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The History of POS Use In Restaurants

Posted by Kevin Sullivan on 8/12/15 8:00 AM in Restaurant Technology

6 minute read Print

History_of_Restaurant_POS_Systems

After 20 years in the restaurant management industry and 15 years (and counting!) as a POS system consultant for restaurant businesses, I’d like to think I’ve seen it all.

But that simply isn’t true.

Restaurant management software is always changing, morphing, and evolving. Restaurateurs are demanding features that didn’t exist 20 years ago. The simplest system - a point of sale to get orders to the kitchen quickly and efficiently - is now being replaced by all-in-one technology platforms that offer not just point-of-sale, but online ordering, loyalty, gift cards, CRM, and more.

It’s exciting to watch these changes in the POS industry and to take part in this ongoing evolution as more and more restaurants are transitioning to efficient systems.

Let’s take a look at the evolution of the restaurant POS system: how they’ve changed over the years, and how they will continue to change for years to come.

The First Restaurant POS Systems

The first restaurant POS systems were basic cash registers. In the mid 1970s, IBM introduced  the electronic cash register (ECR), the first computer-based systems used by the restaurant industry. This was revolutionary.

The POS could get orders to the kitchen in a regulated fashion and provide the customer with a clean, error-free customer receipt that included the correct tax and allowed guests to see exactly what they ordered and the total cost of the meal. At the end of the day, what these systems really offered restaurant owners was the ability to calculate how much money should go into the bank vs. how much money should stay in the cash register. The simplest things that we take for granted now in a POS system were seen as innovative at the time.

However, most restaurants didn’t even process credit cards through the POS at the time; they had to process over the phone. This method took at least 30 seconds, and caused delays at the POS terminals. Even though the ECR and other POS systems were starting to surface, many restaurant owners were wary of upgrading because of this.

Enter… The Internet

In the 1980s, the Internet was born, now allowing for fast transactions. Before, you were using a POS system to enter orders and fire them to the kitchen. Now, restaurant owners were requesting the ability to process credit cards over the internet to speed up their operations. 

This cleaned up a lot of issues with the POS. Your POS could be “one report fits all,” showing your credit card transactions, cash transactions, and overall restaurant sales. Before, you had to balance a credit card machine against your POS. Now, it could all be done through one system, which was amazingly beneficial to restaurants and retail.

In 1986, Gene Mosher, for example, pioneered this technology for his deli with the first graphical point-of-sale software, with colored widgets and a touch screen interface. In 1992, the first POS software for Microsoft Windows was created. In later years, the idea of computers running internet-based software that could automate restaurant transactions went viral. With the Silicon Valley boom, more restaurant owners were demanding high functionality for their systems.

Which POS Features Were Most Impressive

Over the years, I’ve shown point of sale systems to many restaurateurs. There are many features now, but the one aspect that people were really impressed by was the ability to split a check. It’s a simple feature, but then, it was life-changing. You could simply drag one order over here, and the other over there, and have split checks!

Another feature that restaurant owners loved was the ability to modify items and create a customized menu from the ground up. It’s not just a burger with cheese; you can click on American, Cheddar, or Goat Cheese, or you can add an upcharge for double meat or for extra avocado.

Back then, restaurant owners didn’t even consider things like loyalty and gift cards; they simply had punch cards, which have been replaced over time. Now, having loyalty and gift cards built into your system is a must for tracking guest engagement. It’s all automated and integrated now.  

How the Modern POS Is Changing the Restaurant Industry

The modern point-of-sale system is changing the restaurant industry in two ways:

  1. Levels of service are increasing. With a streamlined process, restaurants are now able to create a restaurant culture built on quality service. POS systems also allows you to keep restaurant employees on the floor (rather than running back and forth between the kitchen and the cash register). That way, they’re in eyeshot and earshot of their customers, so they can solve any problems right away.

