Restaurant chain skips switch to EMV despite fraud liability

Despite the warnings, benefits, and impending shift of credit card liability to companies that are not EMV compliant, restaurant chain Garden Fresh has no intention of making the change to the chip-card technology. Instead, the chain is waiting until mobile payment systems become more prevalent.

Garden Fresh, which has 128 restaurants in 15 states under the Souplantation and Sweet Tomatoes banners, has no plans to transition to EMV, Eric Rosenzweig, CIO, told

In October, companies that have not invested and implemented EMV point-of-sale equipment and systems will risk bearing the liability for credit or debit card fraud, unless the card issuer in question is less prepared. This could be a big problem for businesses with a high-ticket clientele, especially smaller companies, but this is not common among most restaurant operators.

"We haven't (updated for EMV). And, in the restaurant industry in general, the motivation has been lacking to do that update," Rosenzweig said.

"While the shift of liability is coming in October for those of us in the restaurant business, we have a very low chargeback and fraud rate we've seen over the years. That shift in liability does not mean that much to us. To make an investment in refreshing tons of terminals, we have to be pretty sure it is something that is going to work, improve business and continue to work for a very long time," he said

The other benefits of EMV do not present enough of a business case, according to Rosenweig. And then there are the possible operational challenges EMV presents, such as new ways of using cards at the checkout—the card stays in the terminal while the transaction is conducted, and removed afterward.

"We have 1,000 or more guests per day in our locations, and from our standpoint, it is all about efficiency. That cashier is one of the only places where the consumer interacts with a staff member in our restaurant. It has to be as simple an interaction as possible," he said.

"Mag stripe works well for that now. We don't want to get caught with a cashier having to figure out what is happening. Slower is a problem for us. We can't have a transaction go from 15 seconds to two minutes." The new EMV cards will continue to have mag stripes.

Garden Fresh has not permanently ruled out EMV for its restaurants. They may eventually become EMV compliant, but only if EMV comes as a secondary feature to the products they are interested in.

"For us, the bigger thing is mobile payments—the Apple Payments or Google Payments—for us, it's about having a multi-use terminal for payments because we really want a whole platform to grow with us as the industry grows," Rosenzweig said.

So there's no rush to adoption from their end because Garden Fresh's restaurant business is all about doing it right. "For us to replace more than 450 terminals out there is a pretty expensive endeavor," he said. "It is like anything else in our business, if we can't do it right, we don't want to do it at all."

Meanwhile, the company has other plans for new mobile technologies. It is looking at loyalty and how it can create a mobile experience users will find worthwhile. For example, there is "line busting, when consumers can order ahead and pay ahead so they can just come in and grab food. Our concept is tough to do, because consumers build their salad before they get to our cash wrap," Rosenzweig said.

The biggest challenge the restaurant chain faces in mobile is finding the right combination of features to make it appealing to users. "Why would someone have a Garden Fresh app? If we can't provide something of value, it is going to be really challenging," Rosenzweig said.

It comes down to a pragmatic approach to payments, mobile, loyalty and all other aspects of its business. Garden Fresh has digital relationships with its customers, but they are now folded under the company's email-based membership program, which sends updates and offers on a weekly basis to about 2 million people.

This program has been successful, so when the company thinks about building mobile loyalty programs, it is considering using mobile as an extension of, and an improvement on, an older, but functioning process, Rosenzweig said.

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