The Need for Speed in Restaurant POS

When I think about restaurants in the abstract, I most always picture my favorite sit down Cheers-like restaurant where everyone knows my name. Of course electronic tableside ordering would be extremely helpful there but for some restaurant owners, it is still a challenge to justify incorporating a new system when they purchased their register-based system a couple years ago. Tableside ordering is making significant inroads in this arena and most restaurateurs acknowledge that they will switch to tablet POS at some point in the future.

So let’s expand our vision beyond Cheers to vastly different food service locales such as stadiums, concert venues, food trucks, street vendor carts, theaters, amusement parks, outdoor summer festivals, concession stands at high school track meets, Pop Warner football and Little League games. These sites have one thing in common: they have to process a large number of orders for throngs of people in short periods of time. If mobile device POS had poster children, these fast service specialists would get my vote.

While standard PC-based POS system have historically been too expensive for these smaller food purveyors, mobile POS takes the price point and merchant services processing down to a level that can be justified even by the PTSA Band Booster Club. While some benefits of mobile POS such as CRM and loyalty programs may not be really useful in these moveable venues, capturing transaction data and maintaining accurate inventory are a huge deal. In their businesses, monitoring costs, managing time and understanding what’s trending lets these merchants adjust to changing appetites, schedules and food prices without missing a beat.

Less expensive merchant processing and widely accessible mobile food service apps have lowered the barriers to entry for a whole new set of entrepreneurs. These new restaurateurs probably would not put themselves in the same category as Wolfgang Puck, Guy Fieri or Mario Batali but now they share the same options for reducing their costs and satisfying their customers in any possible food service location.

10 + 2 Reasons to Use Mobile POS

Yes, mobile point-of-sale systems are the biggest retail trend of 2016 but don’t dismiss it simply because of that. There are many reasons why it’s trendy and a good many of those reasons apply to you and your business. Hear us out and then see if we’ve addressed your objections. Fair enough?

  1. More affordable than a standard computer-based point-of-sale system. Mobile POS systems cost about 50% to 70% less than a standard PC-based POS system as an initial investment. Technical support, operating and troubleshooting are included so on-going costs are minimal. For example, let’s say a PC-based POS system is $20,000. The comparable mobile POS would be between $10,000 and $14,000, shaving your payback period by the same 50% to 70%.
  2. Lower your credit card charges. Mobile POS uses standard Apple iPads, iPods and/or iPhones and simplifies the types of transactions accepted so your charges are less expensive from swipe to deposit.
  3. Flexibility to update, change devices easily and less expensively. When it’s time to update a typical POS system, it means an upheaval to your entire business that could last days. Working with mobile devices such as iPods or iTouches makes it easy to swap out and continue with the workday, no problems.
  4. No disappearing operating systems (XP anyone?). Mobile POS hand-held devices are standard-issue Apple tablets, iPods and iPhones so there is no end of support to handle.
  5. Quicker service, accurate totals, fewer errors or lost orders. Taking orders faster with accurate calculations improves your bottom line. Automating your ordering system also ensures your staff is making fewer errors and orders for food, services or merchandise cannot slip through the cracks or under a cabinet. All of these improvements add up to great customer service.
  6. Line busting. Everybody hates standing in line, especially when all they want to do is order or pay. Rather than having customers to stand in line, you process them where they stand – a practice fondly known as line busting. Untether your cashiers or order takers with mobile devices to minimize the time people stand in line, turning your customers quicker and eliminating impatient ones.
  7. Simplified daily cash out. Since all orders, refunds, returns and credits have been tallied real time all day long, batching or cashing out is much faster and any discrepancies are easy to spot and resolve without looking through the receipts manually. Maintain better records daily to make monthly and quarterly tax and withholding reporting a breeze.
  8. Better sales tracking and remote monitoring. Spotting surging or waning buying trends by looking at what’s moving the fastest helps you stay on top of your inventory and not get caught flat footed, either with too much of one thing on hand or not enough of what’s hottest in stock. Best of all, since all your data is based in the Cloud, you can access your sales and inventory numbers from home, at a conference or on the day you slip away for some much-needed R & R. While working IN your business, you also need to be able to work ON your business. Mobile POS lets you access data while you are working on future business planning regardless of where you are.
  9. Gift card and loyalty programs. No one needs more sox; a gift card to an unusual or favorite shop or restaurant is always welcome and most appreciated. Portable ordering and payment creates a more intimate, personal experience between customer and server/clerk. Capture an email address for electronic receipts and you have the perfect base for promoting your business, encouraging frequent return visits and suggesting gift cards for giving. Gift cards are the most popular item on everybody’s gift list and studies have shown that gift cards and loyalty programs boost repeat visits and attract new customers. You really can’t lose with this one.
  10. The beginning of Customer Relationship Management (CRM). Larger companies know the importance of capturing and cultivating customers – the say is that it’s cheaper to keep a customer than it is to bring in a new one. This also applies to smaller businesses that aspire to be larger. Since you’re doing a better job of tracking your sales and getting email addresses, you have the beginning of a rudimentary CRM right within your mobile POS system. Send an email to let people know you’re running a special. Run a contest with free dessert as the prize. Publicize your new outdoor seating areas. Track frequency of visits and send a “we miss you” card if they haven’t been in for two months. You have all the tools to manage and expand your business at your fingertips.
  11. 15 minute training. Your clerks and servers will be up to speed and productive in 15 minutes tops. Virtually all teens to retirees are adept at handling some type of portable electronic device. The steps for ordering and processing payment are so quick and easy, even children could handle it.
  12. Welcome Micromerchants. Small volume or seasonal businesses have customarily been ineligible for credit card processing because the equipment was costly and setting up the accounting was expensive so merchant service providers weren’t willing to accept them. The mobile POS boom opens processing to these smaller merchants at craft fairs, home repair service vendors or even the guy who delivers your firewood because there is no costly equipment to buy and the processing required by merchant services is streamlined.

