Cashing In

There is such a thing as too much technology. Consider the number of remote controls in any given household, meant to activate TVs, DVD players and stereos, and imagine who, if anyone, is actually proficient at operating all of them.

The same cannot be said for today’s point-of-sale (POS) systems, which can help your business run smoothly with a wide range of user-friendly features. There are a number of providers out there, but a few cater to cafés, with their software built around short-order menus and drink-based orders, as well as gift/loyalty-card programs. Yet cafés still constitute the least automated segment of the foodservice industry, justified in the minds of some operators by lower average sales than a typical full-service restaurant. If you have a simple menu and “it’s all about the coffee,” why spend $3,000 to $5,000 on a POS system?

For starters, even a cash register can cost $1,000 or more, while a POS can increase efficiency and profitability by saving time, reducing mistakes, tracking food costs and supporting product promotions. Matt Milletto, director of training at the American Barista & Coffee School in Portland, Ore., says that because a POS makes order-taking quick and easy, users can “avoid losing at least a few customers each day who will go elsewhere if they see a long line. That might be $15 a day right there, and probably more.” Add to that greater order accuracy and add-ons being accounted for, and a POS can pay for itself, usually in about a year.

THE PLAYING FIELD
POS providers specializing in coffeehouse-friendly systems include Coffee Shop Manager, Selby Soft and Vital Link. Both Selby Soft and Vital Link got their start in pizzerias, which have similar needs to coffeehouses when it comes to customer orders. “The paradigm you need in both of these segments is the same,” says Larry O’Connor, president of Vital Link. “A pizza order and a drink order are customized in much the same way, with various add-ons and toppings.”

Coffee Shop Manager was the first to use nonlinear, matrix-style order screens, which Selby Soft and Vital Link also use. It allows the customer to describe the details of their order in any sequence, such as “soy, nonfat, 12-ounce, vanilla latte,” while the cashier keys it in exactly as the customer says it. “You can start wherever they start without waiting for the magic word ‘latte,’” says Lee Alexander, vice president of sales and marketing at CSM. Thus, mistakes are minimized and the cashier isn’t tempted to modify customer behavior.

All three companies offer gift- and loyalty-card programs that allow operators to bring up a customer’s standard order, not to mention eliminating paper punch cards—or even the loyalty card itself. “Customers can create a full profile and use their phone number to access their account, online or at the store,” says Mike Spence, vice president of Selby Soft. And if you own more than one store, cards can be used at all locations, with balances uploaded to the main server as often as every 10 minutes.

Alexander says that in the last few years he has seen people interested in POS systems solely because of the power of prepaid cards as a marketing tool. “There are 100 ways to market it—from realtors to give to new residents, to schools or sports leagues.” The cards also reduce by-the-swipe credit card processing fees, which average $40 to $50 a month, and as much as $100 at high-volume stores.

With gift and loyalty cards increasing your visibility and level of service, there is now growing customer demand for Web-based ordering. Orders placed on your shop’s Web site are sent straight to your POS system, prepaid by credit card. “If people have a prepaid order, they can be in and out in five seconds,” says Alexander, adding that an online order tends to be a higher total ticket because customers will take their time perusing the menu, and they know it will be ready when they walk in your door.

BEAN COUNTING
POS customer-service features can keep you on top of foot traffic and increase sales, but keeping track of your bottom line is equally important. Unless you got into the coffee or tea business because you love playing with ledgers and spreadsheets, you’ll appreciate the time a POS can save on these tasks. “It allows a shop owner to accurately control every variable of their business—from inventory to labor to sales promotions—and helps them understand waste, cost of goods and more,” says Milletto. “Even if you use a bookkeeper, you end up needing them less.”

Most POS software is set up to export data directly to QuickBooks, the accounting program of choice for most small businesses. Inventory and other activity reports can measure the success of menu items and promotions while taking the mystery out of cash flow, payroll, balancing tills and reconciling bank accounts at the same time. “The key in any foodservice environment is control,” says O’Connor. “If you don’t have control, you don’t know if you’re making money.”