  2. Labor is decreasing. With modern POS systems, you can be smarter about how you distribute your labor. You may need one less server on the floor. You might not need a bar back. There’s a definite decrease in labor that POS in general has evolved into. Now, while POS is streamlined, it’s important not to “cut off your nose to spite your face” as they say, or cut labor just for the sake of cutting costs. It’s important to use employee and labor reports to really take a look at who’s driving the best customer experience.

Let’s Talk Mobile POS and Cloud POS

Take this restaurant for example: Sullivan & Son. Nowadays, Sullivan isn’t running the restaurant anymore: Son is. And Son is demanding technologically advanced POS systems. The younger generation is taking over these restaurants, even the small independent restaurants on the corner, and they want to be more in touch with their customers. Handheld pos systems with cloud technology is the way to do it.

Mobile and cloud POS offer restaurant owners the ability to know:

  • who their customers are
  • how much they’re spending
  • what their favorites are
  • where they’re from
  • and how long it’s been since their last visit

Then, restaurant owners can gauge their businesses towards these takeaways.

From the customer side, cloud and mobile POS gives guests the ease to not have to carry a wallet full of gift cards and instead have it all on their phone, or to have their debit card remembered on the system so they don’t have to pull it out or wait for the waiter to swipe the card.

With cloud-based POS systems, restaurant owners can have complete control over their restaurants from anywhere. While I’m not advocating for complete removal from the restaurant - of course this is a face-to-face industry and a relationship business, plain and simple - if a restaurant owner is away, he or she can actively react to something without having to physically be at the restaurant.

See a trend on your POS dashboard that your restaurant ticket times are running slow? Call your restaurant employees and ask if they need help. Are voids too high, or sales too low? You can see this on your mobile, cloud POS and react immediately. To be able to do that from right in front of your laptop or even on your phone is huge -- and it was never even thought of in the beginning.

What Do Restaurant Owners NEED to See in a New POS?

Now, restaurant owners can pick and choose between several different vendors. What differentiates cloud and traditional POS systems is that modern, cloud POS systems have a roadmap for what they want to achieve. They’re not just advanced past the legacy systems; they’re still advancing. Features are constantly being updated, your software is constantly being upgraded (for free), and your data is always secure.  

Credit card security is the driving force in restaurant POS decisions. In the past, upgrading a system never had anything to do with security. PCI didn’t even exist. Now, protecting your data is the single  most important reason to upgrade to a cloud-based POS system.

What’s more secure: that little PC that’s so vulnerable and is running an old operating system that has to constantly be updated? Or a software-as-a-service that stores data on web-hosted solutions and makes it possible to monitor information in real-time, just like your online banking application?

A cloud-based POS systems’ subscription not only covers features and upgrades; it also covers security, and you better believe that POS systems nowadays are serious about security. Let the SaaS subscription and 24/7 emergency support cover all your woes about security, and let the POS system create the customizable technology that will help you focus on your customers, your menu, and your restaurant.

What’s the Future of the Restaurant POS System? 

I think we’re going to see a surge in mobility for restaurants. While we’re already seeing options for phones to make payments (Apple Pay, for example), I think in the future they’re going to become order devices, above and beyond simple online ordering.

There’s going to be more tableside, interactive things for customers to do while waiting for their food. Perhaps each table will have their own POS system to log in to and order, that send food to the kitchen right away. Of course, there are certain liability issues to worry about there, especially when it comes to liquor, but I think the future of the restaurant point of sale system is that it will combine both customer-facing and restaurant-facing features, to create a fluid experience.

There we have it! The history of the POS system in a nutshell. With your experience in the restaurant industry, what would you add? Let us know in the comments below!

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Written by: Kevin Sullivan

Kevin is an Outside Sales Manager at Toast with over 15 years experience selling IT Systems to the hospitality industry and 20 years experience in restaurant operations and management, giving him insights into the daily challenges facing restaurant owners. He's also an active member of the Massachusetts Restaurant Association.


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