Restaurant POS Software Overview

Whether you’re just diving into the world of restaurant management or have been running your restaurant for decades, there’s one thing that’s always true about the industry: it’s incredibly competitive. One thing that can give you an advantage is having not just a POS system, but the best POS system for your restaurant's specific needs.

Point of Sales (POS) systems are used to send orders from the front of the house to the back, manage inventory, keep track of sales, handle payroll, and more. In this article, we'll help you understand the benefits of restaurant POS software for your business, and explain how to decide between the various options on the market.

Does your restaurant need POS software?

For most restaurants, in order to stay as productive and profitable as possible, you'll need a POS system.

In smaller establishments that either only accept cash or have such a small menu that inventory can be managed with a clipboard, it might not be necessary. But for the majority of food service businesses, POS software can help you minimize busy work while improving the overall guest experience.

It’s important to view your restaurant POS system as an investment rather than an additional expense. By saving payroll hours, improving productivity, and providing guests with a seamless experience, restaurant POS software can be a profitable investment for your business.

What does restaurant POS software do?

Most restaurant POS software companies offer several different packages, so you can customize your software based on your needs. While there is some core functionality you’ll always need your software to be able to perform, such as the ability to track sales and process payments, there are a few features you might be able to do without. Here are some of the most common software features you’ll come across during your search for the perfect restaurant POS software.

Sales tracking

POS software enables you to track every penny worth of product sold in your business. You’ll spend less time balancing cash register drawers, and more time analyzing the resulting data. You might be surprised to learn what your most profitable hours are, for example. You can then adjust your menu and specials so that you’re maximizing your profit.

Streamlined ordering

Your servers can ring in their orders at a station which then sends the order back to the kitchen or bar. This isn’t new technology, but if you’re currently operating with paper tickets, this will speed up your productivity immensely. A great POS system will also allow servers to easily modify menu items as requested by a guest, split checks, and better organize their orders to provide a smooth experience for every table.

Inventory management

By better managing your restaurant's inventory, you can rest assured knowing that you have the necessary inventory in stock, while minimizing wasted product.

Payment processing

While cash isn’t disappearing anytime soon, most customers prefer to pay for their meals with credit cards. You’ll be able to do this quickly and more securely with POS software. If your POS system also provides table kiosks, customers can even do this themselves tableside.

Reports & Analytics

One of the most important benefits of POS software is the ability to create a report in a matter of seconds. Find out profits for the last month, or look at labor costs during the slow months. You can also track hours worked by each employee, which can help you stay within local labor laws and keep servers from being overworked or underutilized. You can also see who your top selling servers are and reward them accordingly with either better shifts or sections, maximizing their tips and your profits. By taking a data-driven approach to optimizing your business, you can identify opportunities for improvement that will increase your bottom line.

Important considerations when selecting restaurant POS software

There are many restaurant POS systems on the market. Here are some questions you should ask yourself before committing to one.

Cloud-based or on-premise?

Traditionally, POS systems have been hosted on-premise, and required users to purchase a license, as well as expensive proprietary hardware. All of this resulted in significant upfront costs, with restaurants receiving quotes of $10,000+. Many of the most popular systems, including Aloha, MICROS, and POSitouch follow this business model. Since these systems are currently used by tens of thousands of customers, you can be certain that they'll be able to provide all of the functionality that you'll need to run your business. The downside is that they're less modern compared to other systems on the market, and have substantial upfront costs.

Today, more systems are moving to cloud-based solutions, which enable you to use a tablet, and pay for software on a monthly basis (typically about $50-100/month per terminal). Though these cloud-based systems are relatively new compared to the legacy systems, and may be less robust, this feature gap is closing rapidly, as it has become clear that the cloud is the way of the future. These cloud-based systems also require a significantly lower upfront cost, compared to legacy systems. Popular systems that follow this model include Toast, TouchBistro, and Revel.

How much will we pay for equipment?

The answer to this will help determine the price of your overall investment. If you already have the equipment you need, then great. But if it’s time to upgrade your equipment, or if your brand-new restaurant doesn’t yet have the necessary hardware, looking for a company that either sells or rents registers, tablets, card processors, and anything else you need can save you in the long run. You can also consider buying refurbished equipment on eBay.

