The Green Sheet Online Edition
August 27, 2012 • Issue 12:08:02
Pay-at-the-table systems pay for themselves
If you were the owner of a small to midsize eatery that's either a quick service restaurant or a casual dining establishment, you might have thought about implementing a pay-at-the-table solution. But chances are, you wouldn't have done it. Why? For starters, such systems can be expensive. Traditionally, each license per register costs $1,500 to $5,000. And that's just the license.
A pay-at-the-table system also necessitates the purchase of additional equipment. Tack on to that the monthly support cost of $200 to $500 per register and the expense of employee training. Even if you were a merchant flirting with the notion, it would likely go the way of many good ideas that are just too expensive to implement.
And that's why 95 percent of small business owners do not have the type of POS systems found at large department stores and grocery stores. They are just too expensive. So, most merchants are likely still using clickety-clack, vinyl electronic POS terminals that are relics of the past.
A better deal than you expected
However, suppose the expense turned out to be a small fraction of what you thought it would cost? If you were a merchant, what would you do? First, think about how such systems work, from the point of view of your customer.
One option is putting one or more self-service kiosks in strategic locations to augment the traditional ordering and payment system, effectively creating a self-service fast lane for those inclined to use it. A more comprehensive alternative - and one I believe should be the goal of every progressive quick-service restaurant or fast-casual eatery - is a dedicated station at each table.
Imagine something as intuitive and convenient as an Apple Inc. iPad right on the table, with easy-to-use touch-screen controls, a beautiful and enticing graphics interface for ordering, a simple and easy payment processor, and an option for games, entertainment and information.
Benefits that outweigh costs
Consider the following benefits to a pay-at-the-table system that can far exceed the costs:
- Secure transactions at the table: Consumers are increasingly aware that the traditional restaurant experience is one of the few situations in which their credit cards leave their possession and are out of sight and out of their control.
They recognize this as an invitation to fraud. Retailers figured this out a long time ago and transitioned to customer-facing stations that allow transactions to be processed without cards leaving the possession of customers. Retailers know that if the card never leaves the customers' possession, their liability for fraud is all but eliminated.
- Upselling and item-based recommendations: _Self-service terminals never forget to upsell, and research shows that customers are more receptive to upsell pitches from a kiosk than from a human.
This is backed up by various surveys that show that deployment of self-serve touch-screens invariably results in increased check averages, producing quick return on investment for the merchant.
How much of an increase can a restaurant expect? "On average, we've found a 15 percent per-ticket increase when customers use kiosks," said Madeline Pantalone, Vice President of Innovation and Market Strategies at EMN8 Inc., an established kiosk vendor.
Other vendors reported similar increases. One such vendor stated, "We've learned customers don't mind being asked whether they want to upgrade to a combo or if they'd like dessert. We're not upselling by saying, 'Do you want this? Do you want that?' We're providing options."
A variant on the upsell is item-based recommendations - the type of upselling experience provided by Amazon.com Inc. on books and myriad other products. Sites like Amazon.com include information that essentially says, "Customers who ordered this also ordered that."
- Turn your tables more quickly: _The average time of 90 seconds for pay-at-the-table checkout and payment is far faster than the amount of time it takes in most restaurants - even fast-casual - to hail the wait staff, get the bill, present your card, get it processed and get it back.
Estimates in different restaurants range from a low of two minutes to a high of 11 minutes for traditional payment processing, with an average of four to five minutes being typical. Multiply the time savings by the number of tables served, and this translates to more customers served. Again, the merchant sees a quicker return on investment.
- Savings in labor costs.: The move to automated ordering and payment allows the restaurant to focus more on fulfillment of orders and less on receiving them. Without question, fewer wait staffers are needed. And if more fulfillment staff is needed, that means more orders are being taken, with more money coming in than under the manual system. Again, this delivers faster return on investment for the business.
- New revenue streams.: The same terminal used for ordering and payment can also deliver entertainment, advertising and information. Revenue streams include advertising dollars and pay games. Once more, new sources of revenue speed return on investment.
A new POS paradigm
So with all these benefits, what's keeping restaurant owners from adopting the new systems? The biggest factors are a lack of understanding and fear of a high price-point. Most likely, the average owner of a quick-service or fast-casual restaurant or a small chain mistakenly assumes that deploying a system is cost-prohibitive. What these entrepreneurs don't understand is that the development of tablet technology has created an entirely different model based on a simple concept: software as a service.
The iPad alone has created an opportunity for cash-strapped restaurant entrepreneurs that is as profound as the emergence of desktop publishing technology three decades ago. What had previously cost $20,000 to $50,000 can now be acquired at a fraction of that cost.
Gone are the days of huge upfront investments. The smart entrepreneur today can get the same features the big boys have - all at a small, affordable monthly fee. Without doubt, mobile technology, iPhones and iPads are revolutionizing the POS industry. Buy the software, and off you go.
Rick Berry is the President of ABC Mobile Pay Inc., a Valencia, Calif.-based company specializing in providing affordable, software-as-a-service POS solutions. Rick can be reached at email@example.com.
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