Are Point of Sale (POS) Systems worth it?  The short answer is, it depends…

There are a lot of things to take into account when considering a POS System:  What kind of system do I get?  What will it do for me?  How much will it cost? Is the investment worth it?

Determine the Value

The first step you need to take when considering a POS System is to understand the VALUE of a POS System.  The right POS System for your business can actually make you money…yes, I said MAKE you money.  Your POS System should not be treated only as an expense, but as your MOST VALUABLE ASSET.

How many DISCOUNTS are you giving out?

Do you know how much money you are losing by giving out compensations?  A free drink here…desert on the house there…it adds up faster than you think.  One of our clients found out just how much they were losing in discounts and comps after our system was installed.

A client of BNG Technologies contains 3 different bars, each with their own manager.  The managers were allowed to give out comps as they saw fit.  After our Restaurant Manager POS System was installed, the owners discovered $4000.00 in freebies were being given out on a monthly basis between the three bars.

The amounts of comps were not tracked until the system was installed.  Everyone assumed the comps amount was more like $400 per month.  What a shock to find out $4000.00 was being given away in one month’s time.  That adds up to $48,000.00 per year!

A conservative estimate of lost revenue to discounts/comps is around 1.25% of total gross sales per year.

How much are you losing to THEFT?

Theft seems like such a strong word.  I know what you are thinking, “My employees wouldn’t steal from me.”  Unfortunately, we have had multiple experiences where our POS System has discovered employees stealing with the use of camera overlays and or detailed reporting features.

Keep in mind that we are not only talking about intentional, malicious, theft.  Unauthorized discounts, voids, freebies to friends/family, and other operations are also put into the category of theft.  If some one is giving away a product or service (without your knowledge or consent), and you are not being paid for it, you are being stolen from.  How much is that adding up to?

Conservative estimates show that you could be losing 1.25% of your total gross income per year to theft.

How much could you save in LABOR?

One of the awesome features of the Restaurant Manager POS System is the ability to track your payroll.  Your employees punch in and out using the system.  Not only does this make the process of running payroll much more efficient, you will also reduce the “extra 10 minutes” you give away to employees on a daily basis.

Let’s say you have 5 employees, each paid at $10/hour.  Each employee gets to work at 8:05 am and leaves at 4:50pm, but writes 8:00am to 5:00pm on their time card.  You just gave away 15 minutes to each employee.  How much does that cost you?

15 minutes X 5 employees = 75 minutes per day.
75 minutes per day X 5 days per week = 375 minutes per week/60 minutes per hour = 6.25 hours per week
6.25 hours per week X $10.00 per hour = $62.50 per week x 52 weeks per year = $3,250.00 per year

That’s $3,250.00 per year you are spending on time you are not getting from your employees.  Each employee is getting a $650.00 bonus every year, just for fudging the time sheet 15 minutes every day.

Eliminating this scenario reduces labor costs up to 8.80% per year.

How much could you make through IMPROVED CUSTOMER SERVICE?

Excellent customer service is imperative for growing your business.  Building your repeat clientele, gaining new customers, and upselling to these customers helps put money in your pocket.

Reduce Order Error

No one likes to get the wrong food, or food that takes forever to get to the table.  By reducing order errors between the wait-staff and the kitchen, customers receive their food quicker and with more accuracy.  With the use of server hand-held units and prompts that help the server get the order right the first time (i.e. listing side options, asking how meat is prepared, etc.), and kitchen printers that eliminate guessing while reading server handwriting and abbreviations, your staff will get orders completed efficiently.  This decreases the number of comps given, increases the chances of upsells, and increases table turnover.

Estimated loss of revenue due to order errors is 1.25%.

Increased Table Turns

The more people you can get through your business the more money you make.  Increasing your efficiency will automatically increase your rate of table turnover, leaving you with happier customers and a happier staff.

Estimated cost due to slow table turns, 1.50% in lost revenue.

Increase Upsells

By using the hand-held ordering system Restaurant Manager offers, your wait-staff will be prompted to offer upsells based on what the customer has already ordered.  Upselling these higher margin items increases your profit on each customer ticket.  Encouraging your staff to offer these upsells can be tracked through the POS System, making employee competitions easy to implement.

The estimated cost of missed opportunities for upsells, 1.50% in lost revenue.

Determine the Return on Investment (ROI) of a POS System

Every business is unique, as are their needs when it comes to a POS System.  The perfect POS System for you is different than for the store next door.  The key to getting your full return on investment is effectively running the best POS System suited to your business.

By using a customized POS System which is suited specifically for your business, you will be able to reap the full return on your investment.  It would not be realistic for us to estimate your individual return on investment in this article.  That said, ALL of our POS Customers have easily paid off their systems within one to two years, sometimes even less, with the savings we have found them.

Remember, you get what you pay for.   In a previous article, “The 10 Costliest POS Restaurant System Buying Mistakes Business Owners Make,” we outlined why choosing a POS System based strictly on price is not a good idea:

While obviously price is a key factor, often the cheapest point-of-sale system ends up being far more expensive than the sticker price, because of hidden costs like missing features that would have saved time or money, technical support fees, or supplemental services you did not realize you would need.

Hypothetical Restaurant Example:

Let’s take a look at a hypothetical restaurant whose sales average $50,000 per month ($600,000/year).  Their trouble areas are untracked comps, theft, employee time skimming, slow table turns, and a lot of order errors.  By installing a Restaurant Manager POS System, we are able to increase their profitability by $35,840.00 per year.  Here’s the math:

  1. $900 per month found in untracked comps: 900 x 12 = $10,800 per year
  2. 1.25% per year lost to theft: 600000 x 0.0125 = $7,500 per year
  3. 1.50% per year lost to slow table turns:  600000 x 0.0150 = $9,000 per year
  4. 1.25% per year lost to order errors:  600000 x 0.0125 = $7,500 per year
  5. 3 of your employees (at $8 per hour) are skimming 10 minutes per day:
    10 minutes x 3 employees = 30 minutes per day
    30 minutes x 5 days per week = 150 minutes per week/60 minutes per hour = 2.5 hours per week
    2.5 hours x $8 per hour = $20 per week x 52 weeks per year = $1,040 per year

By solving only 5 problem areas, out of 15 key problem areas, with our Restaurant Manager POS System, BNG would conservatively save this hypothetical restaurant $35,840.00 per year, or $2,896 per month. With this conservative estimate of savings, this business would be able to purchase a multi-station POS System and receive their full return on investment within a year’s time.

These are real world numbers, easily obtainable by a business using a POS System which is customized for their business AND is using that customized POS System to its fullest ability.  If the business is just going to take the POS System out of the box and not take the time to learn how to efficiently use it, the savings will not be there.

Your POS System is a business tool, using this tool correctly and efficiently is the key to increased ROI.  The saying is true, “You will get out of it what you put into it.”

Is a Point of Sale System Worth It???

Let’s get even more conservative, what if we could save you only 3-5% per year?  Using our hypothetical restaurant example from above, 3-5% of $600,000.00 per year is $18,000.00 – $30,000.00 per year.  Could you use an extra $30,000.00 per year in your pocket?

Saving money is important, but let’s not forget about the other benefits of a POS System:

  • Less waste
  • Increased efficiency
  • Better reporting tools
  • Happier employees
  • Happier managers/owners
  • More repeat customers
  • More new customers
  • Loyalty program integrations
  • Spending less of your own time managing your business!

The question at this point shouldn’t be, “is it worth it?”

The question really is, “Can you afford NOT to?”

Written By:
Ryan Theis & Katie Gjerde