What is POS? - A complete guide

In this guide, we will give you an exhaustive insight into what a restaurant POS system is, how it works, its many benefits for your business, what features should you be looking at from a restaurant's perspective and how much does it cost.

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Installing a POS system involves investment and is an important aspect of your business. With so many options available, identifying a POS most suitable for your business can be a daunting task. An in-depth understanding of what a POS is all about and how it can be beneficial for your business can make the decision a lot easier and can help you manage your business effortlessly and you can focus on what you enjoy the most, delivering stellar dining experiences to your guests. So, let’s get started.

Understanding how a restaurant POS works

POS is the foundation of managing your day-to-day operations. Before starting your own food serving business whether big or small, it is imperative for you to have a thorough understanding of how a restaurant POS works. We have broken down the basic functioning and working into these easy-to-understand steps:

  • The first step is to install the software and configure the whole system.  
  • Once the installation and set-up is done, you need to import all the old customer-relevant data, employee data, sales data, inventory etc. 
  • Once all legacy data is imported, you are good to manage all orders and all other functions on the POS system.  
  • You can manage your staff, track your inventory, monitor the quality, manage your customers, run loyalty programs and a lot more with the help of your POS system.
  • All your billing and accounting activities can be done using the POS.
  • Your POS can help create balance sheets and generate many useful reports like daily sales reports, purchase reports, inventory reports etc.

Benefits of a restaurant POS System

Installing a POS system involves spending money. When starting a new business every penny spent matters. However, when you will understand what all a POS can do for your business you will realize it is actually an investment. So, what are the benefits to your business?

Tracking your daily sales

On a day-to-day basis running a restaurant involves so much that you are always pressed for time. Manually tracking your sales can be a major problem. A POS system has a sales tracking feature, using which you can track your daily sales, generate reports and identify trends like what is selling more and what items need to be removed from the menu.

Centralized management of inventory

Most restaurant POS systems come with an inventory monitoring feature. Proper stock management is one of the key factors in the success of a restaurant business. It is not possible to manually keep a track of your inventory. A POS system helps you track your inventory, alerts you on items that need to be replenished, alerts you on items that are expired etc. You can generate inventory reports and analyze how better you can plan your inventory going forward. 

Fast and smooth transactions

Your POS system comes equipped with options like split payment, accepting payments online via debit and credit cards, receipt generation after payment making it convenient both for your billing staff and customer. It saves a lot of time that would have otherwise gone in re-verifying an order and then generating a bill. A unique ID is generated when the customer order is first punched into the POS system. Thereafter, POS can automatically generate the bill and accept payments. The software helps you keep a track of sales by your employees. Hence there is no chance of unreported sales and stealing by staff.

Generating reports

Your POS can create a balance sheet, generate sales reports, inventory reports, and help you do a trend analysis with the help of these reports.
 

Customer Relationship Management

With a good POS system, you have all customer information with you. The system can help you send promotional offers, emails and messages to customers. Sending out messages or a special offer on a customer’s birthday or anniversary helps you get repeat business. A POS system helps you manage effective customer relationships resulting in long-term associations and repeat business

Employee Management

Your POS can track the check-in and check-out time, number of hours worked, attendance, leaves etc. of employees. It can help you create employee schedules, enabling you to utilize your staff in an optimum way.

Order tracking and management

Your POS is an effective communication platform between the kitchen and the reception staff. Once an order is received and fed in the POS system, it can automatically alert the kitchen tagging it against the table number. This can help avoid any errors and save valuable time in a normally frenzy restaurant environment.

iPad and QR enabled orders

Most people these days are tech-savvy and given the current pandemic situation prefer a contactless experience. Earlier visiting a restaurant meant, a waiter would come and handover the menu to you and manually take your order. However, modern restaurant POS solutions support features like loading the menu on the system which can be accessed by the customer online by scanning a QR code or on a tablet/iPad kept on his table. This makes order placing contactless and also faster.
 

Online reservations and ordering

A POS system can help you check real time availability of covers and take online reservations in advance. Your POS can also integrate with food delivery services like Zomato, Swiggy etc. and take online food delivery orders, which can considerably increase your day-to-day sales.

What to look for in a POS system for a restaurant?

Different businesses have different requirements and therefore there are specific POS systems dedicated for each kind of business. A salon or a gym would require specific features in their POS system. Similarly, as a restaurant you should look for the following functionalities or features in your POS system:

Inventory Management System

Proper management of inventory is the backbone of a successful restaurant. As a restaurant, it is non-negotiable to have a POS that comes integrated with a good inventory management tool.
 

Employee Management System and Payroll Management

A restaurant is essentially a people centric business. A good POS system should be able to help you identify the busiest and leanest hours of business and help create an employee schedule accordingly. It should be able to track individual sales, working hours, leaves etc. At the end of the month your POS should be able to run a payroll cycle taking into account the number of working days, leaves etc.

