You may have heard of the term “POS system” but what does that mean exactly?
Short for “point of sale”, a restaurant POS is both the software and hardware restaurants use to take customers’ orders, accept payments, manage food inventory, and ultimately manage their entire operation — from the front of house (FOH) to back of house (BOH).
There’s a lot to know about modern POS systems, so we set out to demystify everything they can do and what hardware you need to operate one effectively. In this post, you’ll learn:
- What is a restaurant POS is
- What a restaurant point of sale system is
- What the benefits of a restaurant POS are
- What hardware a restaurant POS needs to function
What is a restaurant POS?
A point of sale (POS) is the physical location where transactions are processed.
Many traditional table service restaurants have a physical cash register somewhere in the establishment (usually near the bar or entrance) — the area surrounding that cash register is the point of sale. Patrons can exchange physical cash or pay via credit card or smart wallet, and exchange money for your restaurant’s service.
But since the invention of cloud-based technology and mobile devices like phones or tablets, traditional points of sale like this are slowly but surely becoming a relic of the past.
What is a restaurant point of sale system?
A restaurant POS system is the software and hardware that restaurant operators use to run their entire business: from taking orders to managing the floor plan, reservations, reporting on sales, doing inventory counts, scheduling staff and pricing their menu. More often than not, a restaurant’s point of sale system is a complete restaurant management system.
Most of the top restaurant POS systems on the market are cloud-based, meaning that the data it stores (your sales data, menu prices, inventory levels, reservations, etc) are all stored on a secure internet server.
What does that mean? It means you can access and manage your restaurant using any device that has an internet connection, whether that’s a computer, tablet, or smartphone. If your internet goes down, most restaurant POS systems have an offline mode, which allows you to keep working even when your internet is down. And when your internet is back online, your data is pushed and saved to the cloud.
Essentially, a mobile, cloud-based POS system lets you work from anywhere, whether or not you have an internet connection.
What are the benefits of a restaurant POS?
Power your decisions with data
Great decisions aren’t (entirely) based on intuition in the restaurant space. Whether you’re setting menu item prices, monitoring food costs, fixed and variable expenses, sales, staffing, tips, or restocking inventory, data is what informs your decisions.
Whether you’re looking for high-level insights or to dive into granular insights, most POS systems have end-of-day reports, weekly, monthly, and annual sales reports. Take advantage of them to better grasp when your peak selling times are and what your best-selling menu items are.
Manage shift scheduling
While most POS systems don’t have labour management and scheduling as a feature out-of-the-box, the vast majority integrate with scheduling platforms like 7shifts, which can expand your capabilities.
Unless you’re an operation of one, scheduling staff and budgeting labour costs is essential. Make sure that the point of sale you choose integrates with scheduling software, enabling you to grow your team (and business) down the line.
Count your inventory
Inventory counts should be a part of your day-to-day routine — before you open up shop for the day and after you close. It’s essential for managing food costs, while ensuring you have enough inventory to meet the demand you forecast for the next day.
Now, when it comes to inventory counts, there are a few ways you can approach this. There’s the tried-and-true method of literally counting the inventory and keeping track with pen and paper — but that’s prone to error.
Rather, use your restaurant POS’ inventory management features. Toast POS, for example, has strong inventory management capabilities to help manage food waste, variance, and beginning and ending inventory counts. This is crucial for minimising food waste while assuring you have enough inventory on-hand to fulfill orders.
Adjust your floor plan on the fly
Back when restaurant revenue was largely predicated on table service sales, an adjustable floor plan was an essential tool for efficiently running the front of house.
When table service opens back up, it will likely look a lot different — whether it’s the amount of space you need to have between each group of guests, or the total amount of guests you’re allowed to serve at once.
Cloud-based restaurant POS systems like Lightspeed have adjustable floor plans that reflect your changes in real-time. This is incredibly valuable for keeping FOH staff quite literally on the same page as adjustments to your dining room are made. If wait staff are running food to table five, but a server moved table five to another location, your wait staff don’t miss a beat.
Offer takeout and delivery and order-ahead
There’s no denying that restaurants have gone through a monumental shift in how they operate since the start of the pandemic. The long-standing path to revenue was to either serve as many customers as possible (fast food and fast casual restaurants) or charge more per dish (fine dining).
But since table service was largely shut down at the outset of COVID-19, we’ve seen restaurants follow the path of direct-to-consumer (DTC) eCommerce retailers and pursue online sales.
