Boston-area restaurants come together to negotiate lower credit card costs

It can be challenging enough for local restaurants to stay in the black under normal circumstances. Add in the strains of a prolonged economic downturn, technology expenses, and rising food costs, and the prospect of opening and sustaining a profitable restaurant grows less and less unlikely, even in a foodie city like Boston. To remain competitive, restaurant owners need to manage the seemingly smallest costs, including credit card processing fees. However, independent businesses have limited buying power, especially with credit card companies, since they often don’t have large enough volume for the much more favorable rates offered to chain restaurants. These fees can range from 2 to 4 percent for local restaurants—all directly off their bottom lines.

To help, Phoodeez, a local company reinventing catering to make event eating easy, recently announced a partnership with First Data Corporation, the global leader in electronic commerce and payment processing, to offer restaurants deep reductions on credit and debit card transactions. The deal extends First Data’s merchant services and other suite of payment system products to all the restaurants in the Phoodeez Network – which feature some of Boston’s best – as well as to other local restaurants that wish to leverage the cost savings that come with group buying power.

The partnership is the first in the Boston area to extend lower, group-based credit card processing rates to restaurants.  Participating restaurants will get the guaranteed lowest payment processing rates on MasterCard, Visa and Discover cards, as well as potential deep discounts on American Express card processing fees. The partnership also gives restaurants access to First Data Merchant Services, which include payment card security with encryption and tokenization, electronic check acceptance, gift card solutions and card-linked offer enablement.

“Joining the Phoodeez Network has led to a 15 percent bump in catering revenue, and we’re also seeing a significant savings on expenses like credit card processing,” said Eric Quadrino, owner at Mexicali Burrito Company in Cambridge’s Kendall Square. “Phoodeez’s economy of scale allowed Mexicali to negotiate waivers and reductions on many initial and annual account fees. With the increased business and the decreased expenses, we’ve been able to expand our hours and our staff to serve a growing customer base.”

 Restaurants that opt in receive:

• Money-saving price structure for all credit and debit card transactions;
• Easy implementation and training;
• One convenient statement that incorporates all card transactions;
• Online reporting and 24/7 telephone customer support; and
• The speed, security and affordability that comes with First Data products.

High-quality restaurants need to be creative to increase their profit margins and compete against larger players in the catering market. One of the best ways to do that is through careful, targeted cost-saving measures, such as teaming up with others in the market to negotiate lower rates on recurring costs like credit card transaction fees.