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Christopher Webb Headshot

Why POS's are POS's

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I spend my days speaking with restaurant owners about their digital needs and how they use technology in their restaurants. The conversations are enlightening yet extreme: restaurant owners are either at the cutting edge or they're stuck in the 1970s. There's really no middle ground.

I attribute this gap to the infamous Digital Divide -- that much-in-the-news gap that separates individuals, companies and industries. And it's only very slowly getting better, especially for the restaurant industry. In fact, it's hard to argue there's another industry caught further on the wrong side of the digital divide.

A restaurant owner recently bragged to me, "My POS [point of sale] system can run on seven-year-old IBM hardware!" That's a bad thing, not a good thing. That means the software is less flexible and capable, not more.

The oversized, antiquated POS systems you see in restaurants today are not far off from what IBM created in the 1970s. Since that time, not so much has changed when it comes to traditional POS system hardware or even software. Of course there are a whole lot more POS providers out there, but systems across the board aren't vastly different one to the next and as a lump sum, they're not so different from the one that Pathmark and Dillard's were using almost a half century ago.

In fact, according to a survey by RestaurantOwner.com of 500 restaurant owners, over 40 percent of restaurant owners have used the same POS system for more than five years. The survey didn't offer 10+ years as an option, but I imagine a sizable chunk would have checked this box if it were available. I can't think of anything, especially technology, that I've owned for more than five years.

The funny thing is that with a retention rate of five plus years, you'd think that all these restaurant owners were happy customers. In reality, according to the same survey only 40 percent of restaurant owners are satisfied with their POS systems.

Resultantly, change is in the air as I watch my restaurants seek out change and education. The shift is likely the result of a few things:

1) The economy: it's by and large forced restaurants to find new ways to reach customers.

2) New options: the slew of available tech platforms/services/products that have launched in the past half decade have increased the flow of business.

3) Ease of use: The movement towards making enterprise-grade products more consumer-like (read: more fun, affordable and efficient). The days of POS companies requiring $3 - 10k yearly service fees to manage their outdated systems are numbered.

The progress is exciting. Everyone will benefit from this embrace of technology. Well, everyone except for the traditional POS companies. These guys have made a killing over the decades selling bloated, over-priced, under-performing products to an industry unaware of how antiquated these systems really are. As the industry wakes up, my bet is that restaurant owners will go for the fresher systems that were concepted using modern design and engineering principles.

Square is the perfect example of a fresh response to these old problems. A combined one-two punch of Square's card reader and Square Register basically makes it possible for anyone to have a small business up and running in a matter of minutes. There are currently more than two million businesses using Square, which means $8 billion in payments are processed through the application each year. That $8 billion is an 800% increase from just one year ago -- 800%! And now with Starbucks as a client (and investor) those numbers are only going to continue skyrocketing.

Square's technology is built around the idea that if tools are easy for managers and customers to use, then they'll constantly be in use. And, use = money. Who can argue with that?

Square and others like it are proof that a marketplace exists for new companies to fill the void that old POS systems create. It's an exciting time to watch bridges erected to close the Digital Divide, and the technological advances to do so.

Co-written by Lauren Sudekum of ChowNow

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