Insider tips on how to select and negotiate a better deal on your POS from an operator and former technology salesperson
Heather Ransome is a hospitality consultant, President of the Bucks-Mont Chapter of the Pennsylvania Restaurant and Lodging Association, and Founder/CEO of Zero Proof Go. Having been both an owner/operator as well as a restaurant technology salesperson, Heather has a unique point of view when it comes to selecting the best tech for your business. We spoke with Heather recently on how to select a POS and how to negotiate a great deal.
How to choose the right point-of-sale system for your business
A restaurant point-of-sale system is arguably the most important piece of technology you can purchase for your business because it touches every customer and impacts every aspect of your operation. Restaurant point-of-sale systems are not one-size fits all, so it’s important that you choose wisely when selecting a POS for your restaurant.
Whether you are working with a consultant or doing this on your own, the process for selecting and purchasing a new point-of-sale should always be based on your business needs. “In the consulting world, we call this the Discovery phase, where we work with the client to understand what’s important to them.” Says Heather. “This includes documenting their current operation, listing any new capabilities they want to explore, and clarifying how they want this investment to help improve their operation and bottom-line.”
Know your “must-have” requirements
“I like to divide this list of requirements into 'must have and nice to have' capabilities so we can all be on the same page with where we have room to compromise, and where we don’t.” says Heather. “So, for example, a requirement might be that the new POS needs to work with an existing accounting system, or that it needs to allow for a lot of modifiers to help the kitchen operate smoothly.”
When setting requirements, think first about the biggest contributors to your profitability. “That’s the thing you need to protect at all costs. If you have a bar forward operation, then you’ve got to make sure that the bar is not disrupted too much. If it's delivery-centric, make sure you preserve the integrity of that aspect of your operation. When we talk about compromising something, try not to compromise what really is your bread and butter. The wrong POS can totally take down a kitchen on a busy Saturday night, so priorities need to be clear.”
Make time for a demo
Once you have your list of requirements, you’re ready to reach out to a short list of technology providers to request a demo and proposal. For high ticket items like a POS, Heather recommends you get three salespeople to come in to present three different products. “You want to be as educated as possible about the capabilities of each system, so come to each demo with a list of questions and be really clear about your requirements upfront, so the Salesperson can tailor the demo to your needs.”
And, Heather cautions “If a Salesperson doesn’t ask you about your requirements, it’s a red flag. If they aren’t interested in understanding your needs, it’s probably a sign they’re going to try and sell you a bunch of stuff you don’t need.”
Get the best price
When it comes to negotiating the best price “ask around to see what other businesses are paying for their tech. Different businesses will likely be paying different amounts based on their volume, or the features they’ve opted into, but it’s good to understand the range you might expect.” says Heather. And definitely look online to see what the listed price is for any technology you are considering. “The way technology sales works in general, every price that's published, is set knowing that the salesperson is going to need room to negotiate. So the list price is rarely the final price.”
One of the most important areas to consider when it comes to POS pricing is the processing fees and the contractual requirements you’re agreeing to. “Are you required to go with them as your processor? Is your rate better if you do? Will you get your equipment for free if you do? These are all questions you need to ask.” says Heather. “And don’t forget to ask what happens if you leave, will you need to pay them anything to get out of your contract?”
Document everything
It’s a best practice for any business to put things in writing, yet many of us fail to do this when we are pressed for time or feeling overwhelmed by the negotiation process. “At the end of each demo, ask the Salesperson to send you their initial bid in writing. If the Salesperson tells you something on the phone, or in person, ask them right away to put it in an email. Documentation is a gift you give your future self. It’s especially important when you’re talking to multiple sales people.” says Heather.
Another reason to get bids in writing is that it allows you to use each competitors' bid to help you negotiate the best price with the other companies you are talking to. This isn’t sneaky or unfair, it’s just good business. If you don’t do this, you’re going to pay more for something you could have gotten for less. It’s that simple.
