Restaurant POS Systems

Buyer's Guide

Restaurant Point of Sale (POS) Software Overview

Restaurant POS software is the backbone of restaurant operations. Key features include reporting and analytics, inventory management, food costing and marketing capabilities. These systems may also offer such specialized functionality as reservation management, food spoilage reporting and tip management.

Benefits of Restaurant POS Software

Restaurant POS software offers many operational benefits to restaurant owners and operators. Obviously payment processing is great, but restaurant software systems offer critical capabilities that help food businesses optimize daily operations and achieve consistent business success. Key benefits include:

• Inventory control. Tools are provided for monitoring perishables and tracking stock levels by recipes and portions. This gives an easy snapshot for kitchen and restaurant product needs.

• Reporting and analytics. Critical performance information can be packaged into easily understood insights. Operators and owners can leverage this data to make informed business decisions like managing food costs and monitoring product margins.

• Customer management tools. Operators can create loyalty and rewards programs, track crucial customer information and create sustained retention.

Competitive Advantages of Using Restaurant POS Software

Sixty three percent of restaurants don't have a POS system in place. These are restaurants using cash registers, credit card processors, Excel spreadsheets and maybe QuickBooks for accounting.

If they want to scale operations, restaurants should bring on a restaurant POS system for:

• Growing the business. Automated inventory control and customer management creates operational efficiencies and enables informed decision making. Smarter decisions will lead to greater business sustainability and increased growth.

• Better understanding key customers. Software can identify and generate sustainable relationships with valuable customers and create repeat business from a regular customer base.

• Succeeding in a competitive market. Automating day-to-day time drains can set a restaurant apart from competitors. This frees up managers to spend more time managing employees and interacting with customers.

Business Sizes Using Restaurant POS Software

The restaurant POS market can fill the needs of any restaurant business demographic, be it pop-ups and food trailers, single location restaurants or multiple location businesses.

• Small restaurant business: If your operation consists of a single location, be it a fixed restaurant, a rotating pop-up or a mobile food trailer, you'll be best served by a basic restaurant POS system. You'll be fine with limited hardware or advanced features.

• Midsize restaurant business: If you operate a high-volume, growing restaurant with one to five locations, you'll want a restaurant POS system that offers advanced features. These include reporting and analytics, inventory control and maybe even online ordering capabilities.

• Large/enterprise restaurant business: Managers and operators of more than five locations should look for a restaurant POS option with advanced dashboards and analytics and multiple-location management.

Software Related to Restaurant POS

Many POS systems on the market today offer retailers with all critical capabilities packaged into one solution. However, if a core capability that retailers need is missing from their POS system, they'll want to look to specialized software to fill the void. Popular specialized software includes:

• Inventory management for maintaining desired product levels and monitoring food costs at the per recipe level.

• Mobile POS systems for optimizing experiences and unleashing servers from stationary POS terminals.

• Food delivery software for opening new revenue streams by managing and completing orders online.

• Customer loyalty for identifying valuable customers and building sustainable repeat business.

• Event management software for caterers and other event-based food service businesses.

Features Guide

A List of Common Restaurant POS Features

When comparing restaurant POS systems, it's important to understand the functionality included in each. The most common functions of these systems are listed in the table below:

Feature Details and Examples

Here are examples of what these critical tools look like with some top restaurant POS vendors:

Order entry: For servers, the view of the restaurant system is the order entry and check handling system. With a handheld device or a kiosk station, the order must be quickly and correctly entered. The order entry system must also handle special orders.

Order entry screen by Lightspeed Restaurant

Recipe costing: Recipe costing is a key function for a restaurant system. The system must check recipes against inventory and labor costs to determine actual costs and profitability for each dish.

Recipe cost input screen by Touchbistro

Inventory management: In addition to producing the spoilage reports, restaurant inventory systems track inventory use and costs, including economic reordering points. These systems also produce management reports to help detect theft and over-portioning.

Inventory management by Lavu

Customer relationship management: Newer restaurant POS systems can send targeted offers to customers by email and text messages. The system must have a way for customers to "opt out" of future offers.

Detailed customer profile by Toast

Restaurant POS Buyers' Top Requested Features

At Software Advice we've helped thousands of SMB retailers and restaurateurs find the best POS system for their unique business needs. We analyzed these consultations to determine trends in restaurant POS needs.

According to this analysis, these are the top requested restaurant POS software features for small to midsize retailers and restaurateurs:

The Restaurant POS Software Functionality You Really Need

Small restaurant business

Kitchen printing: Once an order is entered, it must be printed or displayed in the kitchen. The system should split the order by kitchen station if appropriate. At the same time, the system will adjust inventory. Advanced systems will sequence the dishes so a table's order is completed at the same time.

Midsize restaurant business

Tip tracking and time clock: IRS regulations for tips are strict. The restaurant system needs to properly track, estimate and report tips for the IRS as well as state and local authorities, if appropriate. The system must also track hours worked by the staff, breaks and compliance for juvenile workers.
Menu management: Tracks dishes and prices. Advanced systems will also provide layout options and feature pictures. The menu system provides nutrition information and special dietary information when/where required.

Large/enterprise businesses

Automated inventory receiving: Restaurants can receive inventory multiple times a day. Fresh inventory can also vary in price frequently. The system should accept advance shipment notice (ASN) reports from suppliers and prepare inventory receiving reports to confirm amounts and prices.

All formal sit-down restaurants

Reservation system: If a restaurant takes reservations, the system must record the reservation, manage the queue and balance seating between servers. Advanced systems will send reminders to customers by text or email and will activate restaurant-provided pagers when seating is available for a party.

