Are Restaurant POS System Costs Really Worth It?

Are Restaurant POS System Costs Really Worth It?
Amanda McCorquodale

By Amanda McCorquodale

What's the first thing that pops into your mind when someone says "restaurant technology"?

If you are an entrepreneur or restauranteur, maybe it's a POS. No, not the black, rusted-out Honda hatchback you and your buddies drove around in back in high school. The other POS.

A restaurant's POS, is its point-of-sale system, a touch screen computer that's at the heart of the modern restaurant's technology stack along with the many other systems integrating with it.

Before the meal, FOH staff enter orders that are logged and sent to the kitchen for preperation. After the meal, servers use the POS system to print out customers’ checks, and accept payment. POS systems give you a cohesive picture of front and back of house performance and inventory, guest service demands and trends, product and staff costs, and payment processing to ensure they close accurately night after night.

Unlocking the Power of Your Restaurant Data

The Restaurant Manager’s Handbook (Douglas Robert Brown, 2007) reports that today, POS systems are used in about 90% of restaurants. But the POS system comes from humble beginings.

The first POS system was invented in 1986 by Gene Mosher, a restaurant owner and armchair software developer who created the first graphical touch screen point of sale software for automating the information tasks of restaurants and hospitality. Mosher began using this POS in his own New York deli and started a tech company, ViewTouch, that is still in business today.

POS-system-inventor
Gene Mosher and the original POS system, 1986. (Wikipedia)

Before Mosher’s early POS system, restaurants used electronic cash registers (ERC)–the equivalent of an electric typewriter combined with a calculator–which IBM introduced in the 1970s. Yet these early machines couldn’t read credit cards’ magnetic strips, so at the end of the day, restaurant operators and managers had to balance their credit card machines against their register, by hand.

You thought your paperwork routine was rough, imagine what folks like Gene had to manage a few short decades ago.

When the Internet entered the scene in 1991, POS systems offered restaurant owners and mangers the capability to not only streamline payment processing but to analyze and leverage their valuable operational data. Another milestone came in 1992, when the first POS software for Microsoft Windows was created.

In 2002, the first cloud-based POS system was introduced in the UK, meaning data could be stored off-site and viewed from any location as well. Today, POS systems come as traditional counter-top systems as well as virtual setups on mobile devices, where operators can manage their entire POS operation through an online portal.

Restaurant POS System Cost Breakdown

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Adopting a robust POS system can be an expensive initial cost (anywhere from $2,000 to $20,000 depending on hardware, software, and any additional integrations or add-on features), but most operators would agree that the oversight and cost-savings they provide quickly offset the purchase price.

Today's POS systems are rich with features, especially if properly integrated with other systems in the operation.

For instance, POS systems can offer inventory management by tracking product usage, stock levels and variances; how inventory contributes to profits; track loss prevention; have full recipe and product-costing capabilities; and offer ease of re-order. They encourage establishing relationship with customers by identifying loyal and repeat customers as well as their preferences.

POS systems can generate a host of useful reports efficiently, accurately and with robust analyses of real-time sales and labor data. They can turn your menu into a powerful marketing tool, allowing you to track menu trends over time, identify which items are bestsellers or need to be replaced, and strategize daily or weekly specials. They also provide reports of your servers’ sales, hours worked, and performance so that you can tweak scheduling or offer more training.

Read through our primer of restaurant accounting to learn more about key performance indicators that can be calculated via your POS system.

Certainly not least, POS systems offer invaluable financial management that includes pricing, revenues, profits, costs, payroll, invoicing, and asset management. You can also affect POS changes at the enterprise level or at a single location, that is, change menu items, prices, discounts, and taxes on the fly.

The right POS system gives you powerful forecasting tools to automate predictive analysis and help you make better, data-driven business decisions based on up-the-minute information. They also let your servers stay on the floor instead of darting back and forth between the kitchen and the cash register.

Have More Options By Choosing The Right POS

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Choosing the right POS system means considering your hardware and software needs as well as any desired special features. They typically come in Cloud-based systems, (a.k.a. software-as-a-service [SaaS] or web-based systems) in which data is stored on remote servers and can be viewed from anywhere.

