A Restaurant cash register is the predecessor of the modern-day restaurant POS system. Before restaurant cash registers, there was no formal way of storing cash or recording cash flow. Restaurant operators used paper to record their sales and store cash in a drawer.
As restaurants grew in size, cash control needs became more evolved. And the restaurant cash register was adopted. This would help operators keep better track of how much cash was being put into the register, a proxy for how much was being earned. And it would help record if cash was taken out.
And this worked well in the old days. Especially for smaller restaurants and food businesses. The menu used to be limited with only a few items for sale. Tax categories were less complicated and therefore the calculations simpler. There was no delivery and online ordering. There was no printer to print kitchen order tickets. There was no need for integrating front-of-house to back of house software. Payments used to be made in cash i.e no multiple payment modes such as credit/debit cards, gift cards, and loyalty points. Neither was the restaurant industry as competitive as it is today.
There were only a few restaurants per neighborhood and customers used to keep going back to their neighborhood restaurant. And there most certainly were no slick third-party apps that restaurants lost their customers to.
What is a restaurant cash register and what are its functions?
A restaurant cash register is a mechanical or electronic device for registering and calculating transactions. It has a physical drawer for storing cash. Nowadays modern electronic restaurant cash registers are usually attached to a printer that can print out receipts for record-keeping purposes. When a transaction is to be recorded, the operator punches in the bill amount and proceeds to record the sale. The cash drawer opens only when a sale is recorded. The operator collects the cash and stores it in the drawer, in something called the till. Once the operator closes the drawer, the transaction is complete.
Almost all cash registers today are connected to debit and credit card terminals in restaurants and are capable of recording non-cash payments via debit and credit cards. But that’s all they do. Record basic sales transactions.
Cash registers start from around $100 and range up to $500. Credit card and debit card readers cost extra.
What is a POS system?
A POS system can do everything that the restaurant cash register does, and much more. It has improved features such as advanced data management, integrations, and the freedom to install them on a variety of devices and form factors. A POS system is central to the technology requirements of the modern restaurant. And restaurant cash registers just don’t cut it anymore.
Its primary difference with restaurant cash registers is its ability to collect large data sets and connect tools used for different restaurant management functions. More on this later.
When it comes to hardware, there are two main categories of restaurant POS systems – Stationary and mobile. Stationary POS systems are what you see in most restaurants and they typically run on a combination of hardware:
- A touch screen terminal for punching orders
- A computer to run the POS software
- A physical server where all the data is stored
- Additional payment hardware like credit and debit card readers
This hardware can cost between $2,000 to $4,000.
The mPOS or mobile POS system is the newer and lighter version of a POS system. These can run on most tablets and handheld devices – mainly Android and iOS.
According to LimeTray’s report on Restaurant Technology, 82% of restaurant operators want to update their restaurant POS system every 3-6 months. And the trend today is to move to these handheld versions.
The mPOS hardware is made up of:
- Handheld Tablets(Androids or iPads)
- Card machines
- Printers (KOTs, bill, etc.) or Kitchen Display Systems
This hardware can cost between $450 – $1500 (depending on the brand and bundle).
Software-wise, restaurant POS systems are of two types – Traditional locally installed systems and cloud POS systems.
A Traditional restaurant POS system is a legacy system or an on-prem system that helps store your data on a local server, in an on-site set-up. They have traditionally been used by staff to print KOTs (Kitchen order Tickets) and process restaurant billing receipts. These systems come with data loss risks, high up-front costs, data security issues, data accessibility issues and the need for continuous manual uploading of data.
Locally-installed restaurant POS software generally has a one-time license fee that ranges between $1,000 and $2,500. Plus the cost of support.
A Cloud Restaurant POS system, or cPOS system, in short, allows data to be pulled from industry leading remote servers that are on the cloud (and not local servers). You do not have to rely on physical servers any more with the help of Cloud POS. All you need is an active connection to the internet and you are good to go! Also, cloud restaurant POS systems do much more than printing KOTs or billing receipts against orders.
Cloud-based systems don’t usually charge a licensing fee upfront. They are sold for a 3-6 month period as a subscription. And you don’t have to pay extra for support.
So while a restaurant cash register is less expensive on paper, it does not offer the features required to support a modern restaurant business.
How is a POS different from a restaurant cash register in the way it works?
While they appear similar from a distance, the Modern POS system is very different from the restaurant cash register in the way it works. Restaurant POS systems retrieve prices from a relational database, calculate deductions, calculate the tax paid per item of sale, calculate different rates for preferred customers, cross-check sold items against stock and time-date stamp the transaction. It also records who was operating the POS and method of payment.
The restaurant POS calculates sales by date range, time range, product type, outlet and order source. It then helps process this data into dashboards and reports. In short, the restaurant POS system is much more sophisticated than a basic restaurant cash register and can automate essential and time-consuming restaurant management tasks.
Restaurant Cash Register or POS Systems – which should you choose?
When deciding on whether you should choose a restaurant cash register or a POS system, the first step is to evaluate the needs of your restaurant.