Smart device integration capabilities of POS

Integration with smart devices like a tablet and mobile phone is essential for a restaurant POS system. Mobile POS systems help enhance your efficiency as you can monitor and operate from anywhere and anytime. Smart device integration helps take online orders and track their deliveries. 
 

Credit card machine integration capabilities

Your POS system is a combination of software and hardware equipment. Your POS service provider will set up the hardware, import legacy data, set up your desktop, touch screen terminal for user interaction, kitchen display for seeing the order ticket and server and router for internet service. However, you must ensure that your POS software supports and integrates a credit card reader that helps to read the cardholder's account information for completing a payment transaction. 
                       

Generating Reports

A restaurant POS system must be able to generate date-wise purchase reports, sales reports, stock reports, accounting reports etc. Configuring your system with a cloud server can help you access these reports remotely.

Software customization capabilities

Your POS software should be configured such that it can meet your unique business needs. It should provide you with an option to customize the language and currency as per your country. Before choosing POS software, make sure it supports such customization. 

Order management capabilities

A good POS system should enable you to track orders and review whether it is complete or pending, and also enable you to cancel an order. It should enable online ordering and tracking delivery of online orders. It should support features like sharing real time tracking of orders with the customers, chatbot to address customer queries regarding online orders etc. 

Table Reservation capabilities

Your POS system should enable you to manage the restaurant table and reservation process. It should come equipped with a table management system enabling customers to book a table online, enabling both you and the customer to view the number of empty tables at a particular point in time.

Purchasing capabilities

Your POS software should allow you to track purchases, make new purchases, and initiate return requests. It should allow you to maintain a supplier repository.

Account Management Capabilities

Your POS system should come with account management features that can help you operate your accounting operations smoothly. It should enable you to maintain your supplier payment schedule, cash adjustment, create a debit voucher, credit voucher, contra voucher, generate balance sheets and account reports automatically. 

Role Permission feature capabilities

A good restaurant POS system should come with a Role permission feature. This feature allows the admin to add new users and assign them specific tasks. The feature enables the admin to give a particular user access to the data only relevant to his function. When there are multiple users on a system it is important to have these restrictions in place. Not everyone can have access to all data. Role permission feature ensures that a user performs only his individually assigned tasks. This makes your confidential data secure and also helps you track pilferage if any.

Menu Management capabilities

A good restaurant POS system should enable you to upload your menu, make changes, encourage paperless ordering facility by integrating the menu on smart devices. It should be able to update real time availability of items on the menu. If a particular item on the menu is out of stock the POS should automatically update it. This also enables customers to choose from items that are readily available.

CRM Capabilities

A restaurant POS system should enable you to save your customer details, manage old customer data and add new customer data. It should enable you to effectively run promotional programs, alert old customers about any discounts and seasonal promotional schemes. It should be able to help you identify busiest business hours, identify your most selling items etc.  

User-friendly and stellar customer service

Your POS should be easy to understand and use. Also, ensure that your service provider has a good track record of providing customer support. No matter how sophisticated and advanced your POS system may be, you are bound to face outage issues once in a while, small technical glitches etc. A good customer support will ensure that these issues get resolved quickly and your business does not suffer.

What are the expenses involved in installing a POS system?

A POS system consists of hardware equipment and software. Most providers will require you to pay upfront for the hardware and the software will be a monthly subscription plan. Depending on the features you require and your budget, there are many POS options available specifically for restaurants. With regards to hardware, you will need to typically invest in the following hardware equipment:

  • Touch screen enabled monitors
  • Tablets / iPads
  • Router, server, cables and a restaurant kiosk
  • Credit card reader, cash drawer and receipt printer
  • Kitchen display system and a kitchen ticket printer

Your software costs will comprise installation, implementation, training costs, support and maintenance costs, upgradation costs and additional costs for advanced features like online ordering and tracking, chatbot feature, transaction charges etc. Some POS providers charge extra for third party integrations which may spike your overall operational costs. 

 

Limitations of a POS system

Though an important tool, POS system has its own limitations:

  • POS being a technology-based platform is prone to virus attacks, malfunction, outage etc. which if not resolved on time can result in considerable business loss.
  • Since most systems these days are internet based your data is prone to get hacked resulting in confidential data being leaked.
  • The features come with a price tag attached to them. Technology changes and so regular upgrades are required. Having the latest state of the art POS system involves certain costs.
  • Restaurant business is a labor-intensive industry. Not all people will be tech-friendly or willing to adapt to technology. Training staff on the POS software can be a challenge at times.

Restaurant business is one of the fastest growing sectors. People are eating out more than ever. There is no way that you can avoid technology if you want to exponentially grow your business and up your game. A good POS system is a necessity for modern day restaurateurs. However, it involves a considerable amount of investment and it Is a vital part of your business. 

