The point-of-sale has traditionally been one of the last updates made by a restaurant operator. Updates occur every six or so years on average.
But the future has caught up, and outdated POS systems are not just inefficient, they're a competitive disadvantage.
"If you're not keeping up, you are losing business to your more connected competitors. And you're spending more to handle the same number of orders," said Jennifer Wiebe, marketing manager at SpeedLine. Some concepts, for example pizzerias, are now generating more than 40 percent of their sales through web and mobile ordering. POS systems should be able to handle these newer channels.
Such newer capabilities play a big role in helping both independent restaurants and chains connect to their customers.
"Online, mobile and self-serve ordering systems are critical not only in improving ticket averages and reducing costs, but also in improving customer satisfaction. Customer loyalty programs are delivering strong ROI to restaurants who see increased customer frequency and retention. Making these systems work seamlessly with in-store POS often requires an upgrade," said Duessa Holscher, director of strategic products at Granbury Restaurant Solutions.
With online ordering becoming the rule rather than the exception, chains of all sizes are realizing that a consistent POS strategy is critical.
"It's difficult to maintain menus and prices online for multiple locations if they are not centrally managed. For many chains, this means it's time to look at implementing consistent technology chain-wide," Holscher said.
Additionally, more current POS iterations can reduce food costs through portion controls and inventory tracking, and control labor costs through scheduling and overtime restrictions.
"They are reducing labor and increasing sales with integrated web and mobile ordering solutions that drive sales direct to the POS. They are cutting marketing costs and driving more sales with automated database marketing systems," Wiebe said.
'PCI: A moving target'
In addition to cloud-based reporting, integrated online ordering and reservations and mobile integration, an updated POS system is also necessary to keep up with PCI compliancy. Laura Gaudin, product manager at Revention, and Jared Isaacman, CEO of Harbortouch, both said a POS update within the past two years is "critical" in large part because of PCI compliancy standards.
"Many older systems are no longer compliant with PCI standards," Isaacman said. "Businesses that are utilizing systems not PCI compliant are at risk for costly data breaches and significant fines from credit card associations."
Older POS systems may still store credit card data and expose restaurant owners to more risk. Newer systems provide end-to-end encryption, cloud-based processing and tokenization, effectively eliminating all credit card data storage.
PCI compliancy, Gaudin adds, is a moving target that will continue to change as software hackers discover new vulnerabilities. Also, she notes, each POS provider is different when it comes to protective updates.
"Do not be fooled by the promise of a miracle update. If you are having hardware issues, a software update will not magically fix the problem," she said.
Additionally, Microsoft announced the end of its Windows XP this coming spring.
"With no new security patches being issued, any POS stations that run Windows XP will be out-of-compliance for PCI purposes. It's critical to update these systems to a modern operating system before the deadline," Holscher said.
The cost and ROI of an upgrade
Of course, a POS refresh is an investment. But that investment is worth it compared to an outdated system that lacks competitive features, executives say. Plus, new POS systems deliver a tangible boost to the bottom line from their insight features.
"Reporting functionality allows you to identify top selling and underperforming items, the most and least productive employees, and the busiest times for your business. You can utilize this information to make more informed business decisions and operate much more efficiently and profitably. Other features improve order-taking efficiency, moving more customers through your store and adding to your bottom line," Isaacman said.
Many companies now are even offering POS systems with minimal or zero upfront costs and instead collect a monthly fee to recoup equipment costs. Isaacman said these programs put smaller businesses on a level playing field, and software upgrades and support are often included in the service fee.
Gaudin adds that the cost of an upgrade is worth it just for the time saved on manual processes and troubleshooting, let alone the online, mobile and loyalty offerings.
"In general terms, updated hardware means new warranties and improved hardware performance, eliminating system down time. Updated software should translate to a secure PCI complaint payment processing application and new technologies to increase sales and improve operational efficiencies. Some specific ROI data to investigate would be online ordering, mobile application ordering, payroll features such as driver split pay, scheduling enforcement and theft reduction," she said.
Key features to consider
The executives provided a laundry list of features operators should look for when considering their POS updates. Gaudin said mobile payments integrations, loyalty, wireless ordering solutions, mobile and online ordering, security enhancements and features that will help improve customer service and operational efficiencies are important.
Wiebe adds: The tools to manage (and control) delivery costs effectively; the flexibility to use the kind of hardware (PCs, space-saving terminals, wireless tablets, etc.) that meet your needs and budget; and "outstanding live support from qualified, certified technicians."
Isaacman said cloud-based functionality for backups, remote reporting and management are "invaluable features," while integrated customer databases with loyalty functionality is also a key feature. Additionally, "it is important to obtain a system that will continue to be supported by the manufacturer and updated as new technologies become popular ... make sure that your system isn't obsolete in a few years," he said.
Finally, Holscher said key features depend on each restaurant's specific needs and chain sizes, but suggests the following:
- Fit to the business – "A coffee shop is not going to have the same needs as a sports bar or delivery restaurant. Look for a POS that can fit your specific business and has the flexibility to adapt to your workflow."
- Connections – "Credit card processing, gift cards, customer loyalty, online ordering, social media, mobile ordering, business intelligence — all have a role to play and need to play nicely with your POS system. Look for one that is focused on making this part of your technology equation simple."
- Business insight – Look for features that improve your business, from reporting to proactive marketing solutions. "The data your POS system collects should be working for your bottom line."
Read more about POS systems.
Photo provided by Wikimedia.
Alicia has been a professional journalist for 15 years. Her work with FastCasual.com, QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including NPR, Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.