Restaurant Social Media
David & Goliath / FohBoh & AMX - Do we have the will and support?
Are we willing to use our community to its fullest potential especially when the subject matter is a FohBoh advertiser?
When I first joined FohBoh back in 2008 I was incredibly excited with the idea of a world wide communication platform for the restaurant community which would allow for effective, cost free communication for individuals and business to discuss a multitude of subjects about the industry as well as the ability to organize large groups to institute constructive change. Unfortunately, my interest soon waned after as the Economy forced my attention to be spent in restaurant operations and my time spent on FohBoh dropped to zero. A meeting with the regional representatives yesterday from American Express (AMX) has reignited my interest and reminded me of the reasons I joined FohBoh in the first place.
Apparently AMX corporate has decided the best way to combat their 17% loss in revenue last year is to penalize the restaurant industry by targeting its high volume credit card use with an additional $.05 cent per transaction fee for ever AMX purchase to begin in April 2010. AMX has always been the most expensive card out there, charging a full percentage point higher than Visa/MC and now they want to add additional transaction fees, in this economy? Worse yet, everyone already pays third party credit card processing vendors some kind of per transaction fee for AMX, why in the world would we want to do it again with AMX? But what really fries my bacon is knowing that this fee will continue on long after the recession ends and become another permanent chunk taken from an already small bottom line.
In my opinion AMX’s new strategy is completely void of common sense. The past year and a half has been difficult for everyone and many of us have had to make some very difficult cost cutting decisions to stay in business, not the least of which was reducing staffing levels and/or salaries. Revenues have been down across all industries in all sectors and personal incomes have been stagnate, lowered or even worse, eliminated. So seriously, what the heck is AMX thinking?
How many of you out there actually believe the solution to lost sales in a record setting recession is to raise prices? What restaurateur would ever look their guest in the eye and say sorry, but because we incurred a 17% drop in sales last year we are now going to add an additional charge to your bill every time you dine with us to can recover that loss (oh and by the way its permanent)? And if you did, how many people would be pissed off enough that they wouldn’t come back even if it was just for principle alone?
AMX is making a calculated but fairly safe bet that our industry does not have the will or organization to stop taking their cards or at least not to the extent that it forces them to change policy. They may be right. American Express is huge and its scary to think about messing with someone that represents roughly 20% of the payment methods used by our guest. But I have to wonder, if lots of restaurants stop accepting AMX wouldn’t most guests just use their Visa, Master Card or Discover?
Like Goliath, AMX thinks they are invincible but there is a little David out there named FohBoh. Its members are not armed with sling shots but they do wield something potentially far more powerful and that is their ability to communicate and to organize large numbers of people to force change in their favor.
The questions needing answers are:
As members of this community are we willing to come together to effect positive changes for the issues that concern our industry and are the providers of FohBoh willing to back its members when the change needed concerns a current advertiser?
If the answers to these questions are yes, this could be just the beginning – landlords and lease rates anyone?
When I first joined FohBoh back in 2008 I was incredibly excited with the idea of a world wide communication platform for the restaurant community which would allow for effective, cost free communication for individuals and business to discuss a multitude of subjects about the industry as well as the ability to organize large groups to institute constructive change. Unfortunately, my interest soon waned after as the Economy forced my attention to be spent in restaurant operations and my time spent on FohBoh dropped to zero. A meeting with the regional representatives yesterday from American Express (AMX) has reignited my interest and reminded me of the reasons I joined FohBoh in the first place.
Apparently AMX corporate has decided the best way to combat their 17% loss in revenue last year is to penalize the restaurant industry by targeting its high volume credit card use with an additional $.05 cent per transaction fee for ever AMX purchase to begin in April 2010. AMX has always been the most expensive card out there, charging a full percentage point higher than Visa/MC and now they want to add additional transaction fees, in this economy? Worse yet, everyone already pays third party credit card processing vendors some kind of per transaction fee for AMX, why in the world would we want to do it again with AMX? But what really fries my bacon is knowing that this fee will continue on long after the recession ends and become another permanent chunk taken from an already small bottom line.
In my opinion AMX’s new strategy is completely void of common sense. The past year and a half has been difficult for everyone and many of us have had to make some very difficult cost cutting decisions to stay in business, not the least of which was reducing staffing levels and/or salaries. Revenues have been down across all industries in all sectors and personal incomes have been stagnate, lowered or even worse, eliminated. So seriously, what the heck is AMX thinking?
How many of you out there actually believe the solution to lost sales in a record setting recession is to raise prices? What restaurateur would ever look their guest in the eye and say sorry, but because we incurred a 17% drop in sales last year we are now going to add an additional charge to your bill every time you dine with us to can recover that loss (oh and by the way its permanent)? And if you did, how many people would be pissed off enough that they wouldn’t come back even if it was just for principle alone?
AMX is making a calculated but fairly safe bet that our industry does not have the will or organization to stop taking their cards or at least not to the extent that it forces them to change policy. They may be right. American Express is huge and its scary to think about messing with someone that represents roughly 20% of the payment methods used by our guest. But I have to wonder, if lots of restaurants stop accepting AMX wouldn’t most guests just use their Visa, Master Card or Discover?
Like Goliath, AMX thinks they are invincible but there is a little David out there named FohBoh. Its members are not armed with sling shots but they do wield something potentially far more powerful and that is their ability to communicate and to organize large numbers of people to force change in their favor.
The questions needing answers are:
As members of this community are we willing to come together to effect positive changes for the issues that concern our industry and are the providers of FohBoh willing to back its members when the change needed concerns a current advertiser?
If the answers to these questions are yes, this could be just the beginning – landlords and lease rates anyone?
Replies to This Discussion
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Permalink Reply by FohBoh on -
Thank you for this spirited post. Credit card companys and banks are indeed affecting consumers as well as busineses theses days. FohBoh is a small buiness and we are affected too. American Express ads are provided by one of our third-party advertisers, and we have not solicited them directly, to run ads on FohBoh. They are incerted like Google ads. From time to time I see a Google inserted ad that isn't relevant to the foodservice industry. But, they have control on that until we effect a change. If members from FohBoh are unified against an advertiser and the community feels that the advertiser is harming the industry or its operators, you bet. We will remove these ads. It's your community. We are here to support you.
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Permalink Reply by Paul Green on -
I remember when signs appeared at restaurant entrances many years ago bearing the AMEX logo inside a red circle with a diagonal red slash in response to rate increases.
The push is on to eliminate cash transactions, and cash-in on plastic and electronic payments. It is still in the Beta stage, but the technology is there enabling payment via cell phone.
Convenience, however, doesn't come cheap. We may be forced to travel this road as it's rare to find anyone carrying much cash these days. Offering a discount for cash payments probably is a non-starter.
Interestingly, Wal-Mart, with it's make-a-little-on-a-lot-of-purchases approach may provide an alternative, in time.
An article by Liz Pulliam Weston, writing for MSN money offered this:
"Wal-Mart's relentless push for ever-lower prices has revolutionized retailing and is sometimes even credited for helping to keep U.S. inflation low. It's not hard to make the leap into imagining the retailer bringing similar price discipline to an industry grown fat on escalating rates and fees. (Fee income now comprises half of banks' total income, according to investment banker R.K. Hammer.)"
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