Top POS Selection Tips for Franchises

10/15/2009
A restaurant's point of sale (POS) system is a substantial investment for franchisees, and can have a significant impact on the efficiency and success of both the franchisee's business and that of the parent company. As a franchisor, selecting and approving the right POS is critical in protecting everyone's investment and ensuring the reliability and accuracy of the data collected. The discovery phase of the project is an essential step, and during this time it is important that you clearly identify and document the business requirements of both the franchisor and franchisees, taking into account future growth plans, multi-unit operators, international development and support for multi concepts. Engaging with corporate functional department leads and soliciting their feedback and support is essential to the decision making process and end result.

In addition, there are a number of key considerations that franchisors should take into account when selecting a POS in order to ensure that they are informed and equipped to make the right decision for the system.

Robust in-store functionality and third party integration
First off and most importantly, a POS needs to be intuitive, easy to train on, and operate for both the front-of-house and the back-of-house, including manager procedures and system configuration. The POS software should be flexible, configurable and customizable at the restaurant level, while also ensuring data integrity and uniformity. One size does not fit all, and a POS system needs to support multiple concepts, day parts and revenue centers, in addition to seamless third party integration for credit and gift card processing, wireless payment and ordering options, customer loyalty programs, kitchen display systems and alternative ordering methods (i.e. online ordering and kiosks).

Above store reporting and data accessibility
Access to data has become increasingly important as the demand for actionable and timely information continues to grow, and exception based alerts and reporting has been deemed critical for the success of the business. It is imperative that the data from the POS system be accessible and timely. Gone are the days where proprietary transaction files are acceptable. Of course, the data needs to be secure, but it also needs to accessible. Operators need to be equipped with the right data to make informed and proactive decisions. If you can't measure it, you can't improve it. Measuring customer activity, spend and promotions at the transaction detail level provides franchisors and operators with valuable tools in developing effective marketing programs, measuring ROI, predicting cash flow, and menu engineering for profitability. In addition, operators need to review all opportunities to reduce overhead costs by streamlining critical business processes such as GL, payroll, and HR reporting leveraging end-to-end POS integration.

Centralized data management
In order to ensure that you can effectively measure results, the data needs to be clean. You know the saying, garbage in, garbage out. The ability to centrally manage and deploy POS updates is the key to ensuring data integrity. The restaurant level POS system needs to be able to effectively integrate with centralized Web-based applications in order to streamline critical updates for menu downloads, tax tables, discounts, promotions and price changes. A Web-based deployment model greatly reduces the overall time and money spent in deploying POS updates, and also ensures the timeliness of the updates and the resulting data integrity and reliability of the POS data.

System resilience, redundancy, support and maintenance
When making such a significant investment in technology, you do not want to have to rely on a manual crash kit in the event of a system failure. When implementing a POS system, please do not neglect disaster recovery. During the implementation planning stage, it is critical that you review a cost effective strategy to deploy redundant systems and support, along with a properly executed backup strategy in order reduce downtime, risk and exposure associated with a system failure. In addition to the potential revenue loss, you also need to appreciate that guests are no longer willing to put up with long wait times due to system issues, not to mention their reluctance to hand over their credit card when systems are offline and operators have to resort to the dreaded manual knuckle busters. As a franchisor, it is a good idea that you set standards and document expectations for franchisees on what they need to have in place with respect to disaster recovery and system support. System redundancy is vital to the integrity and timeliness of the data not to mention keeping your guests happy. With respect to service and support, it is often difficult to find a single vendor that will provide a cost effective end-to-end solution. In order to keep vendors honest and competitive always provide operators with multiple support options.

Total cost of ownership
Last but not least, before you finalize your POS strategy and direction, you will want to take into account the total cost of ownership over the next 5 years. While the initial outlay for the POS hardware and software will be a significant upfront investment, ongoing maintenance and support costs can definitely add up if you do not implement a solid execution and support plan. You will need to factor in not only the possible implementation costs paid to the vendor and/or outside contractor, but also the soft costs associated with the introduction of a new system. This takes us back to the discovery stage and the necessity to complete an in-depth gap analysis to effectively determine the needs of the business so that you can evaluate the right POS solution and strategy. There are many different solutions and deployment models available, such as a Web-based POS, which can significantly reduce the upfront costs and ongoing maintenance, but requires a greater investment in ensuring that the right disaster recovery model is in place. Whatever you decide, it will be imperative that you hold vendors accountable and request detailed proposals outlining all associated costs so that you are not thrown off guard later on. This includes understanding the costs of cabling for retrofits and new locations, hardware warranty periods, ongoing hardware maintenance costs, including onsite versus depot service options, reoccurring software maintenance fees, monthly hosting fees, integration fees, and possible custom development fees.

Making an informed decision based on documented business requirements and validation through a successful multi-store pilot will ensure that you protect the best interests of your franchisees and lay the foundation for a successful long-term technology platform.

With more than 25 years of experience in the hospitality industry, Natascha Kogler brings in-depth industry knowledge to her consulting practice and clients. Kogler has held top level IT positions at leading national restaurant chains such as Earls Restaurants, The Cheesecake Factory, Diedrich's Coffee, Pink Dot, Baja Fresh Mexican Grill and DineEquity (franchisor of IHOP and Applebee's restaurants). Natascha can be reached at [email protected].  

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