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Security, mobility and integration drive POS innovation

W H AT ’ S I N S I D E :2018 POS Software Report:

Operators ID Trends & Purchasing Plans

Executive Roundtable: Tech Experts Reveal

POS Insights

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Tracking restaurant technology invest-ments has revealed a slow, but steady shift. For many years, tech budgets took a backseat to operations with restaurants focusing spend on service and operations in order to improve cus-tomer experience. The evolution is that

technology cannot be separate from experience. The digital age has inexorably linked both.

Hospitality Technology’s annual “POS Software Trends Report” polls restaurant technology execu-tives to uncover what features are top of mind for POS upgrades and what trends will influence 2018 purchasing plans. What becomes evident is that as experience has become a main business driver, the POS must go beyond mere transactions to forge a deeper connection between sales and engagement.

The POS is on the frontlines ushering restaurants through this age of digital transformation. Almost half (49%) of restaurant operators plan to add new functionality and features to POS software. Purchas-ing plans (Figure 1) illustrate that compared to 2017, only two areas will see an uptick in operator action. More operators are looking to develop and/or deploy mobile POS than last year, 37% compared to 28%; and 32% of operators plan to switch vendors in 2018.

Mobility continues to be a major concern in point of sale activity and about two out of five are priori-tizing developing or deploying POS for a mobile de-vice. After two years of being edged out by prepar-ing for EMV, adding mobile POS was selected as the number one business driver influencing upgrades for 2018 (Figure 2). Enabling new payment options made the top four with 38%. As restaurants and the broader retail industry as a whole have not reached a consensus on mobile payments, acceptance and widespread rollouts have stagnated somewhat, but restaurants must be prepared as diners seek experi-ences similar to online shopping.

During an interview for HT’s October cover story, Mike Nettles, SVP & chief digital officer of Papa John’s cautioned, “If we don’t make it as easy for guests to part with their money as Amazon does, then we’re missing out on some big opportunities.”

About 1 out of 3 restaurants (31%) will be focusing on tighter integrations with e-commerce platforms. “I think that’s been a huge change that many less mature digital players haven’t quite realized yet,” Nettles says. “It’s no longer a matter of being com-pared to another restaurant. Restaurants are being compared to the best digital experiences.”

The most marked increase seen this year is the number of operators looking at POS software to serve as a data scientist. In last year’s survey, only 11% of operators named clienteling (using data to understand and predict guest behavior) a business driver for POS upgrades. This year, 35% said it was influencing upgrades.

Two years post-liability shift, more than half of operators admit they have yet to address EMV. Restaurants have been sluggish to adapt to EMV as companies weigh the cost of hardware upgrades against potential chargebacks. Making systems PCI compliant moved up to third place. As hospi-tality remains a top target for hackers, developing a multi-tiered approach to security is vital. EMV is not a security solution by itself, but rather should be combined with other measures such as tokenization and encryption. Similarly, PCI compliance doesn’t ensure a breach won’t occur, but can reduce the probability and therefore is rightfully a top priority.

Ranking specific features desired for POS up-grades, cloud, which for the last several years failed to make the top three, reclaimed the top spot for 2018 upgrades with 61%. Above-property func-tionality had the second largest increase from last year’s survey. The biggest jump in functionality went to loyalty tools, going to 57% from 33%. Mirror-ing the trends in strategies and priorities elsewhere, more than half of operators will be looking for POS software that enables them to offer online ordering and payment.

Overall, we see a pattern emerging that restau-rants are looking to the POS to provide the level of cross-channel and personalized service that e-com-merce hungry diners are demanding. Next, we take a look at what the POS software supplier commu-nity is doing to address that demand… HT

2 • P O S • JUNE 2018 • WWW.HOSPITALITYTECH.COM

POS SOFTWARETRENDS REPORT

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POS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWAREPOS SOFTWARE2018

FORGING THE LINK BETWEEN OPERATIONS AND EXPERIENCEDOROTHY CREAMER, EDITOR & MICHAL CHRISTINE ESCOBAR, MANAGING EDITOR

POS SOFTWARETRENDS REPORT

2018

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Source: 2017 survey of 100 restaurant operators who subscribe to HT magazine.

Cloud-based POS

Loyalty tools

Integration with other systems

Online POS for web ordering/payment

Tablet-based POS software

Mobile wallet

Enterprise-wide/centralized POS

Software as a Service

Delivery

Inventory management

Social media integration

61%42%

57%33%

56%48%

54%42%

52%45%

49%43%

32%30%31%

18%30%

N/A

28%28%

25%36%

Add new functionality/features/modules to current POS software

Develop and/or deploy POS for mobile device

Install POS from a new vendor

Test & research new POS solutions for possible implementation after ’18

Expand installation base of POS software from current vendor

49%

37%

60%37%

28%32%

21%29%

33%21%

• 2018 • 2017

• 2018 • 2017

FIG 1.

POS PURCHASING PLANS FOR 2018

15%

Adding mobile POS

Addressing EMV

Making systems PCI compliant

Enabling new payment options (e-wallet, etc.)

Using data to understand guest preferences/behavior

Tighter integration with other e-commerce platform

Building a robust POS platform

Tighter integration with other operating system

Enabling multichannel selling in locations

62%52%

57%66%

41%46%

38%46%

35%11%

31%33%

30%33%

23%28%

20%

• 2018 • 2017

FIG 2.

BUSINESS DRIVERS INFLUENCING POS UPGRADES

FIG 3.

TOP FUNCTIONALITIES FOR POS UPGRADES

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HT: Considering the POS as the main point of interaction between a res-taurant and its guests, what key features should be present to appeal to today’s digital diner?

