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Current State of Payment Methods in Restaurants

Jay Bandy • March 28, 2022

Some restaurant operators opt-out of paying credit card processing fees

Since the pandemic, restaurants and other businesses have adapted to many changes throughout the years, and this includes payment methods. The most common ways of paying are through cash, credit card, or debit. However, this has changed in recent years.

The pandemic caused many restaurant and fast-food owners to think of new ways to incorporate safety measures when coming in close contact with customers. Since then, different ways of paying have changed to contactless payments, paying through crypto, and more.

Although, the trend towards cashless payment has been a growing trend due to the number of people who now have smartphones. According to Statista, approximately 67 percent of the U.S. population currently owns a smartphone. This means that more consumers are more often paying with their phones than with cash or even their physical cards. 1


Trending Payment Methods


Tapping Credit/Debit Cards

This is the most common way to pay for many people throughout the world. Now, many cards include a chip in which allows people to tap their cards on the screen of a pin pad instead of having to insert or swipe their card.

The method of tapping is quicker as well and is increasingly more popular today. By tapping a card, you do not need to enter your pin or push any buttons on the keypad.

However, some smaller businesses have been charging their consumer credit card fees as well, or some of them require their customers to spend a certain amount for them to pay with their credit cards.

Depending on the POS system the business is using, this can be the main reason these fees and restrictions exist. These are called surcharges. It is a way for businesses to have customers pay with their credit cards to cover the processing costs that will occur when accepting credit card transactions.

“By adding this additional fee to these credit card transactions, businesses are able to cover their expenses by passing them on to customers who choose credit cards as their payment method, as opposed to those who use different payment.” 2

Surcharges are legal if the restaurant mentions it to the customer. However, some states have put a ban to credit card surcharges to protect the customer.


PayPal

PayPal allows customers to pay with their smartphone or for online orders. PayPal is one of the oldest and most trusted online payment methods used worldwide. You can store several cards on PayPal and choose one that you prefer for most of your payments.

Starbucks’ mobile app allows for users to pay with PayPal instead of their Starbucks rewards card or their physical credit and debit cards. This makes it a lot easier for customers who do not always have the time to reload their card or just want a safer way of paying.


Apple Pay/Google Pay

Apple Pay and Google Pay is ever-increasing throughout the world. These two payment methods have completely changed the way of paying in recent years. Apple Pay works for iOS users. This means that they can pay through their iPhones or Apple Watches.

This is also an example of a contactless payment method. Apple currently accepts most major credit cards and banks. Apple Pay uses facial recognition, PIN, or fingerprint to identify the user using Apple Pay.

Google Pay was also known as Google Wallet. Google Pay is available for Android systems, but is also available for iOS, even if it is not commonly used amongst iOS users. Like Apple Pay, consumers can use Google Pay through their Android operated watches and smartphones.


App Payment

App payments are another example of contactless payment methods. Some restaurants have developed their own payment applications. This makes it easier for frequent customers to use because they do not need to re-enter their payment details and personal information.

Restaurants can also use app payments to start a loyalty program, as mentioned in our last blog. For example, most fast-casual and fast-food restaurants have their own app in which customers can use to order and pay.

App payments can be used in many ways. For some restaurants, it is convenient for customers to be able to open the app and the cashiers scan their bar code or QR Code to pay for their order. This increases productivity time at restaurants as well because it is quick and easy.


Pay-in-4

Pay-in-4 have been making their debut in some restaurants. Some pay-in-4 companies being used in some businesses currently are: AfterPay, Zip, Klarna, and QuadPay. Consumers can log into one of these apps and enter the amount of their purchase of the specific store or restaurant they are in. They will use their card that is on that app to make the first purchase and then their card will be charged every two weeks until the fourth payment is paid off.


What payment method should you use?

The payment method your restaurant chooses to use is based on your POS system and the demographics of your consumers. Younger generations like to use contactless payments and their own devices to pay for their orders. Older generations may still use cash or physical credit and debit cards.

However, it is important for restaurants to keep up with the changes in trends and technology. Therefore, having one of each is the best option to keep your restaurant successful and innovative amongst people in each generation.

