Paybacks are Swell

 
May 8, 2002

So you took the plunge and bought a high-tech point-of-sale system for your pizzeria.

Nice, isn't it? Cool graphics, simple-to-use touch screen, able to generate financial reports faster than an Enron accountant can shred them.

The owner's manual says it'll do even more than that, and the salesperson demonstrated it will.

What's that? You haven't gotten past the table of contents? Your hot-rod, high-priced tech toy hasn't become the marketing machine of your dreams?

You're not alone, say POS manufacturers. While a lot of operators do invest in good POS systems, not all of them fully maximize its abilities.

Once they've purchased them, been trained on them and have them officially up and running, they find themselves thousands of dollars lighter and not fully certain how to master this new piece of gee-wizardry in their stores.

"I read the manual front to back before we got our POS started, but many operators make the mistake of not doing that," said Andrew Albert, owner of Picasso's Pizza and Grill in Dallas. "I think it's incumbent on an owner or manager to do that homework."

Incumbent, perhaps, but certainly not mandatory. Even Albert, who claims his POS system has totally changed his business for the better, admits he's not mastered its ample offerings. His system's inventory feature isn't counting "every mozzarella stick," and only now, after three years in operation, is Albert learning to tap his POS system's marketing power.

"In every conversation I have with franchisees about the cost of a POS, they always compare its cost to nothing, because that's what they think using a pen and pad costs. You pay a lot for those forms and for a person to stand there and write orders."

Vito LaCorte
director of opertions, Snappy Tomato Pizza

Regardless, the 34-year-old said he'd never operate without one again.

"There's no way we could run the volume that we're doing without the system," said Albert, whose business has doubled since buying as POS system. "We were doing half the sales we're doing now and we were pulling our hair out with those struggles. It's straightened all that out and allows us to run things about three times as easy -- but with twice the business."

Asked where he'd rank Albert among POS users who squeeze the value out of their systems, Tom Bronson, president and CEO of Rockland Technology Group, a POS manufacturer based in Dallas, said he'd land in the top 1 percent.

But Bronson said he knows that not everyone will use everything a good POS provides, partly because they don't always need to, and partly because human nature loathes change.

"It takes some prodding most of the time to convince someone to maximize their system," Bronson said. "But if you were really focused on it and wanted to learn it, it would take at least a couple months."

Rob Tayne, international accounts manager for POS manufacturer Breakaway International, believes there are more operators like Albert out there than before. When POS systems were new several years ago, he said, people struggled to change from manual ordering and record keeping to learning how to run the POS.

"These days, customers are more educated about what's on the POS market," said Tayne, whose company is in Arlington, Texas. "They've probably worked in a store where they've used POS, and it makes training and learning much simpler."

Still, that operator must train the employees, sometimes young ones without restaurant experience, and other times restaurant old-timers who've done it one way for a long time.

"I met a lot of employee resistance, people saying it was stupid, that we didn't need this change," said Albert. Not that he didn't try to break the staff in gently. The restaurant's POS terminals were merely installed but not used for a full week, just so employees could get used to their presence.

Digital Dining POS terminal in use behind a bar.

Then the training began -- followed by some whining. After a few weeks, however, the employees' tune had changed.

"The people who said those things at first are now the ones who are thanking God that we did this," he said.

Such rough starts are typical, said Bronson.

"Week one is always a disaster because you've introduced an enormous change into their business," he said. "But we try to tell them that it's like having a baby: It's going to hurt for awhile, but you'll get over it and you're not the only one who's ever done this."

Shahpour Nejad, founder and president of Pizza Guys, a 40-store chain based in Sacramento, Calif., mandates that new franchisees have a POS system when they open. His company was about half its current size when Pizza Guys began installing POS systems, but now that his chain is expanding into Nevada, it's more crucial than ever that Shahpour have immediate contact with his stores.

"It makes my job easier because I can get reporting from the stores through their POS," he said.

Nejad, who spent years drilling POS manufacturers with questions before investing in a system, said he bought his to improve marketing.

"We have strong operators, managers and franchisees who are using their databases to send post cards and things like that," he said. "But as far as making me happy about using it fully companywide, no, I'm not happy. There's much more we can use."

