Nickel and dimed? Kansas City area stores to run low on quarters due to COVID-19
Add coins to the growing list of shortages caused by the coronavirus.
Kansas City area retailers are being told by their banks that the Federal Reserve is rationing the distribution of quarters, and businesses will receive only a small portion of their weekly orders.
That’s a huge issue for retailers, especially ones like Balls Foods Inc. of Kansas City, Kansas, which operates 26 grocery stores in the Kansas City area under the Price Chopper, Hen House, Sun Fresh and Payless Discount Food names.
“It was actually a shock,” said Mike Beal, chief financial officer for Balls Foods. “You don’t expect to get an email saying the government has run out of coin or that there’s a very low inventory.”
He’s never seen that issue before and it left him wondering what they do.
“It puts a pretty big crimp in your business,” Beal said.
The company buys an average of $17,000 in quarters a week. With the rationing, it will be limited to only $480 in quarters, he said.
That’s less than 3% of its average.
As a result, shoppers might see clerks handing them back more dimes and nickels with their change.
“People generally don’t like to have a whole bunch of change rattling around,” Beal said. The smaller number of coins they have in their pocket is generally better for them.”
The Federal Reserve earlier this week warned banks that it would start rationing coins to address the coin supply chain problems. Beal said his company won’t feel the effect until next week.
“I don’t know what businesses do when they can’t get money to give people back their change,” Beal said.
In a hearing before the U.S. House Financial Services Committee on Wednesday, Federal Reserve Chairman Jerome Powell told lawmakers that the shortage was caused by the circulation of coins grinding to a halt during the coronavirus outbreak.
“What’s happened is, with the partial closure of the economy, the flow of coins through the economy has . . . kind of stopped. The places where you’d go to give your coins and get credit and get cash — you know, folding money — those have not been working,” Powell said. “Stores have been closed. So a whole system of flow has kind come to a stop.”
Powell said they were working with the U.S. Mint and the reserve banks to address the issue. As the economy reopens, the circulation of coins is beginning to move around again, he said.
At the same time the circulation of coins halted, the U.S. Mint’s coin production also fell because of measures put in place to protect employees.
Meanwhile, coin orders have begun to increase as regions of the country reopen, contributing to the reduced coin inventory.
Beal said he can’t help but feel that the U.S. government has fallen short in its responsibilities.
“They can order meat processing plants to produce and they don’t own them — the government,” Beal said. “They are responsible for producing coins. Why in the hell they drop the ball on that?”
Retail business are the ones who will be impacted the most by the shortage, Beal said.
“We have a few options, but none of them are really great,” Beal said. “But they’re better than . . . just giving back our customers dimes and nickels.”
Pennies are expected to be the next affected by the coin shortage, Beal said, but he fears there will be a run on dimes and nickels before too long because of the quarter shortage.
For the time being, the stores conserving any coins they have and won’t be selling them to customers looking for coins for the car wash or laundry.
The company will also see if it can buy quarters from coin exchange businesses.
Another option is just using dimes and nickels for change.
“We can do business, but it’s a major, major inconvenience,” Beal said.
Customers with a lot of coins in their cars, piggy banks, coffee cans or just lying around, now would be a good time to cash them in, Beal said.
This story was originally published June 18, 2020 at 2:05 PM.
