When you’re thinking of buying a POS system for the first time, you’ll have plenty of questions. Do I take the leap? How will I hide my cash? I’m not tech-savvy. Will my employees accept the change? Will the cost break me?
Here are some facts:
Employees expect technology. A simple POS with an easy-to-use menu on a touch screen will create additional sales often lost on a notepad, generating more tips. Second, younger employees have been raised on computers, so change is not normally an issue.
There are four easy factors when rating a POS system: 1) daily sales entry into an accounting program; 2) integration with your payroll processing; 3) automated menu item costing; and 4) support for hardware and software.
The most efficient system will automatically send your daily sales information to a computer location where your accounting program is used. For example, each night, part of the closing process is to send the data, while you sleep, to your accounting program. This creates consistency in reporting sales for your sales tax returns, income tax returns and financial statements.
Your daily accounting entry from the POS system must have the ability to breakdown cash, check and credit card payments; payouts for supplies; gift cards; house accounts by customer; and fees. These balances must transfer automatically to the proper expense accounts in your accounting program— preferably to a chart of accounts established by the National Restaurant Association. This way, you’ll be able to compare your restaurant to others with similar operations. If this process requires you to purchase an additional piece of software from the POS vendor, then keep looking.
Since 15% to 40% or more of your sales will be spent on labor costs, this process needs to be easily integrated with your POS, and your labor percentage of net sales must be calculated by the hour. Your POS must have a simple way for an employee to capture his time worked, and this process must not give the employee the opportunity to alter the information.
We have found that using an Internet company for payroll processing gives you the ability to process payroll at the office, on vacation, or from any computer with an Internet connection. You won’t need to wait for your accountant to provide you with
the checks on a timely basis, and you can cut manual checks immediately (for termination circumstances, for example).
Again, your payroll information must be easily transferred to your accounting program, and you need a simple method to enter hours from the POS system. Enter your hours, review the total and print. Always stay in control of printing and signing your own checks.
Inventory tracking does not happen automatically. Ideally, if you can partner with a supplier that would send you purchase orders electronically, this information could be entered into your POS. Now you’re in business. Track menu items’ costs using the 80/20 rule. This way, with minimal extra effort on your part, you can generate a report that will capture 80% of a menu item’s food cost using purchase orders entered into your POS and daily sales captured per menu item. You could focus on dough, meats and cheeses and capture more than 80% of a pie’s cost.
Next, you could take this information and create the backbone for changing your menu prices each six months to one year. Simply average the sales per menu item along with the cost per menu item and determine your overall restaurant gross profit. All other costs being the same by adjusting the menu prices based on volume or movement from average sales data over the past few months, you can calculate an expected increase to your bottom line. A simple report is all you need; this report should be able to be emailed to you nightly.
Consider the hardware. Call a few customers who have had their systems go down. Watch out for third-party machines that have been assembled cheaply and are supported by only the POS provider and not the hardware manufacturer. I recommend 24- hour support from the hardware manufacturer. You can’t afford to be down. If the POS salesperson won’t provide you with a backup the next day in the event you go down, then keep looking. Your POS unit should operate like it was serving pies in the U.S. Space Station.
Telephone or online support is crucial. During your POS evaluations, take the time to call the support department and ask them general questions about the capabilities of the machine. Is the support desk located in the United States? How quick is the response time? After the initial honeymoon and the POS is installed, are future support calls free or costly? Make sure the POS, along with training, can be supported remotely.
Michael J. Rasmussen is the owner of Rasmussen Tax Group in Conway, Arkansas. Visit www.rasmussentaxgroup.com for additional insight into restaurant-specific tax strategies, accounting and technology programs.
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