05 Oct The Penny Problem
One of my favorite restaurants encountered some bad press recently when it was discovered that some of their high-volume locations were rounding their bills to the nearest nickel.
“Chipotle Caught Cheating Customers Out of Pennies,” blared the headline in the Huffington Post. Most other news outlets similarly told the story in sensational terms, using verbs like “bamboozling” and “stealing.”
I don’t think anyone would argue that it was a public relations blunder for Chipotle to enact a policy of this nature without foreseeing the hysterical reaction that would result. Just the same, my own personal reaction to the story is that I am even fonder of this restaurant than I was before. I can’t help but admire these folks for at least attempting to do something constructive about the “penny problem.”
A long time ago, pennies had buying power. When my dad was growing up, the median household income was $12,000. There were still a few things a penny would buy then. But there has never been a time in my lifetime where you could actually use a penny to buy anything. They are a nuisance that cost more to mint than they are worth. Really! You can’t even buy a penny with a penny!
There are those who fear that eliminating the smallest denominations of currency will only give rise to more inflation. That to me is no different than the guy who still buys 32-inch waist underwear because he refuses to admit to himself that his dimensions have changed over time. “If I buy size 38”, he reasons, “then I have accepted the fact that I have grown fat.” His increasing discomfort does nothing to change his physique, and the only impact his policy produces is that friends and family learn to keep their distance every time he has a new pair of underwear to break in!
Canada, whose pennies are worth even less than ours, recently passed a law to remove them from circulation. Following this decision, there was such a hue and cry from merchants who needed more time to change over to a penny-free marketplace that they extended the deadline until after the holiday season. The last Canadian penny to be minted was produced in May.
What U.S. lawmakers are too timid to do may eventually be rendered moot by the increasing transition toward a plastic economy. If everything gets paid for with a swipe, it’s not just pennies, but dimes, quarters and twenty-dollar bills that will soon become endangered species.
Chipotle pointed out that they were rounding down about as often as they were rounding up with no net impact on their profits when the “scandal” was first publicized. As a result of the negative publicity this move has created, they announced they were only going to be rounding down in the future.
For what it’s worth, Chipotle, you can round me up or down and I would thank you for it!