Dear Helena,

I was at a small but chic restaurant recently, taking four friends out to dinner. There was no sign on the door or menu saying that the restaurant was cash only, and I didn’t have any cash on me. There was no ATM in the restaurant, and the nearest one was a block away in the fog. I only found out about the cash situation when I overheard another diner commenting on it. I feel the restaurant should have advertised the fact that it was cash only loud and clear, considering it wasn’t the type of place you’d expect to be cash only. What’s the restaurant’s responsibility? —Empty Pockets

Dear Empty Pockets,

Cash-only restaurants can be annoying, as discussed on this Chowhound thread. But accepting credit cards is a hassle for the restaurant—more so than many people realize. The restaurant must buy or rent a credit card terminal and pay a third-party company to process the payments. It also forks over a percentage of sales to the credit card company (this varies depending on the size of the business but is usually between 2 and 4 percent, according to restaurant owners I interviewed). Small businesses don’t have the clout to negotiate over these charges, which is why the National Restaurant Association is supporting the Credit Card Fair Fee Act of 2009, a bill that would allow restaurants to negotiate with credit card companies as a group.

Some Chowhounds argue that the real reason restaurateurs choose to be cash only is so they can underreport their income to the IRS. True, it’s easier to hide income if you’re paid in cash. But, as John Parsons, daytime manager of cash-only Aurora in Brooklyn, points out, such businesses also attract extra scrutiny from the IRS, so it pays to be scrupulous about keeping records.

Whatever its reasons, if a restaurant is cash only, it should indicate this clearly: in the window, on the menu, and when the server introduces himself. It doesn’t hurt, says Parsons, to remind customers at the time they make a reservation. Granted, a “CASH ONLY” sign in the window doesn’t create a very welcoming impression. “It’s off-putting,” says Gary Koenigsberg, general manager of cash-only Angelica Kitchen in New York. But the sign doesn’t have to be in letters a foot high. And it’s surely better to compromise the ambiance than risk losing a customer because he’s discovered Visa is unwelcome. According to Jack Murphy, owner of San Francisco’s Pizzetta 211, a customer walks out in a huff over the issue about once a month.

What if you’re caught out sans cash or ATM card? Then, says Koenigsburg, the restaurant has no choice but to accept your promise to return with cash (or to mail a check). It can hardly demand your iPod or watch as collateral.

To avoid being stuck, it may help to know when to expect a place might be cash only. Obviously, the policy isn’t unique to holes in the wall. If the restaurant is a neighborhood place that doesn’t serve a lot of businesspeople, it’s more likely that it will be cash only. Any restaurant with a strong business clientele can’t afford to reject plastic, Parsons explains. “People are taking clients out to entertain and want to put it on their credit cards so they can write it off.”

If a place is ultrapopular it’s more likely to be cash only, simply because it can get away with it. Murphy can afford to do so because many hold his pizza to be some of the best in San Francisco.

But even the most well-loved and venerable eatery will suffer if the average check is over $25. Case in point: Gino’s in Brooklyn. The average per-head at this popular red-sauce joint is $60. For the first 64 years of its existence, the restaurant survived without accepting plastic, but owner Michael Miele says, “A lot of younger people didn’t want to pay cash, and I didn’t want to lose customers.” Gino’s recently caved in. No matter how good the spaghetti, people nowadays don’t want to carry wads of cash in their back pockets.

CHOW’s Table Manners column appears every Wednesday. Have a Table Manners question? Email Helena.

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