Negotiating the price for technology is like any other negotiation -- the salesperson is going to come in high, and you are going to come in low. In the end, you’ll meet somewhere in the middle. As a former technology salesperson, Heather counsels “Keep in mind, the salesperson is typically working on commission, which means they get paid a percent of the final sale or annual subscription amount. Sales people are also measured on the number of sales they close each month. So while they are incented to keep the price high, they also have pressure to close the sale as soon as possible. Sales quotas are why I always tell people to wait until the end of the month to sign. That’s when a salesperson feels the most pressure to close a deal.”
Carefully review the contract before you sign
If you’re like most restaurant operators, legal language is not your first language or even your second language. That’s why it is absolutely important to have somebody look at the contract before you sign it. “I would have a lawyer, your accountant, or somebody with lots of experience reviewing and negotiating contracts help you.”
Among the things you should look for when reviewing a contract:
Are the rates in the contract what you agreed to, including monthly SaaS fees (Software as a Service), credit card processing fees, and specific feature upgrades?
Has anything else been added to the contract that you weren’t expecting, including equipment?
What is your support tier, and does it fit your needs? Is on-site support available when you need it?
What is the “Out” clause? Will you owe anything if you end the contract early?
How to make a short-list
Having a solid process in place to help you evaluate POS providers increases the likelihood you’ll choose a system that’s a good fit for your business. So, think about your operation and your business priorities, and write down your most important requirements. “The best way to come up with a short list is to ask around and see what other businesses like yours are working with, and how it might fit with your operation.” says Heather. “Every POS company is releasing new features and working hard to make their technology better and easier to use” but you need to understand if their tech is right for your business.
Quick-fire thoughts on top POS systems for restaurants
We threw out the names of POS brands that are popular with restaurants, and Heather shared her unfiltered responses below:
Toast
“I have a lot of respect for Toast. They disrupted the market with their cloud based technologies. They can be a good option for full-service restaurants. It's easy for people to step in without a lot of training on the system, which is great for the front of the house. Their Kitchen Display system (KDS) is probably the best out there. The reporting is very good. On the downside, they haven’t always been transparent about their fees. And I’ve seen their customer service take a hit since they started outsourcing their 800 number -- it’s highly unlikely that the person on the other end of that phone call is deeply immersed in restaurant operations.”
Clover
“Clover is a less expensive entry-level POS for a smaller operation that doesn't need a lot of integrations on the back-end. I’d put Clover in a taco stand or a food truck all day long. It’s fine for a small restaurant that doesn’t need a lot of modifiers. But the tech doesn’t scale as well as other options. When negotiating with Clover, be sure to do your homework, because I’ve seen pricing that is all over the place depending on your salesperson.”
Heartland
“They offer a workable solution, but Heartland isn’t out there with the best technology, or the most new features. If you purchase through their dealer network, it often comes with an extra level of service and support. For some operations, fewer bells and whistles paired with enhanced support can be a good combination. Especially if you’re able to negotiate on the price.”
Square
“Square is an excellent out of the box solution for restaurants that don’t have complicated menus or operations. As it stands today, it's not the best choice for full service restaurants. If you're a counter-service restaurant with a smallish menu, or a coffee shop, you're okay. But anything with a more complex operation than that, it's probably not going to be a good fit. Overall, their system is very easy to use, and they have a lot of integrations that are very useful.”
Aloha
“I cut my teeth on Aloha, and fell in love with their product back in the day. They’ve been late moving over to a cloud based system. They're working to retrofit their whole business model to be cloud based but it's still not comparable to what some of the leading cloud based systems are offering at this point. If you've got a multi-unit operation with ten or twenty units, Aloha’s server-based product could be a good consideration over a cloud based system.”
Oracle
Oracle (aka Micros) is a dinosaur. It’s my understanding that they’re no longer focusing on smaller independent restaurants. They seem to be leaning more towards Enterprise customers as that is the best fit for their system. Oracle has an amazing interface with Property Management Systems (PMS), which is really great for hotels and resorts. ‘
SpotOn, TouchBistro and Lightspeed
“SpotOn is the closest to Toast in terms of being a complete solution for full-service restaurants. Full disclosure, I used to work for them. But I think they’re an interesting option restaurants should be considering. TouchBistro and Lightspeed have both been making progress and are worth a look. I believe they each received additional funding recently to help them expand their product and sales efforts. They might be very motivated right now to offer you a great deal.”
Have questions for Heather? leave a comment below.