POS System Trends 2009

By Abigail A. Lorden & Christina Volpe | December 10, 2008

POS System Trends 2009
As the end of a tumultuous 2008 draws near, most restaurant operators are happy to put a fork in it and call it done. The economic downturn that began with a credit crunch and sub-prime fiasco rapidly spread to most sectors of business, with those reliant upon discretionary spending feeling a good portion of the pinch. Unless you're part of the quick-service restaurant segment, which is benefiting from consumer trends towards low cost and high value, your hospitality operation is likely looking for ways to cut costs, curb waste, and coax consumers in your doors.

If you haven't already considered it, one of your heaviest pieces of artillery in the battle for share of wallet is your point of sale system. As 2008 comes to a close, and we usher in a new year with hopes of a speedy turn-around, Hospitality Technology puts a focus on the point of sale to find out what exactly this system can do to help hospitality operators sell more and spend less in 2009.

We're tracking the top trends related to point of sale software technology in the year ahead: get the inside scoop from POS vendors about their initiatives; hear from restaurant operators on the functionality that matters most; and bone-up on recent new product releases.

Whether you're looking to boost the functionality of the POS you already have, or invest in a new solution, Hospitality Technology is your advisor on the hottest POS system trends in 2009.


POS Features to Fight a Down Economy

Looking back on the events of the past twelve months, almost every restaurant operator will agree: the industry is in a bit of a pickle. From a downward spiraling economy that is leading more and more guests to cut back on their meals out, to a 27-year record-high of rising food costs, operators have been hit with challenge after challenge in 2008. With no end in sight, many will find that their first line of defense against excess spending and dwindling sales is a solution that is already used on a daily basis: the point of sale system (POS).

These are not your parents' POS systems. Technology that once was only able to track orders and process transactions is taking a lead role in the restaurant segment, thanks to a wide array of built-in functions that bring heightened levels of sophistication to the systems of yore. Systems that can manage forecasting, financials, marketing, customer loyalty and inventory control are being cited by operators as the most important POS features to fight the economy going into 2009.

Drilling for data
Across the board, financials and forecasting are among the most sought after POS functions for their ability to drill down data on both a store and corporate level. Through this function, operators have the ability to not only project anticipated sales based off of historical data, but plan business strategies accordingly to accommodate the ebb and flow of business.

The California-based, Mary's Pizza Shack (www.maryspizzashack.com) is able to forecast both sales and labor through their of the POSitouch point-of-sale software from Restaurant Data Concepts (www.positouch.com). Mary's Pizza Shack worked with POSitouch reseller Custom Business Solutions (www.cbs-posi.com) to select and install the solution. "If I am looking at the last nine weeks we can arrange our labor schedules accordingly," says Bruce Lane, Mary's IT director. "We pick samples of what the productivity of a store is during busy times, like during lunch or dinner, and we know exactly where they stand to let people off and on the schedule. I think that during the late night and afternoon rush, this is important and we have a huge benefit from being able to do that."

An additional feature that operators enjoy is the ability to design custom reports that can be sent to multiple managers on a daily basis. Through an integrated back office solution from MenuLink and Radiant's Aloha POS (www.radiantsystems.com), Goldco Inc., operator of 61 Burger King locations across the southeastern United States, is able to keep its managers up to speed on store performance. "When operators get up in the morning, they have a daily operations report and a detailed sales report that is emailed to them," says Dennis O'Keefe, VP of operations and business development. "If they see a cash shortage or an issue that they are not familiar with, then they can then go into MenuLink and investigate it."

Building profitable customer relationships
Another POS feature that operators are making use of is the ability to manage the profitability of store promotions. In an economy where consumers are always on the lookout for a discount, this function is helping operators avoid promotional campaigns that are not always profitable.

Pizza Inn (www.pizzainn.com), which uses SpeedLine POS system (www.speedlinesolutions.com), for example, has the ability to create and track coupon use through a money market value pack. "You have to get creative in couponing, but you need to make sure that you aren't giving the farm away," says franchisee Viren Patel. "A lot of people in the area were offering $5.99 lunches and by looking at the coupon history in my POS, I found out that I wasn't getting any new customers from running this promotion so I changed my strategy."

