The following article appeared in Florida Restaurant and Lodging, Vol. 14, Number 1

You’ve Come A Long Way, Baby

A perspective of restaurant Point of Sale: where it began, where it is today, and where it’s going in the future

By Rich Peterson

Whether a restaurateur operates one location or one hundred, he is faced today with the same decisions and challenges to his business.

Understanding the evolution of POS systems should enlighten your expectations of a POS system. Knowing how POS has changed and how it will change, how operators have changed and need to change, and the educated choices involved can only advance the industry as a whole.

The Evolution of POS

In the beginning, there was the cash register. It handled cash transactions. Period. You could correct it, you could void a transaction, you could handle a coupon. But the extent of its reporting capabilities ended with a rudimentary daily sales report: sales and cash.

However, intelligent operators began to require more information. Where did my sales come in by different types of tenders? Which promotions worked and which didn’t? How much of a particular brand of beer did I sell? How many appetizers did I sell and, of that, how much was the escargot? Not only were gross sales important, but intelligent inventory management became critical as well.

POS vendors responded with increasingly sophisticated systems that met these needs, allowing operators to, for example, swipe credit cards directly without key entry concerns. Also, video surveillance designed to reduce shrink appeared. These systems were proprietary solutions, however, restricted by firmware limitations. Further, they chained operators to the POS by forcing them to change their business model to meet the POS operation.

The early 90’s ushered in DOS based programs on personal computers, providing increased memory that solved the firmware limitations of earlier proprietary systems.

And then came Windows.

With the advent of Windows, operators were able to free themselves of the proprietary systems. More importantly, Windows allowed not only multi-tasking, but multi-threaded processes: not only could you run several programs at one time, they could all process information independently at the same time.

Operators were now able to interface their POS to “best of breed” applications, such as finance and accounting, to extend their business solution. However, interfaces are one way streets that pose a difficulty: information must be housed in two locations. The interfaced program can’t query the main application. Which data set is correct? As expectations grew, interfaced software began to show its weaknesses.

The answer? Integration. Industry leaders, such as Aloha and Micros, are continually identifying and integrating critical functions previously interfaced. Instead of interfacing such third party programs as reservations and table management, frequency, and gift cards, those functions are now being integrated directly into the POS itself, providing a 360 degree view of the customer.

While interfacing continues to be a solution to the widening requirements of business operation, integration will become more and more important in POS development. Key above house and back of house functions, previously performed by third party software providers, will be added directly to the POS offering.

Such third party interfaced programs as credit cards, inventory, gift cards, frequency, reservation, table management, above house reporting, alerts, proactive support, pay-at-the-table, and web ordering will become common offerings in future POS systems.

This is already happening. Radiant now offers its distributors its “Command Center” to support their high speed Internet clients. Command Center continuously monitors the complete health of the POS system through the POS provider. As customer hardware approaches critical operational thresholds, this information is available to the POS vendor, allowing the proactive replacement of hardware prior to a potential failure.

The Evolution of Support

POS support began as a simple board swapping process. However, as the system complexity increased, it rapidly evolved into a finger pointing game: there was an OS running an application, interfaced to several programs with a number of attached peripherals. Add to that uncoordinated software and hardware upgrades by diverse vendors and you get chaos.

Support has metamorphosed from fixing a printer to fixing a virus and the—literally—hundreds of possibilities in between.

Today’s POS vendor can’t merely provide hardware and software; it must provide consistent and authoritative IT consultation. Because of the richness of today’s product offering, both from the original provider as well as third party providers, successful POS vendors must develop the expertise to rapidly diagnose these complex systems: not only must they must be able to troubleshoot applications and associated software, they must be experts in networking, virus and malware eradication, and peripheral operation.

This necessarily results in a consultative relationship between the customer and the technician. As the POS system becomes more complex, the burden of support falls most heavily to the POS vendor, in effect becoming the IT extension of the customer.

But it is unrealistic to expect any given technician to respond to a support call and have all answers to all questions. Most credible POS vendors now compartmentalize information to technicians specialized in specific areas, distributing those issues to them immediately

The Evolution of the Vendor

Do you want just a cash register or a P&L tool? If you simply want to manage cash, non-integrated solutions are fine. The vendor can install the POS on the counter top, wave goodbye, and the system will work until it dies, at which point the vendor will come out and replace it. Rinse. Repeat.

However, if you want a tool that will continually drive revenue to the bottom line, you should be looking for a POS system that is moving strongly from interfacing to integration.

Successful POS vendors today are companies that have deployed the mechanisms to install and support all aspects of the customer relationship both short and long term. The POS system should manage all aspects of the business, allowing the operator to define and refine processes that continually add value to the customer experience and profit to the P&L from Day One. The POS must be robust enough to continue to expand with new technologies and adapt to the customer’s business model and not the other way around.

There are additional considerations, though. Clearly, the simpler the system, the fewer the challenges; conversely, the more complex the system, the greater the challenges. Cost of ownership and return on investment are key considerations. Is it going to cost more to process credit cards? What is maintenance going to cost in the second year of coverage? Is the maintenance agreement clearly documented so that expectations are reasonable? Are future hardware additions or replacements provided at the original purchase price or unpleasant surprises?

The Future of POS

Many of the exciting possibilities of POS are beginning to emerge: pay at the table, web ordering, and integrated video surveillance to name just a few.

Of the three, the largest looming on the horizon is loss prevention. This represents recapturing revenue already realized that does not make its way to the P&L. This is especially critical during economic downturns such as we are experiencing currently. Integrating—rather than interfacing—video surveillance into the POS system offers such benefits as real time alerts and monitoring via the Internet from anywhere, any time.

Bottom Line

Most important: using the POS system together with the POS vendor to build a stronger and more predictable Profit and Loss statement with the system that you currently have.

Abacus. You can count on us.