customer do you want to serve?
So, which customer do you want to serve?
Actually, I'd prefer to serve BOTH customers @ $5 and customers @ $500, which is probably why many McDonald's now take cards, including AMEX.
Sep 30, 2005, 5:27 pm
#40
Join Date: Apr 2000
Location: Palm Beach/ New England
Programs: AA EXP 3MM, DL GM, Marriott Platinum
Posts: 4,382
Originally Posted by Analise
Just make it clear which credit cards you do accept for payment.
A modern gas station -- a national chain (ARCO) -- had the best prices by about 6c per gallon at one particular highway stop. Naturally, we stopped there. There were zero signs on the pumps nor on the large signs visible from the road to convey this following peculiarity: no credit cards accepted. None. Not Amex, not Visa, none. It took some time to figure out that the automated machines would accept only debit cards and then only while extracting some per-transaction tribute from the customer.
I walked to the cashier, who stated "no credit cards, we don't need the trouble." Well, I don't need troublesome business owners who conceal unusual practices like this, and I went to the next station.
It had been 20 years since I had encountered a gas station (and this last incident was in rural Missouri in the 80s) which did not accept credit cards.
Sep 30, 2005, 5:44 pm
#41
Join Date: May 2003
Posts: 6,359
Originally Posted by fastflyer
A modern gas station -- a national chain (ARCO) -- had the best prices by about 6c per gallon at one particular highway stop. Naturally, we stopped there. There were zero signs on the pumps nor on the large signs visible from the road to convey this following peculiarity: no credit cards accepted. None. Not Amex, not Visa, none. It took some time to figure out that the automated machines would accept only debit cards and then only while extracting some per-transaction tribute from the customer.
Sep 30, 2005, 7:29 pm
#42
Join Date: Apr 2000
Location: Palm Beach/ New England
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Posts: 4,382
About twice a year, usually Seattle or San Francisco.
Do you mean to say that this is commonplace in greater L.A.?
I find it highly unbusinesslike. To advertise a price and then have a hidden twist that would/ does clearly affect many, many customers (how many people really carry that much cash, especially now with $3/gallon gas?).
Is this truly how things are going in southern California, at least with gas stations?
Do you mean to say that this is commonplace in greater L.A.?
I find it highly unbusinesslike. To advertise a price and then have a hidden twist that would/ does clearly affect many, many customers (how many people really carry that much cash, especially now with $3/gallon gas?).
Is this truly how things are going in southern California, at least with gas stations?
Sep 30, 2005, 10:26 pm
#43
Join Date: Nov 2003
Location: LAX
Programs: Ex-CO Silver
Posts: 733
Originally Posted by fastflyer
Is this truly how things are going in southern California, at least with gas stations?
Sep 30, 2005, 10:57 pm
#44
Join Date: Jun 2005
Location: TYO
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Posts: 9,632
When I lived in in London I used to eat occasionally at a sushi restaurant near my home - Sushi Hiro (near Ealing Common tube). That place did not accept any credit cards - cash only. What's more, they weren't particularly friendly. But they knew what they were doing with the sushi - and it was the only place in London that I could find such high quality at such reasonable prices.... I kept going back for the sushi.
Did it bother me that they didn't take credit cards? No.
Did it bother me that they were generally awkward and unfriendly? Yes.
Were the two related? Probably.
Did I stop eating there? Yes - but only because I moved to Tokyo.
Did it bother me that they didn't take credit cards? No.
Did it bother me that they were generally awkward and unfriendly? Yes.
Were the two related? Probably.
Did I stop eating there? Yes - but only because I moved to Tokyo.
Oct 3, 2005, 2:35 pm
#45
Join Date: Apr 2005
Posts: 397
[INDENT]
I use a personal Amex card for miles and if a restaurant didn't take it, I'd just whip out my Visa. No biggie for me.
Originally Posted by gsilliman
...I own a restaurant, and I'm not sure I'll join this bandwagon, but we did drop I-Dine in 2004, with no effect on business. Also, I don't observe that guest checks paid by Amex are any higher than checks paid by other cards. (and by the way, who are those oddballs with Discover cards?)