Nejad admits he'll be satisfied when he masters how to blend his broadcast media advertising with his POS-generated marketing. Currently, they tend to overlap, whereas he'd like the POS pieces to be more focused.

Vito LaCorte, director of operations for Snappy Tomato Pizza Co., in Florence, Ky., does the opposite: uses the POS system to target market, but doesn't purchase broadcast media ads. The 45-store chain has sites in Ohio, Kentucky and Tennessee.

"If you want to see your most frequent customers or your infrequent customers, somebody who hasn't ordered in two months, you can drop them a 'thanks' or send them a 'we missed you' note with the POS," said LaCorte. "You can pick and choose preferences with individual customers and send them something they like. Or if they call the store, you can see that they had a pepperoni pizza last time, and you can ask if they'd like that again. That builds a personal relationship with customers."

While LaCorte is sold on the machines, not all his franchisees are. With POS system prices ranging from $5,000 to $15,000 per store (depending on the number of terminals, software features, screen types, etc.), cost is a concern for operators eager to put more than their hands in their pockets at the end of the day.

LaCorte agrees that the investment is a serious one, but what's worse, he said, is believing any other method or system will produce the same results.

"In every conversation I have with franchisees about the cost of a POS, they always compare its cost to nothing, because that's what they think using a pen and pad costs," he said. "That couldn't be more misleading. You pay a lot for those forms and for a person to stand there and write orders. And that doesn't even count the inaccuracies and mistakes you pay for."

More Use, Less Mistakes

Albert, whose restaurant has an extensive menu, a bar, 150 seats and does delivery, wanted to reduce the wide-ranging inconsistencies in the way orders were taken. Pricing errors, sloppy handwriting, miscommunication between kitchen and wait staff nearly disappeared, however, with the arrival of his seven-terminal POS system. The money since saved, he said, easily made a dent in the cost of his system, but those savings, he added, don't come immediately.

"Some (operators) look for an immediate check of $10,000, but it doesn't happen like that," said Albert. "Over time as things get better, it can't help but you save money. It pays for itself that way."

Tayne agreed, saying it typically takes two years at lower-volume stores ($500,000 to $750,000) for a POS to pay itself off, but only nine to 12 months for a high volume store ($1 million or more) to break even on its investment.

"After you have technology like a POS, it's very difficult to live without it. It's made things better."

Shahpour Nejad
founder and president, Pizza Guys

Key to fewer mistakes at Pizza Guys, said Nejad, is getting a user-friendly system. Young employees, especially, he said, respond well to systems centered on graphic input rather than text.

"They're used to video games, so if they see pictures, they respond quickly," he said. "It's 'computers for dummies.' They follow it, touch it, go to the next screen and the next, and they can't make a mistake."

According to LaCorte, many operators know the capability of their POS, but too many of them don't want to make the effort required to help the machine help them.

"People want the computers to do more than they can do," he said. "Some want to turn them on and say, do my job for me. That's not realistic."

Where reality becomes clear, he said, is by comparing running a pizzeria without a POS to running one with it. In the end, he said, the processes are basically the same, but one is obviously much faster and efficient.

"You've got to become one with that computer by understanding that you just give it simple instructions," he said. "It's the same as writing (instructions) down on paper, only you're typing it into the POS. And that makes it so much simpler to get answers about your business. No stack of guest checks will tell you any of that."

Can't Live Without It?

American pizzerias have run on pencil and paper systems for nearly a century, and as Tayne says, they may run that way another century if operator resistance stays the same. "Some of them want you to justify anything that costs more than $100," he said with a laugh.

Albert and LaCorte, however, are clear converts who say that after using POS systems for years, they wouldn't want to operate without them.

Albert credits his with growing his business beyond the mom-and-pop level and to the seven-figure seller he now has.

Nejad said he, too, wouldn't go back to a manual system, even though he knows some operators run without POS.

"Can you live without a cell phone? Yes, but it's a hell of a lot harder than not having one," he said. "But if you get a flat tire in middle of the road, what do you want to do: Walk back to town and get help, or call somebody?

"After you have technology like a POS, it's very difficult to live without it. It's made things better."


Topics: POS


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