On the other hand, a POS system can be a legacy system, which stores data on local computer servers that can only be viewed via the on-site network. In some cases, they can be a hybrid of both cloud and legacy, which means stores data locally to permit working offline as well as backs up to cloud for access from anywhere.

POS systems hardware, which can be leased or owned, in the Front-of-House includes any of the following:

  • Computer terminals
  • Tablets
  • Tablet cases
  • Stands
  • Credit card readers
  • Cash drawers
  • Receipt printers

In the back of house, there will be KDS (Kitchen Display Systems) and ticket printers. You’ll also need servers or routers depending on whether your system is cloud-based or legacy. Typically, legacy systems require more equipment such as servers, making them more expensive then cloud-based POS systems.

In addition to purchasing equipment of your POS system, you’ll also be paying a monthly or yearly software fee.

Top POS system companies warn that this is not an area you want to cut costs on because inadequate software, lack of software updates, or unreliable support can mean worse headaches and loss of profits for your business down the road. And if you consider the restaurant that has lost it’s connection to the cloud and cannot process credit card payments, transmit orders efficiently to the kitchen, or track value performance insight while offline.

One restaurant server recounts a particularly vivid disaster she experienced when working in a restaurant using an out-of-date POS system. The system wasn’t tracking inventory correctly so the kitchen kept receiving orders from servers in a packed dining room for a steak that was sold out.

Not only that, the system also wouldn’t let FOH staff override their initial 86ed orders so servers had to manual recreate every one, resulting in frustrated employees, hungry customers, and having to manually compare old and new receipts at the end of the night to make sure sales figures were correct.

In addition to POS hardware and software expenses, there will also be costs for installation, menu builds and staff training to consider. Beyond that you may be able to add-on special features such as tableside ordering and payment, online ordering capabilities, gift card and loyalty program management, and the ability to work off-line.

With the ever-increasing concern for cyber security and protecting personal information, some POS systems also offer robust encryption and security features. So when it comes to finding a POS system, it's not a good idea to skimp, but there are four other major areas perfect for cutting restaurant costs where you can trim the fat.

Restaurant Tech Stack Synergy

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Perhaps the best special feature to opt into when considering POS systems is the integrations available via third-party providers or open APIs. An open API means one piece of software was made with a protocol that allows it to be more accessible to integrated closely with other pieces of software.

You can have your POS system integrated with your payroll, for instance, or your accounts payable software, drastically reducing manual entry error and time spent managing admin work.

And while some POS systems may come with their own basic staff scheduling features, they often require managers to input data manually or fall back on spreadsheet schedules or handwritten schedule change requests. If you're notcomfortable with additional time and increased risk that comes with manual scheduling, integrating your POS system with a dedicated scheduling app like 7shifts might make sense.

With 7shifts, you can create schedules online, where they can be copied or modified, from week to week in a few clicks. To further simplify scheduling, 7shifts also has built-in alerts to ensure that your schedule stays labor compliant. This added check and balance keeps your staff happy and helps you avoid costly fines.

Mangers can also use the app to crowd-source time-off and availability requests to staff, reduceing their involvement to one-tap shift switch approvals. Manging sheduling in an integrated cloud-based app allows changes to be shared and reflected in real-time across your entire organization. So that everyone who needs to know, had the most current information. In the end, you can reduce the time you spend on scheduling by up to 80%. See how Greg, managing partner at Leopold's and Victoria's Tavern uses 7shifts to schedule and communicate with his staff across two locations.

And when your POS system is integrated with your scheduling data, you can use it to increase profitability, improve your customer experience, and make smarter decisions about your business. For starters, you’ll be able to make more accurate scheduling based on sales forecasting, permitting proper coverage while only paying for the labor you actually need.

You can also set up your POS so that staff clock in on its interface, which communicates with your 7shifts schedule to make sure employees aren’t clocking in too early. A 15-minute early clock-in can seem insignificant from an employee perspective, but multiply that by all the shifts worked over a year and those early clock-ins can add up, fast. Just a few minutes can add up to $435 in extra labor – and that’s just for one early employee.