By Jay Bandy August 24, 2025
The Phenomenon From Baby Boomers to Gen Z: A Generational Divide The current decline in alcohol consumption is not a fleeting trend but an accelerating, long-term generational shift. A Gallup poll shows that the percentage of American adults who report drinking alcohol has fallen to 54%, the lowest point in three decades. This trend is particularly pronounced among the younger generation. According to research, the share of adults under age 35 who drink has dropped by 0 percentage points, from 72% in 2001-2003 to 62% in 2021-2023. This suggests that today’s young people are the least frequent drinkers in recent decades. These changes are starkly reflected in consumer spending data. In 2021, U.S. Gen Z consumers spent just over $2.2 billion on alcohol, the lowest amount compared to all other age groups. Further reports reveal that 21.5% of Gen Z abstains from alcohol entirely, while 39% consume it only on occasion. Additionally, Gen Z consumes about one-third less beer and wine than previous generations. These figures not only validate a bar owner’s concerns but also signal that the traditional “party-hard” model is becoming obsolete. This is not a temporary fad but a lasting trend that requires a fundamental business model adjustment. Taking a Different Path: The Unexpected Impact of Economic Factors When exploring the reasons for Gen Z’s reduced drinking, a commonly overlooked factor is the economy. While many attribute the shift to changing values, a senior beverage analyst at a drinks company put it bluntly: “Gen Z ain’t got no money”. Compared to previous generations, today’s young people have lower incomes, less stable employment, and many have yet to reach the legal drinking age. Their disposable income is naturally limited. Interestingly, data indicates that Gen Z spends the same proportion of their after-tax income on alcohol as Millennials did at the same age. This suggests that Gen Z isn’t inherently averse to drinking; rather, they simply have less money to spend. For bar owners, this means the challenge isn’t just about “selling alcohol” but about convincing consumers that, within a limited budget, “going out for a drink” is a worthwhile and high-value experience. This forces businesses to reconsider their value proposition: Are they selling a beverage or an unparalleled social experience?   The Drivers Health Above All: Prioritizing Physical and Mental Well-being Gen Z’s focus on physical and mental health is at an unprecedented level. They are more aware of alcohol’s negative effects than previous generations and see it as a potential health risk. A Gallup poll found that 53% of U.S. adults now believe moderate drinking is harmful to health, a view driven primarily by young people. Two-thirds of respondents aged 8 to 34 hold this view. Crucially, mental health awareness plays a central role in this trend. While Gen Z reports higher rates of anxiety and depression, they are also more willing to seek professional psychological help. They openly discuss their sobriety journeys on social media platforms to manage their emotions and cope with stress. For this generation, alcohol is no longer a tool for “relaxing” or “de-stressing.” Instead, it can be a stumbling block to emotional stability and quality sleep. In fact, 34% of Gen Z cite mental health as a reason for abstaining, and 46% say they are “simply not interested in drinking”. Therefore, bars can no longer position themselves solely as places of “indulgence” but must adapt to consumers’ pursuit of “self-care” and “wellness.” The Digital Footprint and the Desire for “Control” The digital age has fundamentally altered the rules of socializing for young people. The ubiquity of smartphones and social media creates a constant state of digital surveillance. In 1991, 64% of U.S. high school seniors had been drunk at least once, but by 2024, that figure had dropped to just 33%, with two-thirds of the decline occurring after 2012, the year smartphones became widespread. Today, the risk of leaving a “digital footprint” after getting drunk has evolved from a social faux pas into a permanent public record that is impossible to erase. This pushes Gen Z to be more cautious in social settings and to “maintain control and avoid embarrassing moments that might be documented online”. This desire for “control” stands in stark contrast to the “indulgence: mentality of previous generations. If bars continue to promote a “binge drinking” culture, they will be out of sync with Gen Z’s core values. Instead, creating an environment that encourages safe, mindful consumption and offers curated social experiences will meet their new demands. The Shift in Socializing: From “Drinking” to “Doing” Gen Z’s social life is being redefined. They prefer to socialize at home or at friends’ houses rather than at traditional bars and nightclubs. They are actively creating “activity-centered” social patterns, such as escape rooms, rock climbing, pottery classes, or immersive art exhibitions. In addition, “wellness-focused gatherings,” such as yoga classes and “sober raves,” are increasingly popular among Gen Z. These activities all provide an interactive environment for people to connect without relying on alcohol. The bar’s status as a social venue is facing unprecedented competition. It is no longer the only “place to go” and must now compete with a wide range of engaging activities. Successful bars need to transform their space from a simple drinking spot into a social hub that offers unique, non-alcohol-centric experiences. The business model must shift from selling beverages to selling a curated social experience. The Unexpected Impact of Demographics A subtle, but often overlooked, factor is a fundamental demographic