When considering the implementation of a Point of Sale (POS) system in a restaurant, it's essential to be aware of the potential hidden costs that may arise, impacting the overall budget and profitability. These costs can come in various forms, from additional hardware expenses to fees for advanced features and payment processing.

Proprietary Hardware Costs

One of the most common hidden costs is associated with proprietary hardware. For instance, though some POS systems like Toast offer the first terminal or handheld for free, any additional terminals will incur extra costs. This scenario means that while the initial setup might seem affordable, the expenses can quickly accumulate if a restaurant requires multiple terminals to operate efficiently.

Add-Ons for Advanced Features

Moreover, while most basic features are included in the standard plans of POS systems, those restaurants needing more advanced management tools or marketing features will find themselves facing additional costs. This requirement can significantly raise the overall system cost, especially for restaurants managing multiple aspects of their operations through the POS.

Payment Processing Fees

Another significant hidden cost is payment processing fees. For example, Toast charges a fee of 2.99% + $0.15 per transaction. These fees mean that every time a customer pays with a card, a portion of that payment goes to the POS provider, which can cumulate into a substantial expense over time.

Impact on Restaurant Operations

Hidden costs can profoundly influence a restaurant's operation, affecting its profitability and efficiency. They can be broadly categorized into labor costs and food waste costs. Labor costs encompass more than just wages and include various fringe benefits, which can make the actual cost of an hour of work much higher than the base salary. Food waste is another critical area where hidden costs arise, with commercial kitchens wasting a significant percentage of the food they purchase before it reaches the customer. Managing these costs is crucial for the successful operation of a restaurant.

Strategies to Avoid Hidden Costs

To avoid these unforeseen expenses, it's essential to have a clear understanding of the POS system's pricing structure, including all potential additional costs. Choosing a system that allows flexibility in payment processors and provides reliable customer support can mitigate some of these costs. Cloud-based POS systems are often recommended for their lower upfront costs and scalability. Additionally, opting for a system that offers a customizable feature set can ensure that restaurants only pay for what they need.

By considering these potential hidden costs and choosing a POS system wisely, restaurant owners can make a more informed decision, selecting a system that best fits their budget and needs, thereby ensuring smoother operations and better profitability.

References

• Control Your Food Waste to Reduce Rising Costs
• Chapter 13: Labor and Food Cost Control
• Best POS System
• Best Free POS Systems
• POS Software

Next Generation Restaurant POS from Otter

The next generation of POS is here. Otter consolidates everything you need to run your business into one system. Manage all your apps, orders, analytics, and marketing with ease.

• Increase your revenue by reaching more channels
• One mission control center for your restaurant
• Reduce your expenses through self-serve options

Learn more about Otter POS