Couponing is a functionality that ties directly into the challenge of creating a loyal base of customers that will keep coming back time and time again. Many of the POS systems on the market today also feature customer loyalty functions that allow operators to not only create special marketing promotions geared to create repeat business, but also to track and address customer satisfaction.

For its to-go business, Pizza Inn has the ability to warehouse client data in its POS system. Whenever a customer places an order, staff can pull up that customer's entire history, and if that customer is part of a rewards program, the POS will know to print out a coupon with a receipt whenever a specific dollar amount is met.

"We are also looking to address the lapsed customer who has not ordered pizza in a while," says Patel. "The computer will tell you that info and you can send them a post card for a free pizza." 
 
The 85-location, Zpizza (www.zpizza.com) recently began working with Empathica (www.empathica.com) to manage and import information about clients who place online orders into its FireFly POS system (www.fireflypos.com) for emarketing and surveying purposes. Management expects this move to provide them with a more accurate portrait of customer satisfaction and store performance.

"When you look at doing secret shopping, it gives you one day to look into store performance, and if you are pleased with what you are seeing then you may think that it is executing everything properly," says Chris Bright, president of Zpizza International. "If there are a large number of guests who are unhappy, it will survey guests. Now you have gone from one data point to another which will give us a real idea of how the store is performing."

Control inventory, cut waste
POS systems that can track inventory costs and address areas of waste are also in high demand as operators search for solutions to reduce ingredient costs and curtail waste.

"If I wanted to know what my theoretical costs are by item compared to actual costs, I can do that," says O'Keefe who also notes that Goldco's system can run a top 20 report of the most lost items. "I can ask for the top 20 items for my 61 restaurants for the month of October and from there I can initiate company wide programs," says O'Keefe.

Mary's Pizza Shack is able to complete a full inventory count once a week for food and liquor and does all of its receiving at the store level. Management is thus able to see where they are losing inventory and set a course to bring in more money to their bottom line.

"If a store is out of a variance, like cheese, then we can force them to take measures," says Lane. "We make them do inventory every day and it doesn't take long to get them back on track. One percent equals a lot of money."


Top 12 Trends of 2009
Hospitality Technology asked point of sale technology vendors to provide insights on the top trends that will impact their POS software solutions in the year ahead. Nearly all POS vendors identified the current economic climate as being the single most important factor influencing point of sale software trends. Restaurant owners are looking in every nook and cranny for ways to boost efficiency, including improved inventory tracking, reduced food costs, and better labor management. In response, POS vendors are focusing R&D into areas that will help operators boost efficiency. Here are some of the specific trends that POS vendors will respond to in 2009.

1. Labor management
The top two cost centers in any restaurant environment are labor and food. It comes as no surprise that restaurant operators identified labor management as the second most important feature of their POS systems (right behind accounting/financials) in Hospitality Technology's 2008 Restaurant Industry Technology Study. As a result, POS software vendors are investing in improved labor functionality. pcAmerica's (www.pcamerica.com) new labor scheduler enables restaurant owners to quickly coordinate staffing. It includes a visual on-screen interface with labor costs and is integrated with the company's POS solution, Restaurant Pro Express, at no extra charge.

2. Robust payment security
Once a back-burner issue, payment security and PCI Compliance have moved beyond merely being important to being essential. As a result, the vast majority of POS software providers are pushing hard to develop new payment applications or modify current ones to be in accordance with the Payment Application Data Security Standard (PA-DSS, the program formerly managed by Visa known as Payment Application Best Practices or PABP). The goal of PA-DSS is to help software vendors and others develop secure payment applications that do not store prohibited data. The PCI Security Standards council is in the process of making a list of PA-DSS approved solutions available on its website, www.pcisecuritystandards.org, by the end of 2008.

3. Integration
Increased security requirements are accelerating the trend towards integration.
Vendors concede that, when operators desire a complete system refresh, a single-source, fully-integrated solution is generally the only type of purchase now considered. As such, many vendors are investing heavily in integration. Posera (www.maitredpos.com) is releasing a new version of its Maitre'D POS solution that's equipped with a SQL 2008 database; this will help the vendor address the growing demand for integration into third-party applications.

4. Centralization
POS vendors identify a steady, ongoing trend to expand centrally hosted applications to include fully functional back office products and management tools. Radiant Systems (www.radiantsys tems.com), for one, has brought to market two hosted applications: Aloha Configuration Center and Aloha Command Center. Both enable restaurant operators to centrally manage in-store data in real-time, allowing them to measure business results more quickly and efficiently.

