The Evolution of the Modern POS System [Infographic]

Over the years, many restaurant owners have hesitated to upgrade from cash registers to advanced restaurant technology platforms.

Why? Many worried that technology would get in the way of hospitality.

But now, restaurant guests are redefining hospitality as we know it. 73% of restaurant-goers agree that technology improves the restaurant experience.

Because of the shift to tableside ordering and payment, the steady adoption of online ordering and delivery, the demand for gift cards and loyalty programs, and the necessity of real-time analytics, 34% of restaurant owners plan to upgrade their point of sale system in 2018.

As James Beard award-winner Joanne Chang from Flour Bakery + Cafe in Boston, Massachusetts said, “What I’ve learned is that hospitality as I’ve described it has changed. Enabled by technology, younger generations want hospitality to be quick, efficient, engaging, and correct.”

So how has the restaurant point of sale system evolved, and what’s next for this central piece of technology, which Ben Kaplan from Barbara Lynch Gruppo describes as “the heartbeat of the restaurant?” Read on for a timeline of restaurant technology innovations over the past 250 years.

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The Road to Modern Restaurant POS

The way we eat is changing because restaurant technology is evolving. Over the years, restaurants have used cash registers, POS systems, mobile apps, and more to take payments and drive revenue. Join us as we dive into the history – and the future – of restaurant technology.

• 18th Century: Loyalty programs began with merchants giving products in exchange for culminated proofs of purchase.
• 1879: The first cash register was invented.
• 1931: The first drive-thru was pioneered by a fast food restaurant in California, Pig Stand Number 21.
• 1950s: Take-out became popular in the U.S. in conjunction with the end of WWII and the invention of the TV.
• 1960: The first credit card was created when IBM used magnetic tape to secure magnetic stripes to plastic cards.
• Mid-1970s: IBM introduced the electronic cash register (ECR), the first computer-based system used by the restaurant industry.
• 1972: Thermal printing was developed and applied to printed kitchen tickets and receipts.
• 1975: IBM created the first desktop computer, the IBM 5100.
• 1980s: Gift certificates were originally designed as a donation tool. Merchants would offer a gift certificate at a discounted cost to non-profit organizations so they could sell them for full price and make a profit.
• 1986: Gene Moshel pioneered technology for his deli with the first graphical point-of-sale software, with colored widgets and a touch-screen interface.
• 1991: The World Wide Web was born.
• 1992: The first POS software for Microsoft Windows was created.
• 1993-1994: The EMV (Europay, MasterCard, and Visa) standard was established in Europe.
• 1994: Pizza Hut accepted their first-ever online order (a large pepperoni, mushroom and extra cheese pizza).
• 1994: Blockbuster introduced swipeable gift cards instead of gift certificates to reduce fraud.
• 2000: The first tablet was created by Microsoft and produced by Lenovo.
• 2001: Starbucks began to offer refillable gift cards.
• 2002: The first cloud-based POS system was introduced in the United Kingdom.
• 2003: McDonald’s, America’s largest restaurant chain, started to accept credit and debit cards.
• 2007: The first iPhone came on the market.
• 2010: Near Field Technology (NFC) functionality was added at low cost to mass-market mobile phones and other devices .
• 2012: Consumer-grade tablets took over the POS market.
• 2013: Papa John’s and Domino’s Pizza attributed over 40% of their sales to orders made online.
• 2013: Restaurant management platform Toast launched a commercial-grade restaurant POS system in Boston.
• 2014: Panera Bread allows guests to order through to self-serve kiosk systems.
• 2015: The U.S. introduced EMV payments.
• 2017: Only 2% of restaurants named technology their biggest challenge to success.
• 2018: Toast introduced Toast Go™, a fully integrated handheld POS system, allowing servers to take orders and payments and issue digital or email receipts from anywhere in the restaurant.
• 2019 and Beyond: The future of the POS is in your hands - literally. Will restaurants adopt more online ordering and delivery technology, like Domino's, or more kiosk stations, like Panera Bread? Will robots eventually run operations, lowering labor costs? Will mobile POS systems become as ubiquitous as smartphones? We'll be watching closely as these trends disrupt the industry - and you should too.

The combination of emerging technologies for both businesses and customers has transformed the restaurant experience over the past decade. The pivot towards mobile technologies and a focus on customer satisfaction and convenience have been key factors in the evolution of the modern POS system.

Free Resource: The Definitive Guide to Restaurant POS Systems + POS Comparison Tool

The Five Eras of Point of Sale Systems

1. Early Point of Sale Systems

What do most experts agree on? IBM introduced the first modern point of sale system.

The system consisted of a mainframe that controlled processing and display terminals that were connected to the mainframe. The machine could only perform limited functions compared to today, but it was truly revolutionary technology at the time.

While these machines were available in the 70s, it wasn’t until the 90s that the technology started to catch on with restaurants. Computers were becoming mainstream in offices and homes, and both Apple and Windows were on their way to becoming household names.

As businesses looked to streamline their processes and take advantage of the automation computers provided, POS systems became more attractive. No longer would the business have to rely on separate systems to handle sales, inventory, and other functions.

2. Point of Sale Systems Become Common

Over time, POS systems acquired more and more functionality as manufacturers and software developers sought to make their systems more robust than their competitors’. Systems began to include integrated loyalty programs, time clock tracking, vendor ordering, customer profiles, happy hour discounting, integration with kitchen display systems, and more.

By the late 90s/early 00s, point of sale systems were a necessity not just for large restaurant chains or big businesses, but for small and mid-sized companies and restaurants as well. However, POS systems were still cost-prohibitive for some businesses, who couldn’t justify the expense of a full machine that could cost thousands of dollars.

Fortunately, a solution was already in the works.

3. Moving to the Cloud

Cloud computing changed point of sale systems forever. While at one time, point of sale software had to be installed locally on the machine that would run it, now POS software could be accessed on demand through any internet-connected device. Any device with an internet browser – that is, smart phones, tablets, and existing computers – could become a POS system.

Tablets quickly became the hardware of choice for many software-as-a-service POS companies. These devices are popular with restaurant owners as they’re sleek, portable, and less expensive. Now, a small business on a tight budget doesn’t have to shell out thousands upfront if they want the benefits of a point of sale system. Instead, they can invest in a tablet for a few hundred dollars and subscribe to POS software for a monthly fee.

4. Handheld POS Systems Are Changing the Restaurant Experience

Restaurateurs are now exploring how mobile, or handheld, POS systems like Toast Go™ can improve the restaurant experience.

In full service restaurant environments, servers look like magicians as they fire food to the kitchen or drinks to the bar with one tap. With a portable POS system, Odd Duck servers making anywhere from an extra $6,000 to $7,000 a year in tips.

In fast casual environments, handheld POS systems improve guest touchpoints, bringing the continued service model to life. Staff can walk around the restaurant and process an order from anywhere, even in line. Eventide even asks guests to give their phone number so they can be texted when their order is ready.

In both types of restaurants, handheld technology has been proven to increase revenue and employee satisfaction.

5. The Future of POS Systems

Today, POS systems can perform more functions than ever. Modern restaurant POS systems like Toast include integrated credit and debit card processing, gift card and loyalty, table management, and more, and run on tablets that were custom-built for the restaurant industry.

The future of restaurant POS systems, we believe, is in your hands - literally.

What do you think the future of the restaurant POS system holds? Share in the comments below.

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This post was initially published in January 2016 and has since been updated with new information.