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The Green Sheet Online Edition

August 24, 2020 • Issue 20:08:02

Hard times spur innovation in restaurant POS sector

By Bill Pirtle
SpotOn Transact LLC

In March of 2020, governors began ordering shutdowns of dine-in restaurants across the country. Some closed completely; some struggled to stay open by offering carryout and delivery. Delivery companies surged to fill consumers' need to enjoy restaurant food without leaving the relative safety of their homes.

According to Wikipedia, GrubHub began offering delivery to restaurants in 2014 and by 2016 was in 50 markets. Now entering "food delivery services" into a Google search field brings 4.45 billion responses.

Consumers like that they pay only a small fee in most cases for restaurant food delivery. But many do not know the restaurants struggling to stay open are paying delivery service fees of 15 to 30 percent of the bill and are deprived of knowing who is ordering from them.

When consumers receive botched orders, they contact the restaurants involved. But the restaurants do not know who ordered the food. Since the food delivery companies are taking the orders, they are receiving the customer data for marketing. So, what stops the delivery companies from steering hungry customers to restaurants willing to pay a higher percentage?

Desperation breeds innovation

Rapid jumps in technology accompany major upheavals and wars. Jet engines were practically unheard of as WWII began in Europe, but they were in use before the war's end. Medical techniques also advance through wars.

COVID-19 is its own kind of war, but one against the economy. This upheaval affects the card processing industry and is a great reminder to all companies, ISOs and merchant level salespeople (MLSs) to diversify their portfolios.

Processing companies and restaurant POS companies found themselves in new territory when the outbreak began. Sit-down restaurants were in danger of disappearing completely, and those staying open using delivery companies were struggling, as revenues were dropping along with profit margins on what they were able to sell.

Companies across the spectrum implemented layoffs, and forbes.com's April 8, 2020, report that restaurant POS company Toast had laid off half of its reported 3,000 employees made many question the future of the restaurant POS. However, innovative POS companies took a more aggressive approach when the crisis began. They hired or brought on new 1099 contractors and promoted their online ordering systems to restaurant owners in earnest.

Help restaurants regroup, reinvent

Restaurant owners, feeling the squeeze on their business livelihoods by the combination of COVID-19 and delivery company fees, found a solution in making their own deliveries, which enabled them to keep their revenue, retain their data and hire more staff to facilitate deliveries. Many restaurants had servers return as drivers.

Every business needs to innovate. Those that do, get to stay in business. Those that fail to make the necessary changes will cease to be. Opportunities still exist for agents seeking to help local restaurants. Contact your ISO about their restaurant options. Compare the POS companies your ISO uses. If seeking new opportunities, be sure to ask about restaurant solutions and training.

Things to look for in an online ordering solution include:

  • What is the cost (normal cost and cost of deals during the COVID-19 crisis) to the merchant?
  • How many items can be used?
  • Will this solution tie in to an existing restaurant website?
  • What are the options and the costs to create a web solution if the restaurant doesn't have one?
  • Are there multiple ways to access online ordering?
  • Will the solution accommodate multiple locations?

Processing companies that have marketing, rewards and loyalty programs that can plug into (or be integrated with) existing online ordering systems can be especially appealing, as MLSs can show merchants how to build loyal customers who keep coming back.

At some point, we can expect a return to dine-in restaurants. Be sure that the online ordering system you present will be compatible with the POS systems in restaurants. To stay on top of the current situation: read posts from your organization; join one of many POS groups on LinkedIn; join a restaurant group; and find reliable online magazines designed for restaurant owners. end of article

Bill Pirtle authored Credit Card Processing for Sales Agents in 2012 and is working on a second edition. He is currently employed by SpotOn Transact LLC as a recruiter. He can be reached at billpirtle@gmail.com.

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