Friday, November 19, 2010

Why “Cash Only”?

Authentic Chinese restaurants around Vancouver often only accept cash, which would seem like an economically unsound practice in our credit-card-centric world. This is such a prevalent practice in Vancouver that I would often judge the authenticity of an unfamiliar Chinese restaurant its “cash-only” sign. (Well, also the “No-MSG” sign would indicate an inauthentic Chinese restaurant)

So why would these restaurants go out of the way to inconvenience their customers? Why does it seem like a common practice amongst authentic Chinese restaurants?

The Cuisine
Unlike Western cuisine where chefs are encouraged to create new and beautiful dishes, Chinese cuisine is rather rigid, and each dish has an idealistic and specific taste and texture. Customers expect the same Kong Bao Chicken from restaurant to restaurant. If one restaurant prepares the dishes better and closer to the expected ideal, the customers will go to that restaurant next time. With an universal and standard taste for the cuisine, it also becomes easy to determine which restaurants have the better value. In addition, unaware or unappreciative of Vancouver’s tipping culture, Chinese customers usually do not tip or tip very poorly.

As a result, Chinese restaurants have to compete with each other like fast food burger joints. They have a very small profit margin compares to Western restaurants, and they must find creative ways to cut cost.

Transaction Costs
The highest are credit cards, which charge vendors a couple percentage for using it. Debit machines also charge a fixed amount each month and as well as per transaction.

Tax 'Benefits'
One of the benefit of cash transaction is that restaurants do not necessarily have to declare this income. It is dishonest and illegal, but there are no paper trail. Restaurants not only can lie about the income, but also pocket the sales tax they charge their customers. This is probably super racist: my fellow countrymen view tax evasion with a sense of pride and entitlement.

Labour Laws
Then restaurants decided to pay their staff ‘under the table’ by cash. . Restaurants do not have to pay tax nor spend money of employee benefits by hiring mostly young people with language barrier and borderline indentured workers with or without proper working visa from China. They can also force workers to work overtime without having to compensate them properly. A woman I knew worked 90 hours a week being paid 8 dollars per hour, cash - business as usual, it seems.

Does it really mean ALL Chinese restaurants that only accept cash do all these unethical or illegal things? 99% Yes.  Fortunately, the head of Canadian Tax Revenue Agency is a Chinese guy, and he is doing very well cracking down on these practices.  Hopefully, we will see labour improvements in the near future.  For now, you must judge for yourself if these issues matter to you when you choose restaurants.

4 comments:

  1. Interesting thoughts; however, I do have a counter question: what is the problem behind cash only businesses? To quote yourself, we live in a card-centric societey but, last time I checked, the only legal tender is cash. Restaurants accepting plastic do so on the basis of convenience to the customer, not because it is required. Interestingly, a lot of new restaurants do not necessarily accept plastic either (or at least "not yet"). For example, Meat and Bread nor Sea Monstr Sushi accepts plastic.

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  2. No, there is nothing wrong with cash only business. People are free to do whatever they want with their business. I am simply explaining a common practice amongst Chinese restaurants behind their "Cash Only" signs. I do not infer that ALL business that accept cash participate in illegal activity. For example, "Meat and Bread" nor "Sea Monster Sushi" fit within the description of the restaurants I have described.

    Thanks for the clarification though!

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  3. Well, here is my thought on the other side of the fence.
    My family owns a very small chinese restaurant, and we usually only hire one cook. often times they are in the process of getting their green card.So they are legal. We pay them 3000 a month in cash. Yes, they work hard, usually 8-9 hours a day with only Sunday or half a day on Sat and Sun off.

    But you have to look at it this way. What other job can someone find with no english skills, no expert skills, no trade skills and that earns 36,000 + annually with food and housing usually covered?

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  4. I completely understand where you are coming from. I had worked closely with people with no English and/or trade skill with large family to support. I also understand that when there is a demand for cheap labour, there will be a supply for cheap labour. Nothing I can do about it nor can I condemn people who participate.

    However, there are forms of legitimate methods of employment that allows workers to work overtime without having to pay them extra. If the workers are employed and paid legitimately, they receive protection from the laws which protect them from further exploitation and injury. For example, I know a woman who worked at a bakeshop without legitimate employment, she slipped at work and injured her back. Without employment compensation, her and her two children were left without income.

    While I can't change how businesses operate or condemn its business practice. However, I can educate the consumers and bring this social problem to light. If people choose to pay significantly more at restaurants that employee workers legitimately and avoid restaurants that don't, I am sure your family would have no qualm changing the employment policy. In this case, it would then be a win-win situation for everyone.

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