What is a POS System?

What is a POS

A POS, or point of sale, is the heart of your business.

What is a POS system?

The definition of a point of sale system, or POS, is a system that facilitates a transaction between a buyer and a seller. 

Before the invention of the cash register in the late 1800s, sellers used handwritten ledgers to document each transaction. The cash register, which would become the foundation of modern accounting, was invented as a way to better track transactions by inputting the cost of the product and automatically calculating the change.

Over the years, cash registers improved and evolved from mechanical devices to electronic ones, and eventually into the modern-day POS which combines sophisticated hardware and software to facilitate order entry, tracking and reporting, payment processing, and more. A POS is at the heart of many business’s operating processes, including restaurants.

A restaurant POS is used to input guest orders, send them to the kitchen for fulfillment, collect payment, and provide reporting on restaurant performance. Modern restaurant POS systems, like Toast, are cloud-based so that you can access your restaurant’s critical information anywhere, any time, and on any device. Modern restaurant POS systems have also evolved to become much more than the traditional definition of a POS, because they can seamlessly integrate with numerous other types of restaurant technology like payroll, inventory, online ordering, gift cards, loyalty, marketing, and more.

How Does a POS System Work?

A POS system works by creating an efficient and repeatable process for a guest to place their order and pay for their meal. Let’s break down the steps of how a restaurant POS is used.

  1. A guest walks into a restaurant and places their order with a server at their table or from an employee at a counter.
  2. The restaurant employee then inputs that order into the POS, which calculates the order amount and sends it to the kitchen for preparation.
  3. Kitchen staff are alerted of the order by either a printed chit, or an electronic kitchen display system like Toast KDS.
  4. Once the food is prepped, the server is notified that the order is ready to be run to the guest and they bring it out.
  5. After the guest has enjoyed their meal, the server goes to the POS to print the guest's check and begin the payment process.
  6. After reviewing the check, the guest hands their credit card to the server who then processes the payment on the POS, which automatically closes the check and calculates the total revenue and tips.
  7. At the end of the night, the manager logs into the POS to view their daily summary of orders, sales, discounts, and tips.  

What Types of Software and Hardware Does a POS System Include?

In its simplest form, a modern restaurant POS provides a touch screen terminal  used to enter orders, process payments, and track restaurant performance. However, powerful restaurant platforms, like Toast, provide much more than that. Every restaurant is different, so you should look for a POS that can be customized to meet your specific needs, help deliver a great great experience, make your employees’ jobs easier, and ultimately help you grow your business. 

Some of the key software features that help meet these goals include:

  1. Menu management: A restaurant POS system should allow you to easily edit your menu, anytime and from anywhere. Menus should be able to be adapted easily across different channels, including your on-premise menu, online ordering menu, third-party delivery menu, and more. With a POS with menu management capabilities, if an item is 86ed, both your servers and all your kitchen staff will know in real time.
  2. Connected FOH & BOH operations: Better connect your front and back of house with realtime order firing, and powerful kitchen display screen software that can track item prep times and alert guests or servers when the item is ready.
  3. Payment processing: Guests should easily be able to pay with their preferred method, whether it's cash, dip, tap, or swipe, or a contactless mobile transaction via printed QR code or digital wallet. Integrated payment processors like Toast can also help you build a valuable guest database by connecting guest information with transaction history, so you can better understand your loyal guests and know who orders what.
  4. Digital dine in: Many restaurants are quickly discovering the powerful benefits of putting guests in control of their ordering and payment experience with technologies like order and pay the table. With this technology, guests are in charge of placing their orders and submitting payment directly from their phone, so they can order exactly what they want, when they want it, regardless of where their server is. When it comes time to pay, they can simply close out with a few taps and be on their way, helping you improve your table turn times. As a result, your servers are freed from the mundane transactional steps of service and can focus more on delighting guests by ensuring they have everything they need.
  5. Off premise ordering: All of your orders, whether in-store or online, should seamlessly flow into one system. Modern restaurant POS systems can allow you to have your own digital storefront that fires orders directly to the kitchen, while also directly sending third-party delivery orders into the POS so that you can ditch the tablet farm and eliminate unnecessary manual entry of these orders. 
  6. Guest engagement: Loyalty, gift cards, email marketing, and CRM should all seamlessly connect with your POS system and its data, so that you can deepen your connection with guests and keep them coming back.
  7. Payroll and employee management: Processing payroll should be easy. Integrated platforms like Toast allow you to quickly export timesheets and tips into payroll with a few clicks. No more spreadsheets and costly manual calculations.
  8. Reporting and analytics: Every business needs to know how they're performing, and restaurants are no exception. A restaurant POS should provide you with the rich data insights you need to understand what's working, and what’s not, so that you can build the business of your dreams.

When considering a restaurant POS system, you should look for one that is designed for restaurants and seamlessly integrates the various types of technology that you need to run your business. Powerful restaurant POS platforms like Toast offer many of these products and services directly so that you don’t have to deal with the headache of multiple disconnected systems and processes. An integrated all-in-one POS system can handle the complex operational logistics so that you can focus on what matters most: delivering a delightful guest experience.  

As restaurant POS software systems have advanced over the years, restaurant POS hardware has followed along right beside it. Gone are the days where most restaurants rely on a few POS terminals and printers to take orders and payments. Today, restaurants are seeing the benefits of having a growing number of hardware products in use.  

  1. Restaurant-grade hardware: Modern POS technologies, like touchscreen terminals, exist to increase efficiency in your business. They should be able to withstand the rigors of the restaurant with durable hardware, and they should be able to ensure that you and your team are always operating at restaurant pace.
  2. Handheld POS systems: These devices put the full power of your POS in the palm of your server’s hand, so that they can submit orders and take payments right from the table for faster service. They can also be used as great linebusting devices in QSR concepts by allowing staff to take orders and payments regardless of how far away the guest is from the terminal.
  3. Kitchen display systems (KDS): Increase speed of service and communication between the FOH and BOH by allowing staff to receive and respond to orders in real time. If the kitchen needs to 86 an item, they can do so quickly with a few taps of the screen and servers will instantly know it’s out of stock. KDS systems can also provide rich data on item prep times so you can improve your BOH efficiency, while reducing your costs of printer receipt paper. 
  4. Guest facing displays: If you run a QSR, guest facing displays make it easy for guests to view their order, add a tip, and complete their transaction. They also make it easy to sign up for your loyalty program or request a digital receipt via text or email.
  5. Contactless payment technology: Contactless payments were already on the rise, but COVID-19 drastically increased their adoption. They are fast, secure, and reliable. Modern POS systems like Toast offer contactless payment devices on the terminal, counter, or on the handheld POS.

The hardware you need will depend on your restaurant's unique business model, but you should look for hardware that is designed for restaurants and built to handle the hustle and bustle of a busy Saturday night. This hardware should also work together to improve operational efficiency and ultimately improve your business’s bottom line. 

Find a Restaurant POS that Makes Front- and Back-of-House Communication Easy

There are many POS systems out there to choose from, but what’s important is that you find one that will improve your FOH and BOH operations by facilitating communication, increasing speed of service, and allowing you to customize the whole system to suit your unique needs. Be wary of POS systems not designed specifically for restaurants, because these can lack the deeper level of customization and integrations that can help your business thrive. 

At the end of the day, a restaurant POS should make it easier for your staff to do their job and make it easier for you to manage your business. If your POS isn’t doing that, then it might be time to consider making a change.

Toast Point of Sale
Learn how a better point of sale system can help you run your restaurant.