shift. Traditionally, men, especially white men, have been the main drivers of alcohol consumption volume. However, their share of the drinking population is declining, being replaced by women and people of color—two groups that have historically consumed less alcohol. Today, women make up most alcohol consumers under the age of 25, and their average consumption is only half that of men. Furthermore, Gen Z is the most racially and ethnically diverse generation in U.S. history. This indicates that even if individual drinking habits within each demographic group remain unchanged, overall, per-capita alcohol consumption is bound to decline due to these population shifts. This is a structural, permanent challenge, not just a change in consumer sentiment. Key Drivers of the Sober Shift Health & Wellness Awareness of negative health effects; connection to anxiety and depression; viewing sobriety as a form of self-care. Economic Factors Lower disposable income; price sensitivity; a desire to save money. Digital Culture Fear of a permanent digital footprint; desire to maintain control; normalization of sober culture on social media. Social Norms & Demographics Shift to activity-centered socializing; rise of non-alcohol-centric events; a demographic shift towards groups who historically drink less (women, people of color).   The Strategy Rethinking the Product: Embracing the “No & Low” Menu Gen Z’s beverage choices reflect their preference for novel flavors and convenience. Studies show that spirits and Ready-to-Drink (RTD) products are the most popular categories among Gen Z, while traditional wine and beer have a mixed outlook. More than half of Gen Z drinkers “often or sometimes” choose non-alcoholic beers, mocktails, or low-ABV cocktails when socializing. Non-alcoholic beers like Heineken 0.0 and Guinness 0.0 are even considered “trendy” brands by Gen Z. Therefore, a bar’s inventory model must expand beyond traditional alcoholic beverages. Bars should position themselves as “beverage destinations,” not merely “alcohol providers.” Specific suggestions include: • Develop a premium mocktail program: Offer complex and visually appealing non-alcoholic cocktails to satisfy Gen Z’s desire for flavor exploration. • Curate a selection of non-alcoholic and low-ABV options: Create a diverse menu of non-alcoholic beers, spirits, and low-alcohol beverages. Highlight “better-for-you” qualities such as natural ingredients, organic fermentation, or functional ingredients like vitamins and adaptogens. By making non-alcoholic beverages a premium, core product line, a bar can directly meet Gen Z’s demand for health, self-care, and flavor innovation. Redefining the Venue: From “Intoxication” to “Experience” The shift in Gen Z’s social patterns requires bars to reimagine their reason for existence. If a bar is just a place for “drinking,” it will be unable to compete with at-home gatherings and new types of event venues. A bar must transform itself from a simple drinking spot into a place that offers a unique social experience. • Host activity-based social events: Organize regular weekly or monthly events centered around activities, such as trivia nights, board game nights, live music performances, or mixology workshops. • Cultivate a “third space” atmosphere: Create an environment that prioritizes community and genuine human connection. Make people feel comfortable and safe, whether they are drinking or not. This atmosphere provides a unique social experience that cannot be replicated at home, offering consumers a valuable reason to go out. Marketing Strategies for the Modern Drinker Traditional top-down advertising is largely ineffective for Gen Z, a generation of digital natives. They place greater trust in recommendations from friends, family, and relevant influencers. Successful marketing must be a two-way conversation that builds an authentic community around the brand. • Embrace a digital-first strategy: Invest heavily in social media platforms like TikTok, Instagram Reels, and YouTube. Produce short, shareable video content, such as 5-second cocktail recipes or fun behind-the-scenes clips. • Collaborate with micro-influencers: Partner with micro-influencers who have authentic niches in areas like mixology, wellness coaching, or food. • Encourage user-generated content (UGC): Create branded hashtags, filters, or remixable music to inspire users to post original content related to the brand. Use an authentic, creative, and inclusive tone, focusing on celebrating human connection and mindful drinking, and avoid outdated “party-hard” or “macho” imagery. The goal of a bar’s marketing should not be to convince Gen Z to drink but to show how the bar’s beverages and atmosphere can enhance the lifestyle they seek—one focused on health, fun, and authentic connection. Gen Z’s Preferred Drink Categories (Alcoholic and Non-Alcoholic) Preferred Categories Spirits (especially white spirits like tequila and flavored vodka), Ready-to-Drink (RTD) canned cocktails, hard seltzers, mocktails, non-alcoholic beers (e.g., Heineken 0.0), adaptogen-infused spritzers. Flavor variety, convenience, health consciousness, self-care, suits at-home socializing. Mixed or Declining Categories Traditional beer, red wine, heavy spirits. Lower consumption among women and people of color; does not align with “health” or “control” narratives; considered less novel in taste than spirits and RTDs. Goliath Consulting Group is a restaurant consultancy group based in Atlanta, Georgia. To learn more about our services including menu development, business strategy, marketing, and restaurant operations, contact us at http://www.goliathconsulting.com or email us at getresults@goliathconsulting.com
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