Traditional Versus Cloud POS Systems
Now Is the Time to Make the Change
I remember my very first cell phone.
I was a teenager, and I recall the freedom of not having to wait until I got home to see if a friend left a message on the answering machine. That’s if it wasn’t already deleted by another family member. We were constantly playing phone tag and nobody ever knew where we were.
There’s no doubt that mobile phones have changed our lives, making it easier to stay connected to friends, family and our businesses.
On June 29th, 2007, the iPhone was introduced by Apple. It was at that time that the “smartphone” started its climb to become more powerful than supercomputers, eventually allowing us to connect to every moving part of our world. From high definition photography and live video, to banking and navigation, we can do nearly everything imaginable from the palm of our hand, which is why 81% of Americans use one every day.
Much like cell phones, the restaurant business is undergoing a major technology shift in an area that is equally as important to its livelihood: the point-of-sale system.
When I first started in the transaction industry nearly 20 years ago, I was still convincing many restaurants to start accepting credit cards or to use point-of-sale systems instead of basic credit card machines. I remember at that time, if a restaurant’s system had the ability to automatically split a check, it was a big deal. Wow, how times have changed.
Although we’ve hit mass smartphone adoption, only a small percentage of restaurants have changed from their traditional point-of-sale, (or POS) systems, to cloud POS systems.
Before we dive in further, let’s talk about the major difference between the two.
A traditional or legacy POS system stores all data on a local server located within the restaurant.
Cloud-based POS or Software as a Service POS (SaaS-POS) systems are web-based and run on a cloud service, with the data stored online.
So, why are so many restaurants late to the game when it comes to making this change?
When Cloud systems were first introduced to the market, the biggest worries from potential adopters could be summed up in two common questions.
Question 1, Security:
What is “the cloud,” and who can access my data?
Answer: In reality, traditional POS system security is more of a concern as the restaurant must protect its own internal network to eliminate a potential breach, which also complicates PCI Compliance.
When a POS system runs on the cloud, this means that the restaurant is outsourcing data storage to a 3rd party, most commonly Amazon Web Services or Microsoft Azure (someone who likely takes far more security measures than a local steakhouse).
Question 2, Uptime:
Should I trust a system that operates on my restaurant’s Wi-Fi network? Will this system go down when the restaurant gets busy?
Answer: Legacy systems have historically taken bragging rights over cloud POS in this area until recently. Although cloud systems started on iPads and tablets where Wi-Fi was the only connectivity option, making for spotty network connection, (and thus making the restaurant nearly non-operational), they have since moved to hardware that provides hardline internet connectivity. This gives users the best of both worlds; the benefits of the cloud, and the reliability of traditional systems.
Not that security and reliability aren’t important, but let’s cut to the chase and talk about the real reasons why it’s worth making a move to the cloud now.
- It’s Less Expensive
Cloud technology is nowhere near the cost of a legacy system. This holds true for upfront and ongoing costs. As opposed to requiring a restaurant to write a huge check every few years for the latest software, (and in many cases, withholding support until it’s paid), cloud systems typically charge monthly software fees including unlimited upgrades to the platform. Many cloud POS providers update their features so regularly that its users have new bells and whistles every week. Additionally, they can count on quick updates for the latest security standard requirements.
- Increased Revenue
With a streamlined process, restaurants are now able to create a culture built on quality service. Cloud POS systems allow customers to pay faster and also offer the benefit of mobility, keeping restaurant employees on the floor (rather than running back and forth between the table, the kitchen, and POS terminal). This means more time to serve the next guest along with more upsell opportunities.
- Decreased Labor Costs
With modern POS systems, it’s easier to be smart about distributing labor. Data at your fingertips lets you know when to staff employees and comes standard with tools to manage things like early clock-ins and breaks to avoid costly mistakes.
- Keep Guests Returning
The latest technology offers restaurant owners the ability to know who their customers are, how much they’re spending, what their favorite dishes are, where they’re from, and how long it’s been since their last visit. The more a restaurant knows its guests, the better their experience will be. The better the experience, the more likely they are to continue to return and tell their friends.
- Staff Accountability
No matter what type of establishment, a cloud-based POS system can track every last drop of product, allowing discrepancies to be spotted in an instant and gaps to be fixed before they become problematic.
- Integrated EMV/Chip Readers
Traditional systems were built before the introduction of EMV/Chip readers, so legacy systems that have added them have adopted a tethered, “semi-integrated” chip reader that tends to cause lag time. With fully integrated chip readers, chip cards can process just as fast as magnetic stripe transactions. And, it’s imperative to adopt EMV because eventually, the magnetic stripe will go the way of the dinosaur.
- Real-Time Updates & Adjustments
Know what’s happening at table 108, which dishes are selling well tonight, how today’s happy hour sales compare to yesterday’s, what the current average table turn time is, change menu prices and inventory for tomorrows brunch menu, and even send a note to all staff members working tomorrow night — all from the palm of your hand, anywhere in the world.
- Simple Adoption
If you have a smartphone, you’ll ace learning a cloud POS in a matter of minutes. They’re built like phones, complete with touch, taps, swipes, and apps, which brings me to my final point.
Choose from the restaurant industry’s best scheduling, payroll, online ordering, delivery, kitchen display system, customer rewards programs, and more to integrate with a cloud point-of-sale system. With every piece of vital software working together, the restaurant can operate at top efficiency.
When cell phones were first introduced, many were opposed to the idea. Even when Apple first introduced the iPhone, not everyone thought it would catch on, but we all know how that played out.
When it comes to restaurant POS systems, I’ve got a fairly good idea where that’s headed as well. And, my guess is, so do you.
Like my old cell phone, maybe someday we’ll have a conversation about your memories from your old legacy POS system and just how far you’ve come.
Paul Hadfield is a veteran of the payment industry and the founder of Hadfield Group, a partner for businesses to design, implement and support custom point-of-sale solutions. He is a recipient of the Electronic Transaction Associations inaugural “40 under Forty” award and is a member of the Forbes Finance Council. Hadfield Group is also a member of the Payment Card Industry (PCI) Security Standards Council, which is responsible for payment card security policies, procedures, and guidelines.