5. Virtualization
MICROS (www.micros.com) points to the support of server virtualization as a growing trend in the year ahead. Virtual applications will help larger operators reduce the footprint of their server farms. For smaller operators, the ability to consolidate all of their in-store systems onto a single piece of hardware will allow them to reduce the number of PCs and/or servers they support and maintain. For multi-unit operators, the combination of a virtualized server farm with an enterprise POS system deployment eliminates the in-store server requirement entirely and allows system consolidation above the store.

6. The expansion of self service

Many vendors note that the combination of advanced technology with operator and consumer awareness will create a growing trend toward self-service solutions. While kiosk implementations have the potential to boost sales and streamline operations in many quick-service and fast-casual environments, the definition of self-service will to continue to expand beyond kiosks to include online ordering and mobility. Likewise, Internet-based and mobile ordering (whether by SMS messaging or mobile web) will continue to grow.

7. Mobile marketing
New forms of marketing are expected to become widespread and require integration. The continuation of this trend will likely see targeted offers or coupons sent to guests' cell phones or PDAs, requiring redemption at the point of sale. NCR (www.ncr.com), for example, is working towards a solution that enables recognition of e-coupon barcodes at the POS. MICROS is also responding to the strong consumer drive toward mobile technology and online ordering, and is currently in development to accommodate mobile technologies.

8. Conversational ordering
Vendors such as Xpient Solutions (http://www.xpient.com) and WAND Corp. (www.wandcorp.com) expect conversational ordering to grow in importance. This technology offers the ability to allow the associate at the POS to quickly and accurately take an order in whichever sequence the customer prefers. Most POS systems currently present an order flow that the associate must follow. Conversational ordering allows the associate to press the menu items in any order and has intelligence to manage the order completion properly (for example, disallowing completion of the order if a required drink selection is missing from a combo meal).

9. Business intelligence
POS vendors identify business intelligence functionality as a core area of importance, focusing on functionality that enables operators to quickly identify industry trends, predict guest patterns, improve business processes and turn predictive analysis into data-based business decisions. Should the economy continue to trend downward, BI will become increasingly essential to successful hospitality operations. Agilysys (www.agilysys.com), for one, introduced Hospitality Analytics earlier this year. The solution consolidates data across disparate systems and multiple geographic locations into a single, integrated source for comprehensive reporting, auditing and analysis.

10. Digital menu boards
The use of digital menu boards in quick-service environments is expected to expand, requiring integration with the POS to maintain pricing integrity and support different day-part menus. Nutritional information legislation may have an impact on implementation rates; if operators are required to post this information, digital menu boards could prove the most cost-effective method for providing it. For its part, Wand has tied its digital signage solution to the POS, pre-loading digital menu boards as a custom product called WANDisplay. The solution works with Wand NextGen POS and Wand Enterprise manager.

11. CRM & Loyalty
Going into 2008, most restaurant operators did not have a loyalty program, quick-service chief among them. According to Hospitality Technology's 2008 Restaurant Technology Study, only 36 percent of all restaurants offered loyalty programs (down slightly from 39 percent in 2007). The economy has changed the game when it comes to loyalty, however, as vendors are reporting a marked increase in interest from restaurant operators. Operators, they note, are looking for ways to extend loyalty functionality beyond the point of sale into more sophisticated CRM programs. To deliver on this need, a host of POS vendors are rolling out enhancements to their loyalty offerings. Agilysys has built its own loyalty application with integration to the InfoGenesis POS application. The integration is built using service-oriented architecture (SOA). The company intends to work with other providers and CRM applications to leverage the functionality. Meanwhile, FireFly Technologies (www.fireflypos) is releasing major enhancements to its customer loyalty program in 2009 that integrate into online ordering and e-marketing solutions.

12. Tableside ordering & payment
Mobility in the form of table side ordering and payment continues to have significant application in reducing human error, improving efficiency, and boosting payment security. What's more, in light of current economic conditions, restaurant operators are looking at tableside solutions as a way to up-sell products. For its part, mobile POS vendor Digital Dining (www.digitaldining.com) is focusing completely on features and functions of the mobile POS that increase sales and reduce inefficiency.

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