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Things to consider in employee POS training

Having a POS system for restaurants that supports these modern needs is more relevant now than ever. Having invested in a POS system that supports all your needs is the first step. But you get the value only from correctly using these tools and features. How do you ensure that? Getting your staff trained on the system is the only way to ensure that you can optimally leverage the benefits of your POS system. A smooth on-boarding and training on the system will ensure they are comfortable. It is imperative to make them aware of the new changes and address any concerns they may have regarding the change. Let us begin with understanding how you can make the transition easy for your employees, a few things that you should keep in mind before embarking on training them on the system.

Historical data access

Even if the new POS system is easier to use, some staff members might be worried about losing out on old sales related, customer related and other data. This is not true! It is possible to import old customer information and all relevant historical data into the new POS system. This can be done with the help of .CSV files and our robust ecosystem, third-party apps, tools, and plugins.

E-Learning

E-learning courses are the way forward. With the help of modern technology, managers can be provided with 24/7 access to POS back-office management through video tutorials. Online training will allow for quick rollouts of the same features across all your stores with different locations by applying a standard menu programming across all sites' systems.

Hands-on Training 

Mastering a new POS system may sound daunting, but there is no better way to learn it hands-on. The detailed training videos and illustrated documentation can be useful for the staff to work on the new POS system. Take an example of processing a reward scheme along with credit card payment. While an overview of the process in step-by-step videos may be useful at first glance; many people find that doing it themselves is more helpful than just watching someone else do it. 

Highlight the features

When you introduce your POS system to your staff, be sure to demonstrate its easy to use  features and emphasize on how these features can help simplify their day to day tasks and ensure seamless transactions. Educating them on tools like inventory management and other unique features of the POS system works because this will ensure that transactions are handled quickly and accurately.

Allow real-time transactions and help them acclimatize to the new system

Achieving mastery over a new system is not an easy feat. Once the historical data migration is complete, encourage your staff to complete transactions on the new system. However, the simplest of POS tools will have their own challenges. Real-time transactions should be practised when it is a lean period. For example, a pub will hardly have any guests for lunch on a weekday. Whatever few guests they have, it is the best time to perform and practice real time transactions on the new system. Provide your employees  real-time assistance and be patient with them as they get used to the new system. Give them time to practice and develop muscle memory for common features of a new tool. The more confident they are in their abilities; the less mistakes will happen when interacting with customers which results in happier customer experiences!

Feedback

You can use the feedback you get from your employees to identify any potential weaknesses in your process. By following up with them about any lags or mishaps, they will know that their input is valued and respected by you as an employer. This clear communication shows how much of a team player both parties are wanting to be for each other's success! After introducing staff to a new POS and giving them enough time, ask specific questions about their experience that could help you identify potential problems. Making your team feel like they are experts in the field is vital for retention rates.

Let us look at a brief example of a Restaurant point-of-sale system. Any restaurant transitioning to a modern point-of sale system should keep the following in mind for their staff:

Some of the important analytics features that can help in training the employees are:

Frequent updates: The easiest way to get instant feedback on your business is with live performance metrics. With a few clicks, you can have an update from every point-of-sale system in one location. This will help managers spend less time trying to figure out what's going wrong and allow servers at work more control over their position without fear that something has gone wrong. By using updates to your ticketing system, you'll be able to give your kitchen beneficial information that will help them make changes quickly and easily.

Inventory management: You’ll be able to track inventory throughout the day with your point-of-sale system. If you teach staff how to use it properly, they will understand what items are in stock and which ones aren't so that customers don't order something when it's out of stock or employees can offer other options if necessary.

Sales report: It is easy to read the report features that allow you to break down sales by region, product and more. This comes as a very helpful tool for managers.

Training to Manage Customer with POS

The application software categorises the data for managers and staff, that makes the data useful for managing the customer in a better way.  You can allocate the tables or manage employees efficiently using the application.

Employee management: Whether it is cleaning the restaurant or washroom, the deadlines and tracking is maintained. If an employee is on leave it prompts to engage another person. Scheduling employees in a shift can be time taking when done manually. It streamlines all the employee scheduling and improves communication.

Reservation management: Online reservation is a very common trend now, as people want to avoid waiting time and over crowded places. It's important for the employees to understand how POS helps in online reservation.

Trend tracking: Understanding the present trends and likes of customers help in serving better quality and introducing new ideas. That is how even Starbucks uses the data to track trends. 

Software training

Portable Kiosk: The mobile point-of-sale system is a hot topic in the restaurant industry. It would be smart for you to educate your staff on how to use them, which means learning about some of their features such as mobile payment, software upgradation.

Accounting: For restaurant managers accounting is an important skill. Also, it is time consuming, hence it is important to know whether your accounting can be integrated with your POS. Doing so makes life so much easier for the manager.

Safety and security: Keeping your customer information safe and confidential is a priority for any business. POS systems can be integrated with security systems, to prevent any frauds whatsoever. 

Training your employees to upgrade to a new POS system is a time consuming process. But with proper planning, upgrading to a new system is not all that difficult. Integrating and adapting a POS system for restaurants will help you run your business more efficiently.