In pursuit of off-premise sales, restaurants used to have to choose between either third-party aggregators (and their prohibitively high service fees eating into already thin profit margins), or owning the whole process in-house — which many restaurateurs feared was simply too much to handle along with their duties on-site. But now, we’re seeing a tremendous uprising of restaurants using mobile ordering platforms to fulfill online orders without taking on the responsibility of building and managing a website. Flipdish, for instance, integrates with most restaurant POS systems, enabling them to sell to patrons from a distance, control their customer experience and keep more of their hard-earned revenue.
One of our customers, DOUGH, recently shared their story of when they left third-party aggregators behind for good. The bottom line? They made more gross revenue, have a much richer relationship with their customers, and have complete control of their customer experience (even when serving them from a distance).
Mobile checkout and contactless payments
What was already a growing trend in the commerce space has accelerated since the pandemic — cashless, contactless payments.
While not all POS providers offer payment processing, most offer mobile payment terminals and contactless card readers (more on those later). These allow servers to meet customers at their table and accept payments instantly, which is a much more fluid customer experience than literally waiting in line to pay.
Run multiple locations from one system
When shopping for a POS system, be sure to look at its multi-location capabilities. This is especially important if you have aspirations of opening multiple locations, or franchising your establishment. Check that you can see sales data per location, as well as get high-level insights across all of your locations.
What hardware does a restaurant POS need to function?
Once you choose a POS software provider, you’ll need to buy hardware to run the software. Here’s a breakdown of what equipment you typically need:
Restaurant POS system terminal
A POS terminal is the physical device that your point of sale system runs on. For most restaurants, they choose a mix of mobile tablets, with a stand that transforms it into a countertop device when needed. Tablets can effectively replace the need for a desktop computer, although some restaurant operators like to view reports on a computer.
With cloud-based restaurant POS systems, restaurant owners and operators have the flexibility to choose the hardware that works for them.
Kitchen display system
A Kitchen Display System (KDS), is an extension of your POS system for the back of house. Your KDS essentially pushes orders that servers take to the kitchen and visualises them for cooks in chronological order.
Essentially, a KDS connects your front of house to your back of house and ensures that you fulfil every order that comes through the kitchen. For smaller operations, it may be a ‘nice to have’, but for any restaurant that handles higher volumes of orders, it’s essential.
While email receipts are becoming increasingly popular, it’s still important to offer paper receipts. To do that, you need a receipt printer.
Restaurateurs can typically choose between two types of printers:
- Impact printer: these printers use wax, resin or ink-soaked ribbon in cartridges to print receipts. Impact printers are usually used exclusively as kitchen printers because they can function in high-temperature environments without breaking down.
- Thermal receipt printer: these are the most common types of printers in restaurants because they’re cost-effective. Since they use heat to print (like a laser), restaurants save costs on ink cartridges.
For customers with credit cards that do not have a near field communication (NFC) chip, they need to pay using a traditional card reader — the ones that allow them to swipe their cards.
For patrons that want to pay by tapping their credit card or smartphone, you need a contactless credit card reader. This lets them pay using and device with an NFC chip that’s connected to their banking information (like a credit card or their digital wallet).
In response to the pandemic, many consumers have transitioned to contactless payments. For one, cash is perceived as ‘dirty’. But most importantly, paying with NFC-enabled devices is faster and more convenient.
Square, which commercialised the first contactless card reader, reports that, for 31% of businesses in the United States, 95% or more of their total transactions are via card payments. This trend is likely to accelerate as consumers shun cash in favor of smart wallets.
Even though we just mentioned the benefits of mobile payment terminals and cashless payments, it’s still important to support patrons who want to pay cash.
Most POS systems are compatible with several models of cash drawers and connect via USB or Bluetooth, each of which are typically equipped with a bill and coin tray compartment. Check your POS system provider’s hardware page to see which cash drawers their platform is compatible with.
Restaurant POS systems: mission control for your business
The restaurant POS system you choose ultimately needs to align with what you need to operate your establishment now, while supporting its growth in the future.
There are a lot of options to choose from. If you’re looking for a POS solution that works with Flipdish, we integrate with:
- And many more!
Hopefully now, you have a better idea of what a POS system is and how essential it is for running a successful restaurant operation. But just remember, technology may be what enables you to run a restaurant, but ultimately it’s your quality of food and customer service that customers appreciate.
Every business is different. Find a POS that allows you to deliver the best customer experience for your context, rather than the solution that has the most features. Read online reviews, ask other restaurateurs, and don’t be afraid to talk to POS sales teams. Assess your current and future needs, do your research, and you’ll find a solution that’s right for you.