All restaurants

Spoilage reporting: Restaurants have perishable inventory that must be tracked and documented. The system must identify expired inventory to be removed from stock and provide compliance documents.

Pricing Guide

How Restaurant POS Software Is Priced and Hosted

Restaurant POS costs vary based on the software capabilities and hardware requirements of a restaurant.

POS systems for restaurants typically cost between $49 - $150 per month per terminal. And hardware costs can be as high as $1,000 for tablets, printers, network infrastructure, cash drawers and other restaurant needs.

A big determinant of restaurant POS prices are the deployment option businesses choose. The two primary options include:

• Cloud-based POS software that mostly features a subscription pricing structure with the system being priced on a per-terminal, per-month basis. Many vendors offer discounts to businesses that pay annually. Best for small or medium restaurants.

• On-premise POS software is usually priced by the number of licenses and/or terminals required. Most of these systems require a large upfront fee for the right to use the software in perpetuity (rather than paying a monthly or annual subscription). Better suited for restaurant businesses with five or more locations.

What Businesses Typically Budget for Restaurant POS Software

By analyzing the numerous conversations Software Advice has with restaurant POS buyers, we can determine how much your peers are looking to spend on their new system.

The majority of restaurant POS buyers are looking for a monthly subscription plan between $50 and $99 a month. Interestingly, 58 percent of restaurant POS buyers budget less than $100 while 90 percent of general retail POS buyers budget over $100. Keep this in mind when researching your new system, as a restaurant-specific POS is likely going to be the better option for you.

Hidden Costs of Restaurant POS Software

Typical hidden costs for a restaurant POS include:

• Implementation fees: Depending on the need for specialized features and setups, fees for implementation can be nonexistent or cost as much as a couple thousand dollars. Learn more about POS implementation best practices.

• Training and support fees: These vary from user to user depending on the needs of the restaurant. Do consider training one reliable employee to be the point person for the new system. The rest of the team can come to them with questions.

• Hardware fees: Typical hardware includes registers, tablets, multiple printers and maybe barcode scanners.

• Transaction fees: These can vary between two and four percent per transaction fee.

FAQs

What Are the Key Functions of Restaurant POS Software?

Here is a checklist of the must have restaurant POS functionality:

What Questions Should I Ask Vendors When Evaluating Restaurant POS Products?

When evaluating restaurant POS vendors and their systems, these are some key questions you need to get answers to:

Does the functionality of the system meet your needs?

• Consult with employees to determine operational pain points and create a list of must-have functionality to overcome these pain points. Walk through each with vendors and take note of the features they offer to remedy the paint points.

Are there any hidden fees?

• Some POS system costs include tiered payment processing fees based on the total amount of money processed per month or year. Determine this and other potential costs before choosing a system.

Do you have to purchase hardware from the vendor?

• The hardware on which your POS system operates is often just as important as the software itself. Ask if you can provide your own hardware or if you're required to purchase hardware through the vendors (often at a marked up price).

What Hardware Do I Need for My Restaurant POS System?

These are the critical hardware tools you need to get the most out of your restaurant POS system:

• Tablets/monitors: Displays menu information and restaurant layout/seating. Show servers/bartenders any opened tabs. iPads and other tablets are replacing bulky monitors.

• Credit card reader: Processes credit, debit and gift cards. Most new readers accept EMV readers as well as enable mobile payments (Apple Pay, Android Pay).

• Ticket/receipt printer: Send order tickets to bar and kitchen so they can prepare it. Paper receipts for customers are phasing out in exchange for email and text receipts.

• Cash drawer: A secure place to house cash from tips and payments.

Tips & Tools

Build a Business Case for Restaurant POS Software

Adopting restaurant POS software, especially a mobile POS system, for your restaurant will effect positive change throughout all roles. Owners, operators, managers, servers, bartenders, cooks and more will all experience the positive benefits of moving to a POS system. If you need assistance building a business case for a manager, use this article and its use cases to win the decision.

Relevant Articles

Here are some recent articles about restaurant POS software you should check out:

• "5 Tips to Avoid Botching Your POS Implementation"

• "Yes, Your Restaurant Needs mPOS Software. Here's Why!"

• "3 POS-Enabled Online Restaurant Ordering System Options"

• "Increase Restaurant Upselling and Grow Revenue With Mobile POS Systems"

• "Improving Patron Experiences and Increasing Tips With iPad POS Systems"

Popular Restaurant POS System Comparisons

There are many POS systems on the market that might work for your business, so we've included the following pages for you to see detailed comparisons of a few top systems:

• "Top Square Alternatives"

• "Revel POS vs Square"

• "Shopkeep POS vs Revel POS"

Recent Events in Restaurant POS Market

• GrubHub partners with Breadcrumb POS by Upserve and Toast to streamline online ordering. GrubHub, a popular online food takeout/delivery marketplace, has partnered with Breadcrumb and Toast POS systems to enable users to manage online orders from the same device they use for the rest of their operation. This saves time tracking and managing orders across disparate systems and provides great insights into online ordering sales data.

• United States Congress meet to discuss the repeal of The Durbin Amendment. The Durbin Amendment, passed in 2010, essentially set boundaries on how much banks can charge in fees for debit card swipes. Were Congress to repeal the amendment, restaurant owners would likely see higher payment processing costs and need to adjust their own prices accordingly.

• Servers using tablet hardware. In addition to consumer-facing iPad technology, we're seeing an increase in iPads and mobile devices for line busting in quick service restaurant environments. Servers are using apps for iPhones, tablets and other mobile devices to take orders in high-throughput restaurant locations. For more, see our guide on POS systems for mobile devices.