Here are some things you should evaluate:
The tax that your restaurant should collect on a sale. POS systems are designed to do a lot of these calculations while restaurant cash registers require manual inputs.
- The size and components of your menu. If you have a lot of different menu items, you would need to calculate their sales and consumption differently. Restaurant cash registers cannot integrate with restaurant inventory systems, so this process becomes very taxing.
- The additional menu items you will add in the future and at what frequency. Updating this information is manual for restaurant cash registers.
- How busy your restaurant will be, especially at peak hours. POS systems speed up order processing by automating manual workflows.
- How your staff will process comp-offs.
- Whether you will need more than 1 register.
- Whether you will accept multiple payment modes like loyalty points and gift cards.
- Whether you need to integrate with multiple online ordering platforms.
- Whether you need to accept table reservations online.
- Whether you need an inventory management software for food cost control.
- Whether you need to accept tips.
- Whether you need to split checks.
- Whether you need a kitchen display system integration.
- Whether you need employee scheduling and payroll management.
This apart, if you are looking to run database marketing in your restaurant you need a POS system. Restaurant cash registers don’t have the ability to collect customer information and purchase history, to run these marketing campaigns on. And database marketing is the most important marketing activity for a restaurant in today’s time. If you don’t know who your most valuable customers are, how will you get them to visit your restaurant again?
Restaurant cash registers are also unable to use the data they collect to generate performance reports for your restaurant. POS systems, on the other hand, can generate a variety of business performance reports to help you easily track the health and growth of your restaurant business.
A few useful reports to look at include:
- Sales over a period (by day, week, month, etc.).
- Staff activities (which server handled how many orders, which delivery staff delivered which orders).
- Food usage reports (to see what’s selling and what’s not).
Why Restaurants Still Choose Restaurant Cash Registers
Even though a POS system offers a lot more, some restaurants might still want to choose a restaurant cash register.
More affordable (in some cases)
A basic restaurant cash register starts at around $100 and allows a small restaurant to start processing cash transactions. Small restaurant operators often see it as a way to get started and then upgrade their technology at a later stage. Simply put, restaurant cash registers are less of an investment than many traditional POS systems. However, one needs to buy additional hardware for credit and debit cards or accepting other forms of payment. This can add up quickly.
It is interesting to note that modern, subscription-based cloud POS services often start at a lower half yearly expense offering smaller restaurants the option to try and test their technology before having to make a large upfront investment. But restaurant cash registers are definitely less expensive than traditional POS systems.
An established practice
Restaurant cash registers are often simple mechanical or electronic devices. Their limited features mean lesser complexity. This means that they need less upkeep than traditional POS systems. Restaurants have been using cash registers for a long time and are often used to this way of cash management.
POS systems, on the other hand, need continuous software updates and support. And many traditional POS companies charge extra for it. To the tune of $25 to $200 per month. However, Modern subscription based POS systems don’t charge this extra maintenance fee and are closing the gap between the simplicity of restaurant cash registers and the improved functionality of POS systems.
12 reasons why you should retire your restaurant cash register for a POS
Driving repeat business with restaurant marketing
As mentioned before, the POS collects the data that makes database marketing possible. When your customer’s orders get punched in, their details become a part of your database. The POS system then connects this customer data to transaction data and stores that information. This allows the system to segment your customer database by their repeat orders, frequency of orders and recency of order. When you have these segments, you can send them to offer campaigns. Think automated emails, SMS campaigns, social media ad campaigns that pursue your customer to make that repeat visit.
According to reports, 75% of your restaurant’s revenue comes in through a repeat customer? Your POS is crucial to making this happen. You could also onboard them to your loyalty program. Good loyalty programs (if promoted well) also incentivize your new customers to become your regular customers. You can segment this further into categories based on the degree of loyalty’ exhibited. This can be gauged through their total orders, average order value, the frequency of visits and so on.
This would just not be possible with a restaurant cash register.
Unlike a restaurant cash register, a POS system enables you to automate a lot of the data compilation and prepares it for analysis. In the absence of a POS system, you would have to track sales with a restaurant cash register, tally it with an excel sheet and then contrast it with various other data stored in different forms. And as you can visualize, it would be an operational nightmare! The POS system does this automatically and saves you a ton of time. The POS collects the right data and stores it in relational data tables. This is the basic infrastructure for your restaurant analytics system.
Accessing reports anytime, anywhere
Once you have your restaurant analytics in place, you would need reports that present all that data in a simple and easy to understand format. A good POS system in today’s time is defined by the quality of its reporting. You should be able to track your sales, the Cost Of Goods Sold, your inventory and profits, easily. And you should be able to do this anytime and from anywhere. LimeTray’s restaurant POS system comes with an analytics app that visualizes all this data in simple dashboards so that it’s easy for you to manage your restaurant with data. No points for guessing that a restaurant cash register does not give you reports.
