According to the National Restaurant Association, the average restaurant is now working on a profit margin of about 5% — and that’s pre-tax. With such slim margins, restaurant owners and managers must run efficient operations.
With the cost of food and beverages and labor continuing to rise, restaurants need every possible advantage to manage operations and grow revenue. Choosing the right point of sale (POS) system is crucial to increasing workplace efficiency, managing costs effectively, and improving overall business operations.
What Is a POS system for a restaurant?
When we think of POS systems, we often think of credit card machines. While POS systems enable secure credit card transactions, they do so much more. Modern POS systems for restaurants can help you run your restaurant more efficiently, monitoring and controlling your front-of-the-house and back-of-the-house operations.
Front-of-the-house operations
POS systems optimize customer service and sales, allowing for quick order input. Orders can be instantly set to the kitchen. For sit-down restaurants, table management software can provide visibility into table assignments and track orders and time. POS reporting provides sales, revenue, and traffic insights to monitor and manage operations.
Back-of-the-house operations
Because POS systems connect to the kitchen, your food preparation staff can get orders immediately and work more efficiently. You can also track inventory and supplies in real time. Some POS systems will alert you when inventory is running low and allow you to automate the reorder process with approved suppliers and vendors. You can also manage menus and centralize pricing within your POS.
Employee management
The best restaurant POS systems will also help you manage your staffing and scheduling and provide payroll reporting. Staff can clock in and out on the POS system. Managers can track multiple wage rates to optimize staffing levels within wage guidelines and also manage payroll.
How does a restaurant POS work?
Restaurant POS systems have both hardware and software components. The hardware replaces the traditional cash register and includes credit card readers, cash drawers, receipt printers, and barcode scanners. Today, most restaurants are transitioning to tablet POS systems to manage orders and payments to streamline operations.
The software captures and processes payments, tracks inventory, collects customer data, helps manage ordering, and manages staff.
Best features of restaurant POS software
Besides payment processing solutions, modern POS systems provide significant benefits, including:
- Cloud connectivity: Allowing you to manage stores remotely or look at multiple locations from a centralized dashboard
- Inventory accuracy: You can track every incoming and outgoing order, monitor transactions, and reduce shrinkage
- Faster service: In restaurants, turning over tables quickly means you can generate more revenue. POS systems let you deliver orders more quickly and manage your floor plan more efficiently
- Automation: Rather than having to do manual calculations, POS systems automate the math, alerting you when supplies need to be replenished or menu items are running low down to the ingredient level
- Business intelligence: Reporting capability provides real-time reports on sales and performance, allowing you to gain key insights to run your business more effectively and track trends proactively
- Customer retention: Many POS systems can track customers, build, and implement customer loyalty programs. You can also apply incentives or discounts easily and customize promotions with customer relationship management (CRM) functionality for regular customers
- Digital menus: Allows centralized menu creation, which is sent to all terminals to ensure accuracy and consistency
- Pricing optimization: POS systems can calculate food costs on a granular basis, so you can determine optimal pricing for menu items. It makes it easy to offer specials for slow-moving or high-margin items and also suggests upsells for wait staff to recommend
With the right POS systems, you can also significantly reduce order errors. If you are employing mobile devices, wait staff can input orders tableside and double-check accuracy, then immediately transmit the information to the kitchen staff. If dishes are sold out, the information is available in real-time, allowing servers to offer alternatives to guests immediately.
How POS systems are shaping the restaurant industry
The food service business industry is expected to produce $997 billion in sales in 2023. That’s nearly a trillion dollars!
Inflation, rising costs, and labor shortages are driving increased menu prices which can require more attention to price optimization. A modern POS system lets you analyze costs and make adjustments on the fly as necessary to stay competitive and manage cost efficiency.
That’s just one way modern POS systems are changing the way restaurants operate. With the right POS solution, you can build a culture based on responsiveness and quality service. Rather than making multiple trips to the kitchen or cash registers, for example, wait staff can spend more time on the floor being attentive to customer needs.
