Getting Started with a Hospitality POS, Point-of-Sale, System
“The restaurant business is a cruel and shallow money trench, a long stainless steel hallway where thieves and pimps run free, and good men die like dogs. There’s also a negative side.”
– Jacob Stallwart (restaurant owner and food writer)
So you are going to start using a point-of-sale system to facilitate your sales, add marketing and promotions management plus control inventory. So where do you start? Right here.
Hospitality Point-of-Sale is different that Retail Point-of-Sale because specific items of ?inventory? are not, in most cases, purchased by the business for resale to customers. While sometimes a restaurant or bar will sell it’s own logo branded t-shirt or may have a few items for immediate take out sale, bottled water perhaps, for the vast majority of hospitality businesses ?inventory? as a retail store understands the concept, are distantly related cousins.
This is not to say that hospitality businesses can not have inventory control, far from it, it is does it a bit differently that is all.
For the most part the order of importance to the hospitality business is:
Table turnover which is the result of :
• Fast accurate ordering to the kitchen
• Up sales of drinks and desserts also made quickly and accurately
• Quick processing of payments and tips
• Table Management
• Seating Customers quickly
• Moving Customers either physically or from Server to Server
- Critical Item control, such as bottled wine and beer, perhaps meat
- Portion Control, harder to do but possible
Here are the ten steps we will cover:
- Work Flow and Entry Parameters
- Menus and Menu Categories
- Defining Modifiers
- Kitchen & other Printer considerations
- Customer Information
- Staff Considerations
- Payment Types
- Integrated Credit Card Processing Information
- Sales Tax and other Taxes
- Receipt Printing Options
Step 1: Define the General Work Flow Entry Parameters
While our discussion thus far focused on so called, ?Table Service Restaurants? (TSRs) the other broad category is ?Quick Service Restaurants? (QSRs), many Bars fall into the QSR category and a lot of places have aspects of both so we will describe the TSR model and attempt to mention differences in various aspects.
Here are some broad view considerations when looking for hardware software and possible different configurations. The first question as mentioned is, ?does the business have table service? Bar/Quick service or a combination of both? Then how extensive is the menu? Is there a hostess? Is take out or delivery offered? Will the servers carry their own ?bank? for making change is will there be a controlled cash station?
Most POS stations come as either: 1) order entry only, 2) order entry and credit card processing and 3) order entry, credit card processing and cash processing
How many sales stations will you need and how easy is it to add
stations? This is going to be just a guess on anyone’s part and it will obviously change with the time of day and season. Not to mention your budget, but generally the type of store and size is a good indication. Look around at stores similar to yours using a POS system for ideas.
Will you want to identify customers to track sales offer special pricing? There are a wealth of tools and strategies available with a Point of Sale system. Even relatively high volume food cafeterias and high end restaurants have procedures to implement some form of customer identification; and the rewards of knowing who your customers are and using strategies to pull them into your business instead of waiting
for them to decide to come in is definitely worth it.
Also consider whether your will want cash control where clerks are responsible for balancing their own drawers. All electronic cash drawers are available with removable and optionally locking plastic “tills”. Some systems are available with the ability to open two cash drawers depending on who is logged into the system.
Finally consider whether you want to configure the system and install it yourself or get a professional to configure and install the system or split the different as is available from a pre-configured “self” installing system like CREST from Point-of-Sale systems.com
Step 2: Menus and Menu Categories
In order to quickly find menu items and produce more meaningful
management reports it is best to have created menu categories. The decision to make a category depends on the meals the restaurant is serving. Some is have completely different Breakfast, Lunch and Dinner menus and then categorize within those menus. While every restaurateur I have ever met drew out their first menu on paper using either a pencil or a word processing program, there are some considerations when making the menu, ?electronic? the touch screen size does limit what can best be displayed, no matter what the software is.
As a general rule of thumb use no more than 12 to 14 categories no more than 10 menu items or less than 3 to a category. Look to combine smaller categories and split larger ones along logical lines. The point being the less ?keystrokes? in the form of touches to the computer screen will mean time saved and that improved customer service.
If you look at the menu set up spreadsheet we use in our installations there is both an ?item code? and a description. The item code needs to be a unique alphanumeric combination generally no more than 12 characters and we suggest beginning each item with a 2 digit code for the category the item is in as a way to help organize the menu. The description can generally be up to 30 characters which will fit on a single line of a 800 mm standard thermal receipt printer.
Step 3: Define Modifiers
Most menu entree items will have modifiers, choices or options that all part of the course, some will be planned for, ?Did you want the Mashed potatoes or French fries with your steak? And How would you like that steak cooked?, some will not always be planned as the cheeseburger ordered without the cheese. These are all examples of what we generically refer to as ?modifiers?. For each menu item, drink, entrée or ala carte item most of the likely modifiers should be identified. There will also be several sets of modifiers that will be the same for different types of items, these we call “modifier groups” and examples are, temperatures: rare, medium and well for meat and dressing options for salads (on-the-side extra, light etc).
