October 31, 2024
Written by: The POS Exchange Team
Behind the scenes of every successful restaurant is an efficient point of sale (POS) system. This is especially true today, as customers have come to expect fast, accurate service when dining out. So, what happens if you switch to a new POS system that doesn't meet your expectations? You might be stuck with a complex, clunky system that only frustrates your staff and makes operations more difficult. Understanding how a restaurant POS system works before selecting can help avoid this scenario. In this article, we'll cover exactly how a restaurant POS system works to give you insights into choosing a system that will meet your operations' needs. The more you know about how a restaurant POS system works before you make your selection, the better you'll be to choose a system that will help you improve accuracy, streamline operations, and enhance your customers' dining experience from day one.
The Best POS System for Restaurant by The POS Exchange can help you get there with our comprehensive restaurant POS systems guide.
A restaurant POS (Point of Sale) system is a digital platform used to:
It combines hardware, like tablets and cash registers, with software that:
The POS system is the hub for handling transactions and streamlining restaurant operations.
What is POS? POS stands for point of sale, which refers to the time and place, or the fact, that a sales transaction is completed. A restaurant point-of-sale system includes POS hardware and hospitality point-of-sale software that manages a sales transaction, including:
Restaurant POS systems are built specifically for restaurant businesses, not retail or hotel. A modern restaurant POS system can streamline your internal operations, connect all the personnel involved in making your restaurant run smoothly, and automatically track:
This helps increase revenue, profit, and customer satisfaction while decreasing employee:
The modern restaurant POS system is made up of two parts:
Restaurant point-of-sale hardware is made for the hustle and bustle of the restaurant industry: industry-grade and hard to break. The POS terminal is at the center of every POS system, sometimes called the touch screen cash register. This piece of hardware handles everything from ordering food and sending it to the kitchen to:
Some restaurant POS systems also offer mobile POS tablets that allow servers to send orders to the kitchen and accept payment and tips at the table. If you don’t own a table service restaurant, the mobile tablets can allow your cashiers to take orders in the line, or "line bust."
Some fast-casual restaurants implement kiosks to give guests control over placing digital orders. According to the National Restaurant Association, 42% of diners would use self-service ordering kiosks if available, so this is a significant opportunity to stand out.
Now that you have restaurant hardware, you need software to run the hardware. Restaurant management software will help you run your business more efficiently because you can have:
Restaurant POS software can run on:
If your restaurant hardware is an Android tablet, such as a Samsung, it will run on Android. If it is an iPad, it will run on Apple. If it is a computer, it will run on Windows. Both systems have pros and cons.
iOS software is easy to use, as it’s a favorite among consumers. It’s not very customizable, as Apple requires app updates to undergo a rigorous approval process in the App Store. Also, you have just three choices for hardware sizes:
Android software might be less familiar, but it is highly flexible and customizable, so your restaurant's point-of-sale system can feel like an extension of your restaurant's operation. The POS team can send updates to your software instantly, and there are dozens of manufacturers and hundreds of Android device models, with sizes as small as 5" phones and as large as 22" tablets. Android systems are also, in many cases, more affordable than Apple systems.
A large, clear touchscreen monitor allows for easy navigation and reduces the need for additional hardware, such as a mouse and keyboard.
A barcode scanner is essential for quickly scanning items and accurately tracking inventory.
A sturdy cash drawer is essential for securely storing cash and credit card receipts.
A high-speed printer helps keep lines moving quickly and prints customer receipts accurately.
A dedicated kitchen printer helps streamline the kitchen and ensure that orders are prepared correctly. These printers are often specially made to handle the heat of a kitchen, and you shouldn’t use a standard printer for this reason.
A secure credit card terminal is necessary to process customer payments.
A mobile POS system allows for flexibility, including taking orders and processing payments at the table.
A display shows the purchased items and their total cost, helping prevent mistakes and build trust.
A robust system can help you track your food and beverage inventory and manage recipes and ingredient costs. Most POS systems have a notification system that alerts you if shortages or supplies run low.
Accurate and up-to-date sales data are critical for any restaurant to make informed business decisions. Is one product selling better than another? What times are busiest? A sound POS system will provide real-time sales reporting and the ability to generate custom reports and export data to other platforms.
An efficient table management system can make a big difference in the speed and accuracy of service, which is crucial when you’re busy and short-staffed. This feature should allow you to:
You can offer a more personalized experience and build stronger relationships with your diners by keeping track of:
A sound CRM system will also allow you to send targeted marketing campaigns and reward loyal customers.
A seamless and secure payment system is essential for any restaurant. Good POS software should process credit and debit cards and support various payment methods, such as:
With more customers ordering food online, restaurants need an online ordering system that integrates with their POS software. This will help streamline the:
A restaurant POS system has several parts and functions that help your staff take orders and process payments efficiently.