The dining experience is simply more expensive these days. The Bureau of Labor Statistics reports that it costs 7.7% more for people to eat at restaurants in June of 2023 vs. a year ago — and that’s the smallest increase in the past 12 months.
With rising prices, customers are becoming more demanding and less tolerant of problems. POS systems are also helping restaurants overcome some of the biggest complaints patrons have about their dining experience. For example, a Consumer Reports survey of diners showed that many of the most common complaints have to do with service-related items, such as:
- Incorrect calculation of the check
- Incorrect meals served
- Slow service
- Server confusion about who gets what meal
- Waiting after the meal is concluded
Executives at Chili’s make an effort to track what they call guests with a problem — G-WAPs for short — at their 1,110+ locations. Near the top of the list was staff attentiveness. To counter the concern, they revised staffing and streamlined their tablet ordering system. While we tend to assign blame to staff for these common complaints, they can often be overcome with the right systems in place, improving the customer experience and reducing the toll on staff.
Quick service POS system & software
Quick-serve restaurants (QSRs) and fast food chains have unique needs regarding POS systems. They have to move people through the lines quickly and efficiently to hit targets.
Streamline interfaces are necessary to allow order takers/cashiers to process orders fast. The best POS systems can make order entry simple. This is especially important because of today’s high turnover rate where new employees are constantly being trained and integrated into the workforce.
POS systems need to have the robust tools you need to manage operations but be simple enough to use by frontline workers.
POS systems for QSRs today integrate directly with digital menu boards and drive-through displays to keep everything in sync and integrate payment processing for quick, secure checkout.
What legacy POS systems do restaurant chains use?
While nearly every restaurant, even the smallest mom-and-pop locations, has moved past order pads and traditional cash registers, many restaurants are still relying on legacy POS systems that don’t employ modern features that can improve operations.
Even some of the major players in the industry are struggling with inefficient, legacy systems that simply don’t work well in today’s evolving industry environment. 72% of restaurant operators say they’re having a hard time meeting expectations because of an increase in digital ordering, for example.
Other legacy systems are lagging when it comes to data optimization. The insights a modern POS system can produce can be key to streamlining operations and reducing costs. Integrating data-driven decisions into your operating and marketing efforts can produce significant results, but you need an easy way to collect and apply the data to produce these insights.
What are the new trends in the restaurant POS industry?
One of the biggest trends, especially for QSRs, is the implementation of self-order kiosks. Customers place their own orders and payments, which reduces wait times and order handling. Nearly two-thirds of restaurant consumers say they prefer kiosks over traditional ordering systems.
Not only do kiosks enable customers to customize their orders more easily, but they provide a way to suggest upsells and add-ons to increase sales. Customers using self-serve kiosks tend to spend 10% to 30% more than when engaging with employees.
Since the pandemic, customers have become more comfortable with ordering themselves. The increase in mobile orders and take-out have changed the dynamic for many customers, especially younger demographics. 65% of those under the age of 30 report ordering online. At the same time, third-party delivery services continue to grow. POS systems must accommodate these trends by integrating mobile and online ordering with in-store POS solutions.
Another trend is the movement to contactless payments. Juniper Research forecasts that half of all transactions made through POS systems will be contactless by 2025. As customers become more digitally savvy, creating a way for customers to order and pay is a clear win for both diners and employees.
One area where technology is shifting is with QR codes. In the aftermath of the pandemic, some restaurants adopted QR codes, asking diners to access menus on their smartphones and then tying them to their POS systems. Research shows customers generally dislike QR-code menus. Many restaurants that adopted this technology are now switching back to physical menus, tablet POS systems, or tableside kiosks for ordering.
Point of sale and Payment Experts
Sekure Payment Experts provides POS systems for restaurants and other service businesses to manage sales, invoices, payment processing, inventory management, employee management, and customer management. Starting with worry-free payment processing, our Payment Experts create customized solutions for the unique needs of small- and medium-sized businesses.
With Sekure, you get free POS equipment, advanced software, and the best customer support in the payment processing industry. Schedule your demo today.