Here’s why the end is near for restaurant POS terminals
I recently had the pleasure of attending and participating in the 33rd Annual Piper Jaffray Consumer Conference, where I heard fresh perspectives from restaurants, retailers, investors, analysts and service providers like me. I had the good fortune of joining top experts in a panel titled, “When, Not If: Technology Milestones for the Restaurant Industry.” The brilliant Piper Jaffray Senior Research Analyst Nicole Miller Regan served as moderator, and Damian Mogavero, Founder and CEO of Avero, and Austen Mulinder, President and CEO of Ziosk, were my fellow panelists.
My favorite moment was when Results Thru Strategy’s Fred LeFranc asked me if I could envision a day in which mobile ordering eliminated the need entirely for POS terminals at restaurants. I thought back to a college finance course and the smart instructor who often asked us to “examine extreme examples.” After a moment of contemplation, I replied, “Yes.”
It turns out the elimination of POS might not be an extreme example after all. During the conference, Julie Krueger, Google Retail Industry Director, spoke about “Retail’s New Realities.” Julie cautioned those in the room that consumers are embracing new technologies much faster than retailers and restaurateurs. In fact, she reported, 50 percent of consumers have said they would prefer a self-service experience to a full-service experience. Krueger’s warning as well as my own experience led to my affirmative response about POS systems. Consumers are demanding self-service options, which can offer a much better experience – much faster, more accurate, and ultimately more personal than ordering from a cashier who has to re-enter a spoken order into a POS system.
A perfect example is the Five Guys app, built upon the Olo platform, which turns every customer’s smartphone or tablet into a personal POS terminal. Instead of the standard five or six POS terminals in the front of the house, Five Guys now has over 1 million customers walking around with a personalized Five Guys POS terminal in their pocket. A Five Guys customer can stand in the back of the line in the restaurant, order from the Five Guys app, and watch the order print out on the burger prep line in a matter of milliseconds (try this at your local Five Guys). The prepaid order zooms across one of the fastest APIs on the Internet, which securely pushes it down to the store’s back-of-house prep line.
Today, this process relies upon connectivity with the POS system, but that need not be the case in the future. A restaurant could store all of its menu and pricing details in the cloud and eliminate the front-of-house POS terminal entirely. In fact, what digital ordering providers like Olo store in the cloud is exactly the product availability, pricing and ordering rule-set that would enable this POS-terminal-free future.
Will POS systems go extinct tomorrow? No, they will not. But when digital ordering pioneers like Papa John’s are seeing that digital orders will come to represent 50 percent of their orders this year, we’re approaching a major industry milestone that hints at a self-service-dominated future. A recent xAd and Telmetrics study reveals that 60 percent of smartphone owners have chosen a restaurant solely with their smartphone on the go. And when comparing the impact of the smartphone in the automotive, entertainment, restaurant, and telecom industries, the study found that conversion rates are highest in the restaurant industry. The same study two years ago revealed that the top activities for consumers were around things like browsing the menu and calling the restaurant. Now more consumers are using their phones as a form of payment, and they expect ordering capabilities, too.
The self-service, digital ordering opportunity transcends counter-service. Hudson Riehle, senior vice president of the National Restaurant Association's Research and Knowledge Group, shared that off-premise is the fastest-growing channel for all restaurants, with 75 percent of restaurant industry traffic now happening outside the restaurant’s four walls. Even casual dining chains can use the location-aware superpowers of smartphone technology to better gauge when to start making an off-premise order and when the customer has arrived to collect it (more information is available in our white paper, “Mobile Presence Technology,” intended primarily for QSR brands, but relevant for all restaurants).
Krueger spoke of the retailer’s dream of an “endless aisle.” In the very near-term, off-premise sales through mobile ordering will help to realize the restaurateur’s dream of the endless dining room – whether there’s a POS terminal in that dining room or not.
Noah Glass / Noah Glass is the Founder & CEO of Olo. Since 2005, Olo has helped restaurant brands increase revenue per square foot through faster, more accurate, and more personal service with digital ordering.