How to Choose a POS System

With the new year upon us, many bars may be reexamining their business plans and finding it’s high time to invest in a POS (point-of-sale) system.

“Any business looking to grow either needs or wants to take the next step in their use of technology because what you can do on a POS system is vastly more powerful than a cash register system or a simple handwritten system,” says Arie Paller, National Sales at Harbortouch.

According to a survey of just over 200 bars and nightclubs conducted by Software Advice, a POS reviews firm, 56% of bar and nightclub owners currently use some form of restaurant software, which leaves plenty of room for future adoption among establishments that are not. And for those looking to make the switch, getting a POS system right now is a lot easier thanks to significantly lower adoption costs and more control. POS companies offer everything from payment plans to free setup and installation with just a monthly service cost after that.

“It’s a huge change in the marketplace because, traditionally, if you wanted to buy equipment like this, you’d either have to have the funds or get a very large loan,” says Paller.

The lower cost of POS systems has made the biggest difference for chains and multisite bars that can now afford to automate processes and centralize data through all locations over a POS system. “Automation’s going to become way more important once you get multisite going. There’s a unique set of needs once the establishment owner gets over even two or three sites,” says Eric Elwell, CEO of 2TouchPOS. “There’s a huge opportunity for multisite guys to get big rewards from investing in software to knock out administration tasks.”

And whether a bar has multiple locations or just one, the biggest boon to owning a POS system is increased overall operational efficiency. “You want to be able to serve as many patrons as possible in a night. Without a doubt, a POS system increases that by an order of magnitude,” says Jared Isaacman, CEO of Harbortouch. “Whether it’s table-turn or the efficiency to serve patrons around a bar, a point-of-sale system makes a night-and-day difference in terms of revenue potential in any given night.”

A POS system also automates tedious but important tasks like inventory management. In fact, according to the survey by Software Advice previously mentioned, 76% of bars request formal, built-out inventory management capabilities as a central component of their POS systems. Fortunately, inventory management is a standard capacity already rolled into the majority of POS systems.

Software Advice’s survey also found that bars are requesting sales and reporting analysis in almost equal numbers at 74%. And while inventory management is a big part of the reason for that data request, POS systems can now go beyond how much liquor or food is sold. “There’s just so much that we can learn from the ticket-level data about what’s being purchased and when. Then we can take all the historical information associated with that, and use it to empower a business owner going forward on what they should and shouldn’t be doing,” says Isaacman.

2TouchPOS is currently working on engaging with Microsoft’s Power BI application, a suite of business analytics tools that analyzes data and shares insights. Using 2TouchPOS’ DataKey app, users will be able to take ticket details and other data out of the cloud and import it into the Power BI app. They’ll be able to pull in other outside data sources like the weather and events. “[You can] write reports and do comparisons on more than just what the POS has to offer,” says Elwell. “The thing that’s most exciting about Power BI is how much control it turns over to the end user.”

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Data in POS systems is also being used for marketing purposes. “Bars are starting to do giveaways and offer incentives for their customers, in exchange for their contact information,” says Paller. “You accumulate email addresses, names, addresses and can do direct mailings, as well as email and text message marketing.”

By leveraging data in this way, bars can offer patrons much more personalized offers and incentives. “That level of analytics really allows the smallest of small business guys that are using the right technology in the right way to really offer personalized, differentiated experiences, that really build sustainable customer retention and loyalty,” says Justin Guinn, Market Research associate for the bar POS system online marketplace, Software Advice.

The data also enables bars to measure the effectiveness of the incentives since they’re able to track them. “That’s one of the biggest challenges for small business owners: Am I deploying my capital efficiently in terms of marketing?” says Isaacman.

Unlike data capabilities, something customers and bar owners aren’t asking for in great numbers is the ability to accept things like ApplePay and Samsung Pay. Many POS systems already offer the ability to accept these types of payments, but there are a few hurdles. For one, mobile payments typically require the tapping of a phone to a card terminal, and in most bar POS systems, that card terminal is attached directly to the POS. “It’s that initial linking of the patron to the POS system, or to your tab, that isn’t perfect yet,” says Isaacman. “It can be super seamless in a bar that’s relatively empty and not busy. If there are fifty people crowding to get to the bar, it’s going to be almost impossible for that bartender to take the time to figure out who you are and link you to a ticket. And that can hurt the overall experience a little bit.”

Another issue is the overall lag in adoption of mobile payments. Many bars, unless they cater to a younger clientele, like college students, aren’t seeing the demand for this type of payment just yet. Which means if your bar hasn’t gotten hip to mobile payments, you shouldn’t worry about being behind the curve. “I think it might still be a few more years out,” says Guinn. “Once that consumer adoption starts to increase, and people expect to pay with that capability, that’s where restaurants and bar owners will need to catch up just to meet customer demand.”

Smartphone payments aren’t the only mobile consideration a bar faces. They also have to decide if a traditional, plugged-in POS system versus a mobile, tablet-based system is right for them. Some argue that a traditional system offers more robust capabilities and stronger internet connectivity versus mobile options. “The first question I would ask anyone who’s going mobile is - How does it help? What gains are you trying to get?” says Elwell. “I’d want to make sure they’re solving a real business problem.”

Elwell acknowledges that tablets offer a faster way to take orders, but this front-end speed may create a backlog elsewhere, like in the kitchen. “Faster isn’t always better. You have to optimize, I like to say. If all you’re doing is shifting a problem from the floor to the kitchen, did you really solve anything?”BarPOS3

Isaacman believes volume should be the determining factor of whether or not to go mobile. “I think a super busy bar or restaurant should never go the tablet route,” he says. “The brain and heart of the business should be run on a real POS system because it’s more efficient. It’s got more horsepower. It’s not going to get stolen and it’s not going to get dropped.”

Guinn thinks a mobile POS system is great for unique bars and eating spaces like brewpubs or food trucks. He even sees the potential for upselling in traditional bars using tablets. “One of the greatest features I think mobile POS offers for servers and restaurant and bar owners is the ability to send prompts to your servers as they go through the order-taking process,” he says giving the example of additional toppings on a hamburger. “As opposed to relying on servers to remember to ask these things and upsell, the tablets actually take care of that process. The server has to register and click through the prompts to carry on with the order.”

Still undecided? The bar owner who wants it all is in luck as some POS providers offer the ability to incorporate mobile options as a complement to a traditional system.

By Ashley Bray

Photos (top to bottom): Shutterstock, HarborTouch, 2TouchPOS.

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