Extras. Extras are modifiers that have an, extra charge associated with them. These must also be defined and when the charge should be made.
Multiples. These modifiers are choices from a list of modifiers and may also be of the ?one or the other variety.
To be honest, this part of configuring the software in the POS system can be a little tricky. Much of what may have to happen is a workaround to get the items, modifiers and the pricing to work out in the desired manner. The saving feature of many POS software program is the ability to type in a special modifier that will print in the kitchen and as a last resort you can have a modifier that is, “See Server” .
Step 3: Define Vendors
Different POS programs may define vendors and manufacturers
differently, the Vendor should be the company you purchase inventory from. While you may sell Coca Cola you are not buying directly from the Coca Cola bottling Co. rather a distributor. If the manufacturer is important to know in your particular business you may want a POS program that can accommodate that information. In most cases the manufacturer is merely part of the description of the item.
If you purchase the same item from multiple vendors you will want to make sure the POS program can accommodate that, not all do.
Step 4: Kitchen and other Printer Considerations
As mentioned earlier the major benefit of a hospitality system is quick accurate service which is a result of good accurate communication and the creation of a situation where wait staff is not spending time in the kitchen in the way of kitchen staff but is out taking care of guests.
So called ?Kitchen? printers are impact receipt printers, that is they use a ribbon and plain paper to print. Thermal receipt printers are not used in kitchens because they use heat to make print on treated paper, this paper is subject to quickly turning brown in the hot kitchen environment and becoming unreadable.
The best kitchen printers use two color ribbon, red and black, and the software programmed to print the modifiers in red.
Placement of the kitchen printers is important as well as getting the information to them. The printer is best situated on its own stand attached to a wall or ceiling in such a way as to make it difficult to place any additional kitchen utensil or food item next to the printer. Also consider whether other prep areas such as salad or dessert need a printer for communication. It is also best to have a separate printer in a bar area for so that the bartender will easily see an order from a remote location as opposed to have the order print on their receipt printer
Step 5: Customer Considerations
One of the most useful tools in a POS system is the ability to track customers. Why is that so important? Because if you know who is buying what you can ?target market? to those good customers. For example if you know the customers in your women’s clothing and accessory store that purchase handbags from you over the last year and even the subset that has multiple purchases you can email or send them an invitation to view a new line of handbags you have or inform them of a sale you are planning or send them a discount coupon. All are ways of ?pulling customers? into your store. Instead of waiting hoping a customer will think of you now you can be proactive. See our article on Marketing Ideas with your Point of Sale System for
The consideration you need to think about are how do you want to identify your customers, how do you want to organize the information and how do you want to gather the information?
Identity of customers. All customer records must have a unique field or piece of information. Just as all drivers in your state have a unique drivers license number. Your options are usually a customer number generated by the POS system or a phone number. Years ago the phone number was not so good as multiple people at the address had the same number but with cell phones today almost everyone has a number. Alternatively do you want the ability to look up customers by first name, last name or business? Think about how you want the sales process to flow. Generally the sale process starts with the clerk asking for the customer ID/phone number, the items are identified, the
payment method is determined, payment is taken and change is
returned or a credit card receipt is signed.
Organization of Information: Think about what types of information would be useful to know from your customers. The obvious things like contact information, address, phone and email are great for contacting customers in a variety of ways to promote sales, send coupons etc. Other information might be useful in specific situations like clothing sizes in a children’s clothing store so that relatives could purchase items. Should this information be available on a computer screen or a report or both?
Gathering the information: Motivating people to take the time to
complete a form is key. As well as being able to quickly set up a
customer and make a sale. Therefore most applications allow for a customer to be set up with a minimal amount of information such as customer number and name. In this scenario a form can be available at the counter to be completed by the customer while the sales clerk is processing the sale, wrapping the merchandise etc. The next consideration is the motivation of the customer to give you their contact information. Offering an immediate discount to the purchase helps, perhaps offering special pricing or notification of sales are all possible offers as well as offering a free promotional item such as a coffee mug or other suitable item imprinted with your store’s name and logo.
Step 6: Servers, Bartenders and other Staff Considerations
As far as Salespersons and clerks using a Point-of-Sale system are concerned, all applications define users with a name and password. Access and functions are limited by permissions. consideration should be made for what areas and functions of the Point of sale application the sales people should have access to. Who should be allowed to make price changes, give discounts, view inventory information and the like. Different POS software programs have different ways of granting users access to information so if there is a specific need it should be defined.