Can I customize the system?

Unless you run a very large-scale operation, you probably won’t need every single feature that the POS system provides. Therefore, it makes financial sense to see if you can customize a bundle of features that work exclusively for your business. But keep an open mind when learning about a company’s distinctive features. There could be a few features that you didn’t know about that can help your business grow. In addition, you should plan for the future -- there may be some features which you don't currently need, but may need down the line as your business scales.

Is tech support included?

When it comes to tech support, don’t assume you can fix any issues that come up. Even if you’re a computer whiz, you’ll never know the system as well as the company’s technicians do. So, make sure there is some level of tech support included. You can pay for unlimited tech support, or if you prefer, some systems let you pay for each support call. It can be prudent to start with an unlimited support plan initially, and drop down to a per-incident plan once you're comfortable with the system.

Is a long-term contract required?

If you do sign up for a POS system, make sure to check if you'll be locked into a long-term contract. Knowing that you can switch providers if there’s a better deal or a company with better features will give you peace of mind. Look for shorter-term contracts, or opt for a system that allows you to pay on a month-to-month basis.

How much does a restaurant POS system cost?

Prices can vary widely, especially between more modern SaaS systems and traditional on-premise systems. Each provider is a bit different -- some systems require you to provide your own equipment, while others allow you to purchase or rent cash registers and scanners from them.

For modern cloud-based POS systems, you can expect to pay about $1,000/year per station in order to use the POS software. You'll also have an upfront cost for hardware, which can be an additional one-time cost of another $1,000-$1,500 per station.

For more traditional systems, such as Aloha, MICROS, and POSitouch, hardware and software costs are tightly coupled, since they require you to use their proprietary hardware. If you use one of these systems, you can expect to pay several thousands of dollars, with many restaurants receiving quotes of $10,000+.

To give you an idea of what to expect, we'll break down the various costs that come into play when purchasing a restaurant POS system.

Software costs

These days, most modern restaurant POS systems are cloud-based, and charge a monthly fee. Most systems with recurring monthly fees will cost about $50-100/month for their software. Many traditional on-premise systems charge large upfront license costs, which can present a higher upfront cost ($1,000+ per license). However, fewer companies these days follow this model, with most companies migrating towards SaaS models.

Hardware costs

Some systems require you to use proprietary hardware, which you'll need to purchase from the vendor or a reseller. In this case, the hardware costs may be substantial (thousands of dollars upfront). You can save some money by purchasing this equipment on eBay as well.

Many modern systems these days enable you to use tablets, such as iPads, which you can purchase on your own. Many vendors will also sell hardware bundles, which can include a tablet to use the software, a platform for the tablet, a cash drawer, and a receipt printer. Though it may be convenient to purchase these bundles, you can likely save some money by purchasing these things on your own.

Support fees

Many restaurant POS systems include support in their monthly fee. However, there are also some systems that charge additional fees for support, or charge on a per-incident basis. Some restaurants opt to pay an additional fee for support while they're getting accustomed to their new POS system, and then drop down to a per-incident plan when they feel more comfortable with it.

Credit card processing fees

This is an unavoidable cost, unless you run a cash-only restaurant. Every time you swipe a customer’s credit card, you’ll have to pay a fee. These fees can vary, but they typically hover around about 2% of each purchase.

Bottom line

If you think that these POS features could benefit your business, it’s best to start narrowing down your options sooner rather than later. Once your restaurant is equipped with the best restaurant POS system for your needs, you’ll quickly see the benefits start rolling in.

In most cases, POS software is a necessary investment. There are only a few situations where it may not be necessary. For example, if you operate a smaller food truck or only offer a handful of menu options, the additional expense of a POS system might not save you enough time and money to make it worthwhile. Also, if you prefer to only deal with cash and can manually track your sales, restaurant POS software may not be a necessity. But if you have inventory to track, credit cards to process safely, employees to pay, and want to improve your restaurant's productivity, then restaurant POS software is simply a must.

Bruce Hogan

Bruce Hogan is Co-founder & CEO of SoftwarePundit. He leads the team's research and publishes content about software products and trends. Bruce has experience investing at multi-billion dollar private equity firms, leading teams at venture-backed technology companies, and launching new businesses. You can connect with Bruce on LinkedIn.

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