The basic hardware needed for a POS to function is:
Depending on your hardware setup, your POS terminals will connect to a central server that houses all sales data for your restaurant. Your system will also connect to peripheral machines via USB ports and cables, including:
The connections will allow you to control all pieces of hardware through the POS terminal. Some systems use Bluetooth technology to connect peripheral machines wirelessly. When you decide on a POS system, your POS company will help you set up your system and teach you how to use it.
You will have an account with your POS provider, and they will work with you to set up your menu so that items are ready for staff to select when taking orders. Your POS provider will also set up any required staff permissions and accounts on the system, and they will train you how to use the POS so you can then train your staff. Some POS providers offer more extensive staff training than others.
The first function a POS serves is the obvious: it’s where transactions are made. Your restaurant POS system:
That may sound simple, but the technology is nothing short of complex. Have you ever had a customer ask for a cheeseburger without the cheese and with x, y, and z instead? POS systems simplify entering complicated orders with easy-to-use interfaces that respond with just a quick touch of the finger versus messy paper tickets.
A mobile POS also means that tabs can be opened and closed in any number of ways:
Your front—and back-of-house staff are in constant contact, and restaurant POS systems expedite those communications. By enabling servers to digitally send ordered items to the kitchen after a customer orders them, you significantly reduce the time your guests wait for their food to be ready.
Likewise, your kitchen staff can immediately alert FOH when food is prepared to be delivered, ensuring optimal freshness for your hungry guests.
One essential job that restaurant POS systems accomplish is making it easier to manage multiple parts of your business, all from one database.
Inventory management means that your POS reports depleted inventory as it’s ordered. That information must be in one cloud-based system that automatically updates in real time. This is great for both food and beverage ordering and merchandise sales. Most POS systems will even ping you reminders when you’re running low and need to order more of something.
Synced POS and inventory systems let your hustling staff focus on selling, and your POS can focus on reporting.
The most significant benefit of a restaurant POS system is the robust amount of data you can glean from reporting.
Here are a few insights that your POS should provide:
What’s selling and what’s not? Knowing this is key to maximizing your profit and minimizing waste. It can also give you good information on what kinds of new menu items you should be rolling out. If you find my salads aren’t selling as fast as my pizzas, I know what to add for next month’s special.
This report shows the exact time each product is ordered, instead of just the time a customer transacts. (This is handy for those Happy Hour guests who stay until close!) Insights into when items are ordered are essential because they enable you to curate timed menus with only the most popular items, and you’re not wasting extra ingredients in stock and wasting them.
Track order trends by the hour of the day to determine what times you’re selling the most and when you need to staff up. Knowing this data lets you plan fun events when you’re typically slower, so I can incentivize visitors!
Identifying what days of the week you’re busiest and slowest is critical. That data helps you make proactive decisions about your business. If my Tuesdays are consistently slow, that may be the perfect night to schedule a weekly Trivia Night.
This data helps you identify which employees make the most sales. You need to identify these top sellers to ensure they’re working on your busiest nights and share their knowledge with the rest of your team about what’s working for them.
Another function of a restaurant POS system is integrating with other systems you’re using. This includes:
Information in your POS and all of your integration systems should sync so you can automate the data flow from your POS and e-commerce transactions. This will keep you, in making business decisions for your restaurant, knowing you have a holistic view of your company:
Additional Features
Most restaurant POS systems offer additional features—sometimes for free and some for a monthly fee.
The features may include:
Some POS systems require an internet connection, while others don’t. You’ll need an internet connection most of the time to process orders through your POS, and you will always need an internet connection to process credit card and debit transactions. Some POS systems, however, can still function if the internet goes down. You’ll want to ask about this when shopping for a POS.
If your venue is large, you will need several wireless internet access points to cover all your POS terminals.
Understanding the hardware component of a POS system is crucial. What type of hardware does the system use? For example, if you want an iPad POS system, you’ll want to ensure the provider’s software runs on Apple products before getting too deep into negotiations. If you and your staff are comfortable with a specific type of hardware, it may also help to narrow your search to systems that operate on that device.
From there, ensure you understand all the hardware requirements for running the system. You don’t want to pick a restaurant POS only to find out you didn’t account for all the hardware required. Ask early what is needed – it’s likely more than one iPad or tablet.
Some hardware requirements you’ll want to ask about include the following:
When you ask about all the POS hardware requirements, you avoid unpleasant surprises down the road.
What are the system’s basic capabilities? This may seem like a general question, but it’s a helpful starting point to get to know the system. This is where different POS providers can let you know general features – such as changing your menu or sending orders to the kitchen. This question can also potentially knock off some of your other questions early on by helping me find out what the system can’t or doesn’t do and find another solution.
For example, maybe the system can’t handle online ordering well, and if a large portion of your sales come from online ordering, this would be a deal-breaker for you. By finding this out early, you’ll save time and be able to spend time considering and choosing the right system for you.
Can my POS help with labor? The answer should be yes! Your restaurant POS should provide scheduling and labor insights, such as top-performing staff and labor hours.
