LETTER TO THE FEDERAL RESERVE CHAIRMAN ON THE PENNY SHORTAGE

The following information was released by the National Restaurant Association:

The Honorable Jerome Powell

Chairman

Board of Governors of the Federal Reserve

20th Street and Constitution Avenue, NW

Washington, DC 20551

Dear Chairman Powell:

On behalf of the National Restaurant Association,1

I write to share concerns about the impact the

current penny shortage is having on the nations restaurants and to request that the Federal

Reserve work with the Trump Administration and other key entities in the coin supply chain to

ensure pennies continue to circulate within the U.S. economy.

As you are aware, the Administration ordered the U.S. Mint to halt the production of the penny

in February. Starting in September, business owners in growing pockets across the country were

reporting that they were unable to order pennies. Today, most of the terminals associated with the

Federal Reserve distribution system have ceased fulfilling penny orders and deposits.

This means banks, credit unions, and the larger retail community, including small business

restaurant operators, cannot get the pennies needed to provide exact change to cash-paying

customers. This disruption is forcing restaurant operators to adopt ad hoc rounding practices

while navigating an inconsistent patchwork of state and federal laws governing payments and

financial transactions. This is creating confusion and potential legal liability.

The restaurant industry transacts more than $1 trillion in sales annually, and more than one in

four of those purchases are paid for in cash.2 When operators cant provide exact change, it

creates friction at checkout, frustrating customers. In a highly competitive industry, like

1

Founded in 1919, the National Restaurant Association (the Association) is the leading business

association for the restaurant industry, which comprises more than 1 million restaurant and foodservice

outlets and a workforce of 15.7 million employees. Together with 52 State Associations, we are a network of

professional organizations dedicated to serving every restaurant through advocacy, education, and food

safety.

2 Circana/CREST, 2023

restaurants, any change to the hospitality our customers expect could mean a lost return sale for

an operator.

A majority of restaurant operators are currently rounding down total transaction costs to the

nearest nickel when exact change isnt available out of fear of litigation. Prolonged rounding

down could cost restaurants an estimated $13-$14 million per month, or $156$168 million

annually. In an industry with low 3-5% profit margins and constantly shifting costs, rounding due

to a penny shortage will cut into operator profitability.

The Federal Reserve, the Administration and the other key entities in the coin supply chain can

help alleviate the penny shortage that is causing our immediate operational challenges by reopening the penny order and deposit system. This will help to recirculate the penny while we

work with Congress to pass the Common Cents Act to provide national rounding guidance and a

safe harbor for restaurants that need to round when exact change cannot be provided.

Even if the Federal Reserve cannot fulfill new penny orders due to the production halt, it could

continue deposit services for the billions of pennies already in circulationproviding restaurant

operators the ability to provide seamlessly interactions with their many cash-paying customers

across the country.

The Association appreciates the Federal Reserves consideration of this urgent request and is

ready to work with you to ensure that restaurant operators across the country can continue to

provide the highest level of hospitality to our cash-paying customers.

Sincerely,

Michelle Korsmo

President & CEO

National Restaurant Association

Cc: Members, Federal Reserve Board of Governors