Faster order processing and reduced table flip times
Restaurant POS systems simplify the order taking the process and make it faster. Orders can be taken at the table or from the queue with a mobile POS. They can then be sent directly to the kitchen on the kitchen display system, shaving the time taken to take the order manually. Or take for example a delivery order. Orders can come in from any online channel. Whether your own or a third party. Juggling multiple tabs to mark them at each stage of the order process is tiring and time-taking. And for deliveries, a few minutes of delay could result in bad customer experience. Possibly even resulting in losing the customer forever.
POS systems can go a long way in improving communication at each step of your restaurant’s operation. A digital menu with standardized add-ons reduces errors in order taking and helps capture customer preferences correctly. A kitchen display system cuts down the frantic running to and from the kitchen. A connected inventory system makes calculating the cost of food easier and alerts when stocks get depleted.
Restaurant POS software lets managers track which menu items are selling and which ones are not. It lets them figure out peak hours and prepare for them better. It gives them visibility of their loyalty programs and marketing campaigns. The POS system is the one central place where all of this information is stored and managed. This helps simplify restaurant operations, from choosing to decide the menu, calculating stock to reconciling taxes.
A step up from efficiency, POS systems can help your restaurant become more profitable. Reducing the order processing and table flip times means you are serving more customers by the hour. Having a connected inventory management system means you have an eye on your food costs. And online order management tools also help you deliver faster. These all can contribute significantly to your bottom line.
But the main feature that can impact your restaurant’s profitability is the restaurant marketing module and loyalty program integration. A loyalty increase of 7% can boost lifetime profits per customer by as much as 85%, and a loyalty increase of 3% can correlate to a 10% cost reduction (source). A built-in loyalty program lets you keep an eye on your regular customers so that you can keep your repeat business up. Online ordering integrations, on the other hand, open up new revenue streams for your business. According to Statista, revenue from the online food delivery market is expected to show an annual growth rate (CAGR 2019-2023) of 6.5%, resulting in a market volume of US$28,398m by 2023. So opening up your restaurant to online ordering can contribute large profits to your restaurant.
Preventing theft and waste
Given the advanced data collection and reporting capabilities of POS systems, theft and waste at the restaurant become more visible. This discourages staff from being wasteful. When inventory policies are flouted, managers can spot it better and take action. The POS system is capable of calculating the total cash deposited by each employee and provides a clear picture of each employee’s performance. This way both good performance and poor conduct can be met with the appropriate action. The data collected can be analyzed over time to track over and under usage trends for your stock.
Better inventory control
The inventory management system alerts you before the critical stock gets depleted. Restaurant cash registers do not have this feature. Imagine the impact on sales if you run out of a critical ingredient during a busy service. With inventory management, you can measure ingredients as you consume them. Without an in-built inventory management system, calculating the cost of your food becomes next to impossible. Imagine manually jostling through multiple xl sheets to sales reports trying to match them. You will end up feeling more like an accountant than a restaurant owner. The inventory management feature also has other handy features like sourcing raw materials straight from your inventory dashboard.
The ability to grow
Restaurant cash registers may seem to be able to do the job when you start out but they will not be able to match the needs of a growing restaurant. As your menu becomes larger, or the number of employees increases or you add new outlets, your dependency on data will evolve. As your business becomes more complex, you will need data to simplify decision making.
Customers today are beginning to expect a wide range of services from restaurants. They expect to order online from your restaurant, book tables through your website, get personalized offers and invites and be served faster than ever before. A POS helps you keep pace with growing customer expectations in ways that restaurant cash register never can. Especially modern subscription based POS systems where the software keeps getting continuous updates from the back-end.
Building relationships with your most valuable customers
Not all of your restaurant’s customers are the same. Some visit or order from you more than others. Studies show that roughly 20% of your customers will be responsible for 80% of your sales. You can imagine why it’s important to know who they are. Only when you identify them can you build lasting relationships with them. The POS system is the source of this information. You can look up how often they dine with you and how much they spend each time. And then give your most loyal customers an added incentive to keep coming back to your restaurant. These could be in the form of offers or loyalty points.
Integrations with online ordering and delivery apps
Another way restaurant cash registers stunt your growth is by their inability to accept online orders and delivery orders directly. When you have a restaurant cash register, you have to manually punch in all your online orders to accept them. With a POS system, this process becomes automated. Online orders are fast becoming the major sales channel for restaurants globally. Having your own platforms allows you to control every aspect of the experience – from ordering, discounts, checkout, payment, delivery, feedback, and loyalty.
Accepting multiple payment modes
Customers today want to be able to pay via multiple payment modes that your restaurant cash register is not compatible with. A POS system accepts all major payment methods including credit and debit cards, online wallets and loyalty points. Keep a lookout for PCI compliance in your payment processing software. PCI Compliance refers to adherence to the Payment Card Industry Data Security Standard, or PCI DSS and is a standard designed to reduce credit card fraud. It includes a list of best practices and guidelines by the major banks and credit companies.
The Verdict: Restaurant Cash Registers or POS?
The choice between a restaurant cash register or POS is a careful one. The technology you invest in today will determine the success of your restaurant in a hyper-competitive restaurant market. When it comes to the needs of the modern restaurant, the POS is clearly the better choice. And the modern subscription-based systems are closing the price gap between restaurant cash registers and POS systems.