If you're already using 7shifts and you've recently switched your POS–or are in the process of switching, be sure to update your settings in the app here to get relevant updates on our growing list of integration partners and to ensure you’re alerted when we support your POS.

You can also visit our knowledge base for instructions on how to integrate your restaurant’s POS today.

What POS System is Right for Your Restaurant?

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Here is list of some of the most popular POS systems for restaurants and how they measure up.

Use the following comparison to find which one is right for your buisness, or download the PDF to save for later or print out:

Download the PDF

TouchBistro

Software Pricing (starting from): $69/month
Market: Any full-service or quick service business
Data Storage: Cloud-hybrid
Device Compatibility: iPad
Standard Features [1]:

  • Delivery Management
  • Gift Card Management
  • Loyalty Program
  • Separate Checks
  • Split Checks
  • Table Management
  • Tips Management

Notes: Tableside features. Can accept credit card payments when offline.
Integrates with 7shifts: Yes
Website: www.touchbistro.com

Toast POS

Software Pricing (starting from): $79/month
Market: Designed exclusively for foodservice with a configurable toolset for nightclubs, pizzerias, bars, and chains
Data Storage: Cloud-based
Device Compatibility: Android
Standard Features:

  • Delivery Management
  • Gift Card Management
  • Inventory Management
  • Loyalty Program
  • Online Ordering
  • Separate Checks
  • Split Checks
  • Table Management
  • Tips Management

Notes: Has built-in loyalty program. Offline mode means data is stored data until it can be synched once back online. When offline, credit card payment are queued – stored and encrypted – then sent out for verification when the device is back online. As you won’t know if card is declined until system is back online, collect customer info for large checks.
Integrates with 7shifts: Yes
Website: https://pos.toasttab.com/

Lavu

Software Pricing (starting from): $69/month
Market: Users choose between bar, winery, restaurant, and pizza, ice cream, coffee shop, food truck, and brewery interfaces
Data Storage: Cloud-based
Device Compatibility: iPad
Standard Features:

  • Delivery Management
  • Separate Checks
  • Split Checks
  • Table Management
  • Tips Management

Notes: Has open API and offers robust training program. Offline mode means data is stored data until it can be synched once back online but credit card payments not accepted.
Integrates with 7shifts: No
Website: https://www.lavu.com/

Rezku

Software Pricing (starting from): $49/month
Market: Full service restaurants w/ large bar operations. Has custom integrations for breweries
Data Storage: Cloud-hybrid
Device Compatibility: iPad
Standard Features:

  • Delivery Management
  • Inventory Management
  • Loyalty Program
  • Mobile Access
  • Online Ordering
  • Reporting/Analytics
  • Separate Checks
  • Split Checks
  • Table Management
  • Tips Management

Notes: Can accept credit card payments when offline.
Integrates with 7shifts: Yes
Website: https://rezku.com/restaurant-pos

Upserve

Software Pricing (starting from): $119/month
Market: Restaurants, bars, nightclubs, and cafes of all sizes
Data Storage: Cloud-based
Device Compatibility: Android and iPad
Standard Features:

  • Delivery Management
  • Gift Card Management
  • Inventory Management
  • Loyalty Program
  • Mobile Access
  • Online Ordering
  • Reporting/Analytics
  • Separate Checks
  • Split Checks
  • Table Management
  • Tips Management

Notes: When offline, credit card payment are queued – stored and encrypted – then sent out for verification when the device is back online. As you won’t know if card is declined until system is back online, collect customer info for large checks.
Integrates with 7shifts: Yes
Website: https://upserve.com/

[1] According to https://www.capterra.com/restaurant-pos-software

There is no shortage of costs to manage when opening or operating a restuaraunt–POS systems are just the begining. Check out the Ultimate Guide to Restaurant Costs for a birds-eye walkthrough of all 5 major restaurant costs you'll need to wrangle including: food, labor, utilities, kitchen equipment.

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Amanda McCorquodale
Amanda McCorquodale

Amanda McCorquodale is freelance writer based in White Plains, NY.