Consider this: You’re trying to plan your holiday staff. You don’t want to overschedule, but you also don’t want to schedule too few people. As the holidays roll around, most days, you’re either short-staffed or have extra servers waiting around. Either way, it’s less than ideal. With your labor reports on your POS, you don’t have to make the same mistake twice. Use your past labor data to accurately forecast staffing requirements, saving you headaches and money on labor hours.
Your restaurant POS is packed with valuable information, and your reports organize that information for you. The information you pull from these reports should give you valuable insights for running your restaurant and making more informed decisions with real-time insights! Because reports can be such a powerful tool, you’ll want to ask about the reporting your system has.
Some information you’ll want to see in your reports include:
While you’re asking about the reports available, you’ll also want to ask how I manage these reports. Do I have to go into the building whenever I want to pull a report? Ask about cloud reporting capabilities. With this remote access, I can pull and manage reports from anywhere – between off-site meetings or from bed for a (well-deserved) day sleeping in. Your reports don’t have to be limited to your physical restaurant space.
Thanks to powerful integrations, many restaurant POS systems do more than process and track sales. These integrations build out your system's functionality while adding valuable hours to your busy week.
Below are some integrations you’ll want to ask about for your business’ POS. Consider this answer a free recommendation from restaurant owners already using the restaurant POS software you’re considering. This will give you some insight into:
Inventory management is one of the most essential parts of running a restaurant. Nearly 54% of restaurant owners struggle with managing their food costs, according to TouchBistro’s 2023 State of Restaurants Report. Many restaurant POS systems will have powerful inventory capabilities and integrations to help minimize that struggle. Since inventory is a significant issue for veterans and new restaurant owners, asking about any integrations is crucial to smoother this process.
Do you mean you don’t want to spend hours going back and forth manually inputting your POS data into accounting software? With a point of sale that integrates directly into accounting software, you can avoid the tedious manual entry, and inevitable errors that come along with that. Finding out what accounting integrations are available can save you many headaches, and accounting errors, in the long run.
You're also trying to make money while running a restaurant to serve delicious food and make people happy. So, how are you processing payments at your restaurant? Payment processing isn’t something you can skip at your restaurant unless you choose to go wholly card-free and accept cash only. Whether looking for an integrated processor or a standalone system, most restaurant POS systems have different payment processing options.
Try to avoid POS providers that only offer one payment processing option. Without the freedom to choose, you won’t be able to find the one that fits your business needs or switch when/if those needs change.
This will likely be one of your first questions, but ask before signing anything! This includes the cost of the hardware and software (either a one-time fee or a monthly/yearly subscription fee). You’ll also have to remember that some integrations are an additional cost besides the POS. We discussed the different integrations you can ask about, but figure out how much they can cost in addition to your software and hardware costs.
You know the cost, but how are you paying it? Is it a monthly subscription? A yearly payment? And what are the different pricing models based on your restaurant size? There’s no one-price-fits-all solution on the market for restaurant POS systems, so while your buddy down the street paid one price to accommodate his venue, you might pay another. Getting the information on pricing models will show you what you’re going to pay for your specific needs.
Do you think your two-year cellphone contract is brutal? Try a four-year contract with a restaurant POS you end up unhappy with. If you find a provider I love, it makes sense to stick with them. Even for four years! But you don’t want to be trapped. If you end up agreeing to a long-term contract, you’ll also want to confirm there’s some guarantee if I’m unhappy. Some providers charge tens of thousands of dollars to get out of your contract, even if it’s within the first 30 days.
While this seems like many questions, they all tackle one area of contracts and costs – your payment processing rates. Having as much clarity as possible on these rates is essential before you sign anything. You don’t want to find any surprises on your bill months into your contract. The right restaurant POS provider will be able to give you straightforward answers. Also, make sure they aren’t able to change the rates on you.
Imagine signing onto one rate and finding it raised a few months later, and you have no ground to stand on. You may feel you’re getting a good deal on my processing rate initially, but the unexpectedly higher prices will have you thinking otherwise in a few months or a year. Believe it or not, that’s standard practice with some restaurant point-of-sale systems.
The POS Exchange brings over 20 years of restaurant expertise, serving 200,000+ merchants and processing billions annually. Our tailored POS system solutions help businesses speed up checkouts by 30%, implement dynamic pricing, and manage customer reviews while reducing overhead. Perfect for:
We offer end-to-end service, from smart consultation and interactive demos to local installation and 24/7 support.
Our mobile iPad POS systems streamline operations with features like order management, bill splitting, and inventory control. With integrations for business management tools and advanced security measures, we ensure your POS system grows with your business.
Trust our expertise to help you avoid the common pitfall that affects 38% of new business owners who choose the wrong POS system. Whether managing a busy restaurant, a local café, or operating a multi-location business, The POS Exchange delivers customized POS system solutions that tell your unique business story.
.svg)
.svg)
.svg)
.svg)
