The End of the Penny: A Ripple Through Restaurants, C-Stores, and Grocery Stores

 

When the United States officially retired from minting the penny in early 2025, few consumers initially adjusted their behavior; most saw it as a minor rounding change at checkout. But behind the scenes, restaurants, convenience stores, and grocery retailers faced complex operational and strategic shifts that revealed deeper truths about pricing psychology, cost control, and state-level regulatory friction.

Restaurants: Pricing, Perception, and Profit

For restaurants — particularly independent and small chains — the penny’s disappearance was more than symbolic. Dining prices have long been anchored to psychological pricing (e.g., $19.99), and rounding disrupted customer expectations and internal systems.

Example 1: Local Bistros Adjusting Price Points
In Portland, Oregon, a cluster of neighborhood bistros faced customer pushback when menus shifted from $12.99 to $13.00. Patrons complained the rounding “felt like a price increase,” even though actual totals rarely changed. Restaurateurs had to retrain staff to explain rounding and update digital menus across systems.

Example 2: Fine Dining and Paperless Checks in Chicago
A fine dining group in Chicago leveraged the transition to eliminate paper checks entirely. With rounding applied at digital checkout, they provided automatic rounding explanations on customer receipts, framing the change as eco-friendly and efficient. This improved customer understanding and sped table turnover.

Example 3: Fast Casual Chains Updating POS and Loyalty
A mid-sized fast casual chain based in Atlanta redesigned its POS to bundle items into price “tiers” (e.g., combo meals at round dollar points). Loyalty programs were recalibrated to avoid fractional point values. While the technical upgrade cost was non-trivial, marketing campaigns that explained the rationale preempted customer confusion.

C-Stores: Speed, Rounding, and Item Mix

Convenience stores run on thin margins and speed of transaction. The penny’s end forced recalibrations in how prices were displayed and rounded across hundreds of small ticket items.

Example 1: Gas Station Mini-Mart Pricing Chaos
In Phoenix, a regional gas station chain with attached mini-marts struggled to decide whether to round to the nearest nickel or dollar. Some customers expressed frustration at seeing fuel prices like $3.14 and then rounded grocery totals of $3.15, creating perceived inconsistencies between fuel and in-store rounding.

Example 2: Impulse Buy Pricing in New York Suburban C-Stores
A C-store operator near Albany used rounding as an opportunity to reprice impulse buys (candy bars, snacks) to round numbers that better supported promotional “buy two, pay X” deals. The result was fewer stuck pennies in the cash box and clearer value propositions for customers.

Example 3: Automated Checkout in Houston Market
A Houston C-store chain accelerated its rollout of automated self-checkout lanes, integrating rounding logic that applied at the basket level rather than item by item. This reduced transactional friction but required new signage and staff training to maintain customer confidence in fairness.

Grocery Stores: Scales, Bulk Pricing, and Promotions

For grocery retailers, the complexity of weighed goods and layered promotions made rounding decisions operationally challenging.

Example 1: Produce Scales in Seattle
A grocery chain in Seattle found that rounding at the scale level created distortions. A bag of apples that weighed out at $7.98 would round one way, while a slightly heavier bag might round up. To maintain fairness, the chain shifted rounding to the total transaction level, which required POS software updates.

Example 2: Dollar-Based Loss Leaders in Miami
In Miami, a grocery cooperative used penny-priced loss leaders to drive foot traffic — literally offering a “99 cent” special per package. With the penny gone, the pricing became $1.00, diluting the promotional psychology. They doubled down on volume savings (e.g., “5 for $5”) to preserve value perception.

Example 3: Digital Carts and E-Receipts in Minneapolis
One Minneapolis grocery innovator integrated rounding logic into its app and e-receipts, allowing customers to see projected totals before rounding. Those who prepaid through the app appreciated the transparency; older customers still shopping in store needed staff assistance to understand the rounding mechanics.

 

Three U.S. States Where the Transition Has Been More Difficult

While national guidelines recommended transaction-level rounding to the nearest five cents, three states have complicated compliance through regulatory or tax structures that conflict with simple rounding:

1.       Pennsylvania — Retail Sales Tax Precision Requirements
Pennsylvania’s tax code historically required retailers to calculate sales tax to the exact cent. Without legislative updates, grocery and restaurant POS systems struggled to reconcile state tax law with rounding logic, forcing temporary manual overrides.

2.       Massachusetts — Itemized Price Posting Regulations
Massachusetts continues to enforce itemized price posting on receipts, down to the penny. With rounding only at the total, retailers had to adjust systems to display per-item prices that might not mathematically sum to the reported rounded total, creating confusion for auditors and customers alike.

3.       California — Localized Municipal Fees
California’s layered structure of state, county, and city fees — including recycling, sanitation, and public health surcharges — often produces fractional cent totals before rounding. This has forced grocery and restaurant chains to adopt uneven rounding policies across locations to remain compliant with each municipality’s reporting requirements.

 

Three Insights from the Grocerant Guru®

Drawing from field observations and executive consultations, the Grocerant Guru® offers these strategic takeaways:

1. Communicate Transparently and Early
Customers tolerate rounding when they understand it. Signage, receipt explanations, and staff training that proactively address why totals now end in 0 or 5 build trust and reduce friction.

2. Centralize Rounding at the Transaction Level
Operationally, it is more efficient — and fairer — to apply rounding after the total (including tax) rather than on individual items. This approach minimizes rounding distortion and simplifies accounting.

3. Use Technology as an Enabler, Not an Afterthought
Retailers who invested in POS and scale software upgrades before the end of the penny found the transition smoother. Those who treated rounding as a compliance afterthought faced greater customer confusion and internal cost pressure.

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