Do you want staff to use the POS system to clock in and clock out? Most POS applications have this function so it is merely a matter of assigning user names and passwords. A nice feature is one that allows the set up of the user, the assignment of a simple password, such as user initials or first name but then requires the user upon the next log on to come up with their own password. Even in a small to medium sized restaurant their may still be enough kitchen staff, wait staff and hostess’ that time management will be an important aspect of the system and having other people know how to clock others in or out can not be tolerated.
Another consideration in this topic is whether servers will be sharing a cash till or will work a specific till and therefore have cash responsibility and balance out after the shift. Some POS software allows for multiple cash drawers so it is possible to have a single station but different drawers will open for different users. Of course space considerations will limit the number of drawers possible.
Step 7: Payment Types & Considerations
While many POS application have the basic payment types, Cash, Check, Credit Card, some let you create other types and have payment options for gift cards which depending on your situation can be a great offering. Gift cards are plastic, credit card size cards with magnetic strips or barcodes which are custom printed in full color for your store (see our article Using Gift Cards as Tools to Increase Sales ). You can use them as a way to increase cash flow, by providing another item to sell that, until the card is redeemed has no cost. While it looks like an immediate Sale it is from an accounting standpoint a liability,
you actually owe the holder of that card the cards value in
merchandise, but it can be a great way to boost cash flow. Remember that the card itself, like barcodes is merely a number that number corresponds to an entry in the POS database that contains information on the card’s balance.
The ability to offer on account sales can be used to issue store credit; instead of giving money back to customers for returns you can issue the credit, which can be maintained as a reducing balance until it spent. Again, the rewards are better cash flow because you are keeping your money. Another benefit is that most customers think of the store credit as free money, almost like a gift card, because they have already spent the money, so they can be encouraged to spend more. Example: instead of buying the $50.00 jeans with the $50.00 store credit, get the $50.00 jeans and the $50.00 sweater (the customer was already thinking of spending $50.00) while perhaps slightly illogical, it really does work!
Finally if you have special payment needs like multiple currency, or food stamp like programs, those payments types will need to be configured.
Step 8: Integrated Credit Card Processing Information
There really is little choice any more that you will want to integrate your credit card processing with your Point of Sale system. Although technically you do have the choice of a separate standalone terminal with a keypad and magnetic strip reader (card swiper) that is connected to a phone line; the process of reentering the sale amount , with the inherent possibility of mistake ( $24.42 becomes $42.24) and
the time delay of the dial out process, and the fact the cost is less to integrate, really means integrated credit card processing is the only way to go.
With the widespread availability of high speed internet, DSL and cable, most stores will be able to take advantage of the speed of those connections to process over the internet. Although it is still possible to have integrated credit card processing and use a dial up modem. Same advantages of reduced mistakes, still a time savings, just not as much as with the high speed connection.
If you are going to set up your payment processing software or have it done for you, you will need to have your merchant account provider supply you with a set up sheet from the actual processing company. This information will include a variety of different codes as determined by the processor. These will be entered as configuration settings in the credit card processing software (usually PC Charge or IC Verify) and tested. Be sure to have the support phone numbers for both the software developer and the credit card processor because you will usually have to call one or both before the system can be made operable. To really understand the credit card processing process see out article on: Integrated Credit Card Processing: Why it Makes
Dollars and Sense .
Step 9: Sales Tax & Other Taxes
A big advantage of the point of sale system is to quickly and easily apply sales tax and most importantly generate a report at he end of a period so that your Sales Tax return can be easily completed. This is important because the easier it is to file your tax returns the easier it is to stay in compliance with your taxing authorities.
Most areas have a combination of percentage sales tax on items sold and some have various amounts charged either on a per unit basis or ad valor um. Each taxing division with percentage must be known and exactly when to apply it. It is best to contact the taxing authority and request written detailed documents or pamphlets to most accurately complete this area.
As an example, in California , install a customer’s computer, no sales tax, this is strictly a service. But, sell the computer and the installation service, both are subject to sales tax.
Step 10: Receipt Printing Options
You store receipt can be a great place to communicate with your
customer. The most common receipt printer is, 3 1/8 (80 millimeters) Most printers and software can print a store logo, and some new thermal printers can print in two colors (the paper is 3 to 4 times as expensive as well as the printer which uses a print head with varying degrees of heat to activate the different colors).
Consider what messages you would like to print on the bottom of the receipt, such as return policy or perhaps a regularly changing quote that reflects your store’s premise and philosophy.
Also what information would you like to print on the header of the
receipt? Customer ID, name, Clerk name, in addition to the invoice number, and date. You will probably want in addition to the store name and phone number the store’s web site address.
So there you have it every thing you need to know to select and set up your hospitality point of sale system. There are so many way that a POS system can improve your store’s customer service, and inventory control, as well as, improve your bottom line that there is no reason not to get started today!