So now what do you think? You may have some “yeah, but….” thoughts still rolling around. If so, please give me a call at 585-704-6453 or email me at mike@SalesSensePayments.com

Gift Card Programs for Loyalty and Profit

For the seventh year in a row, gift cards are at the top of everyone’s gift list for gift-giving occasions. According to the National Retail Federation’s 2015 holiday survey published last October 60 percent of the consumers polled said they prefer receiving gift cards that let them select their own gifts. Department stores (40.3%) and restaurants (34.2%) are the most popular gift cards among shoppers and recipients alike but coffee shops, electronics and online merchants were well represented too.

This is excellent news for every type of retail outlet and it is incumbent on every retail company to set up a gift card program to take advantage of this surge in popularity. From pet salons to dry cleaners, gym, craft store or the specialty meat market, gift cards can give your bottom line a boost. The statistics on long-running gift card programs show that gift cards draw new customers to a store, business or restaurant and the amount spent per customer rises as well. 

Regardless of the denomination of the proffered gift card, the consumer nearly always spends more than the face amount. Even if the sale rings up at less than the amount of the card, the merchant is the all-around winner. If the tab is greater, the merchant has sold more than the original amount; if the tab adds up to less than the card’s value, the merchant gets to keep the money left over on the card. 

While some protest that gift cards are impersonal, their popularity is undeniable. Rather than taking the easy way out, many gift-givers are looking for gift cards at specialized stores that cater to their loved one’s unique interests. 

Our society is so used to handling credit cards that it isn’t a great surprise that plastic gift cards have more intrinsic value than paper certificates or even punch cards. Plastic cards offer a myriad of benefits to consumers and retailers alike:

  • Produce 30% to 50% more revenue per card 
  • Simple to track (retailer) 
  • Less likely to misplace or lose it (consumer) 
  • More convenient to carry in purses, wallets, pockets, backpacks, phone cases 
  • Sturdy, won’t rip, tear and the bar code remains scannable 
  • Another product or merchant branding opportunity 
  • Makes a good impulse buy item at the checkout 
  • Easy to use, add money or reload the card 

For more information about gift cards and how they should figure into your business, contact Mike Krause at (585) 672-6381.

Tips vs Service Charges: The IRS Changes the Game

It happens everywhere to restaurant patrons in large parties (six or eight or more): the restaurant tacks on an automatic gratuity percentage so that math-compromised guests don’t shaft the server(s) at the end of the meal. Tipping also helps to keep menu prices stable and attract high quality servers. So even as the American economy crawls slowly into a healthier place, the IRS ruling that an automatic gratuity is really a service charge tosses the country’s wait staff a rotten tomato.

The difference between tips and service charges is significant because tips are not subject to FICA (Federal Income Contributions Act) withholding and service charges are. This new ruling classifies service charges as a wage rather than a free-will payment made by a patron at the end of a meal. Ultimately, it means that while the wait staff eventually get their portion of the service charge, it is deferred and added into their wages with FICA, state and federal withholding taxes deducted.

To qualify as a tip or gratuity, a customer’s payment to a server must meet four requirements:

  • The patron makes the server’s payment of his or her own free will
  • The patron decides the amount of the server’s payment
  • The patron decides which server(s) are given an additional payment
  • The payment made by the patron is not negotiated or set by the restaurant’s policy

Automatic gratuities, now considered service charges, flunk the tip test on all four factors. So the service charge becomes part of the server(s) wages paid every week or two weeks, not hard cash they take home that evening.

The new ruling also changes how restaurants, country clubs and other hospitality enterprises handle their automatic and manual reporting for IRS purposes. The ripple effect is potent as merchant services and hospitality management software and terminals now must be adjusted to accommodate the IRS ruling.

Some restaurants are changing their employment model to pay servers a living wage rather than providing a low hourly rate and expecting the rest of the server’s money to come from serious hustle and schmooze. Still other restaurants are avoiding the service charge issue by providing large parties with suggested gratuity tables of 15 percent, 18 percent and 20 percent of the total check, then letting the patrons make the ultimate decision on tipping themselves.

For more information about merchant services and hospitality management systems, please call Mike Krause here or at (585) 672-6381.