For a quick look at daily sales and labor figures, CSM has a Flash Report. “It’s a great at-a-glance feature,” says Alexander. “It doesn’t matter if you have a computer that’s hooked up to your POS, and in a lot of shops there is no back office anyway, making the report even more key.” Selby Soft’s version is called the Dashboard Report, which shows a graph of sales, total tickets and labor versus sales by the hour for the day and the last week, month and year. “The goal is to manage your business and not focus on minutia,” says Spence. “It takes the mystery out of it.”

ALL NEW, ALL THE TIME—BUT AT WHAT PRICE?
Last year CSM launched Coffee Mail, which enables users to leave instructions that will pop up onscreen when the POS station is turned on. “It’s a good way for closers to give a heads up to openers, say if the grinder was giving them grief or why they didn’t do something they normally do,” says Alexander. “And it creates a record of communication as an Intranet form of e-mail.” You can post monthly or weekly reminders for a group or a specific employee, each with their own login.

It’s safe to say that other POS providers will come up with a version of Coffee Mail. “They are constantly writing code and we’re constantly writing code—little odds and ends all the time,” says Alexander. “If somebody comes up with an idea we like and we can test it and release it, we’ll do it.” 

And since software updates can be done quickly and frequently, it might seem like all POS systems are slightly different versions of the same product. But each has a look and feel all its own, making them attractive and intuitive to use for different groups for a variety of reasons, from organizational preferences to aesthetics. It’s wise to get a hands-on feel for each system to determine which one makes the most sense for your menu, sales volume, and even specific customer-service features that will maximize appeal to your unique customer base.
     
And then there’s the price tag. With a number of features and packages to choose from, a POS system costs $3,000 and up. O’Connor believes Vital Link is the most affordable product out there, which includes one year of online and phone support. Spence says pricing is similar between the companies, within a few hundred dollars in many cases. “A guy selling a $10 latte would never stay in business, and the person selling them for $.25 probably doesn’t have a good product.” The biggest thing, he says, is the quality of programming. “There are different languages out there. High-end programming and database languages make your system run more smoothly. Café owners should also ask if a POS provider is innovating, and if the number of updates being done are making things easier for them.” Phone and online support are offered for a set period after setup—usually one year. Paying extra for software support allows you to get updates online, with changes that can be more frequent and potentially beneficial than you’d think.

THE WI-FI CONNECTION:
In the last year, POS companies also have seen “more demand for integrating with Wi-Fi services—WEBbeams specifically,” says Mike Spence of Selby Soft. The company specializes in servicing coffeehouses, like the POS providers mentioned here.

WEBbeams interfaces with POS software, allowing retailers to print out codes for customers that give them free Wi-Fi access in exchange for a purchase.  “The length of free time is up to the owner,” says WEBbeams president Brian Van Lieshout. “Fee-based access codes are also integrated into the POS.”

From a computer networking standpoint, WEBbeams ensures that the POS and Wi-Fi networks meet PCI (payment card industry) compliance standards that allow the shop to save money by sharing one Internet connection for the use of both POS transactions and public Wi-Fi. In addition to securing the POS computers, WEBbeams’ equipment also gives them first priority to the Internet connection. “This ensures critical sales operations are not adversely affected because of heavily used Wi-Fi,” says Van Lieshout.

It’s common to see a three to five percent increase in revenue—minimum—after installing a POS. A good example is from a CSM customer in an isolated part of Alaska, who saw an immediate 10-percent increase. Since the only new variable affecting the business was his new POS—no new traffic patterns or a shop closing down the road—he thinks the POS is what did the trick.

Testimonials like this can make parting with a few thousand dollars almost exciting. (Although most manufacturers concede that if a shop’s sales are under $3,000 per week, it can be tough to afford.) About half of POS systems are purchased outright, and most shop owners can expect to see a return on investment in about a year. With a lease-to-own option, which often makes sense for new owners who need to put their cash into inventory, it will be paid for in 18 months to three years, depending on sales volume. “But it does pay for itself; that’s not hype,” says Spence. “And look at your competition. If they have a POS, you’re getting left behind.”

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