ERICK KOBRES: Customers are the lifeblood of a restaurant’s business. To maintain these relationships and attain new ones, it is vital to create a “surprise and delight” experience that encourages your customers to return. The right POS can do this and more by providing the technology necessary to manage the front- and back-of-house while staff focuses on driving customer happiness and deepening those relationships. It can help increase efficiency with order takers by improving the accuracy and speed of the transaction. In addition, by having mobile order takers, servers can meet cus-tomers on the floor and cut down on wait time, thereby eliminating walk-outs due to long lines. Customers want to have more control over their experience, and restau-rants can provide this through self-service order kiosks that have CRM capabilities directly integrated, making it easy for customers to see how many rewards and visit points they’ve accrued. They can also reorder from a list of past purchases and re-deem rewards and gifts. Another option is using a customer display systems (CDS), a customer-facing check-out terminal. Customers can see their order as it is entered, and engage directly with a loyalty program on the screen.

JIM MELVIN: This varies by QSR, casual, etc. Our QSR clients have a focus on kiosk extensions and order/pay ahead options. Both give the consumer better control over the ordering/dining experience. A similar trend in casual is the ability to order and pay from the table. Ordering via a server handheld, a table to kiosk or even the consumer’s device are seeing more acceptance by chains large and small.

4 • P O S • JUNE 2018 • WWW.HOSPITALITYTECH.COM

MOBILITY, SECURITY AND PERSONALIZATION DRIVE TOMORROW’S POINT-OF-SALE NEEDS

Empowered Guests Demand Empowered POS

EXECUTIVE ROUNDTABLE

Half of restaurants plan to update point-of-sale (POS) software in 2018, and according to Hospitality Technology’s 2018 Restaurant Technology Study, must-have functionalities for the POS are increasing. As operators consider POS upgrades, they are looking for systems that offer mobility, CRM/loyalty program management, next-gen payment options and deep analytics all while being secure. When asked to identify technologies on innovation agendas for 2018, restaurateurs named mobile payments, interactive kiosks and tableside ordering among the top five. The POS will be the central hub that is integral to offering all these things. In this executive roundtable, HT queries technology experts about the evolving state of the POS to find out what capabilities will shape the POS of the future and best prac-tices for integrations.

Erick KobresCTO,

Revel Systems

Jim MelvinCEO,

Intelligent Transactions

Limited

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5 • P O S • JUNE 2018 • WWW.HOSPITALITYTECH.COM

HT: Improving digital engagement/loyal-ty is a top priority for restaurants in 2018. What role should POS providers play to help restaurants foster loyalty?

KOBRES: Point-of-sale systems integrated with loyalty programs will continue to grow in popu-larity as they encourage returning business and demonstrate appreciation to valuable guests. With a POS, restaurateurs can capture and manage the customers’ transaction information and store the profile within the POS, and then analyze this data and create meaningful segments and deploy stra-tegic promotions. They can tier the rewards and allow customers to redeem their reward after they have reached a predetermined level. By offering a tiered system they can incentivize not just return shoppers but those that return to rise through the loyalty tiers, and continue to make larger, more frequent purchases.

HT: Considering kiosks, what are some of the unique functions of this technology that will reshape foodservice?

KOBRES: For restaurants, self-service kiosks pro-vide key advantages, including increased speed of service and order accuracy. In addition, kiosk order-ing eliminates the social friction of ordering face to face, which results in larger purchase orders. Kiosks reduce the volume of orders for staff, freeing them to interact with customers. When looking ahead, operators should look for ways to deepen relation-ships with their customers through self-service ki-osks by integrating a loyalty program whereby a customer is offered up gifts, rewards and points at the kiosk. This enables customers to be in total control of their customer journey.

MELVIN: BYOD (bring your own device) kiosks. One evolving option we recommend to clients is to consider using the order/pay ahead solutions as on-premise kiosk option. Three large tier 1 chains we work with are providing on-premise ordering to allow the consumer to enter the location at which they are sitting. The staff will deliver the order and/or their name can be called when the order is ready. This provides for consumer directed payment and eliminates the need for traditional kiosks.

HT: What is the next-generation of Mobile POS (mPOS) — is it BYOD? What recom-mendations would you offer for restaura-teurs to future-proof or create a future-ready mPOS strategy?

MELVIN: QSR is moving rapidly to separate POS and mPOS devices. This facilitates EMV and other consumer-controlled payment options (Ap-plePay). It also extends the life of existing POS hardware/software. QSRs should verify systems support mPOS/credit terminal options — the ma-jority do. These solutions eliminate new PCI com-pliance burdens from the POS and move them to the mPOS provider. Casual implementation is evolving across three fronts: 1) pay at table — both table kiosk and server provided device, and 2) consumer BYOD payment options.

HT: Payment and data security continues to be a top concern and strategic goal for restaurant technology. The hospitality and retail sector is a top target for hack-ers, second only to the financial industry. What steps should be taken to bolster se-curity at the point of sale?

KOBRES: Payment and data security have be-come the greatest threats to a restaurant’s bot-tom line and reputation. For some POS systems, customer data is stored within the system, which makes it easier for malware to access the cardhold-er name, card number, expiration date and internal verification code. The recent Chili’s data breach is an example of why card data should be encrypt-ed at the swipe and sent directly to the payment server. POS systems should also be EMV compat-ible, ensuring that each payment is encrypted with a unique transaction code so that card data never has to enter the POS.

MELVIN: We recommend the use of mPOS devices to separate the POS from the credit process. This also removes the POS from PCI certification pro-cesses and lowers compliance costs. Additionally, use of evolving/changing credit technologies such as EMV, ApplePay, etc. are isolated to the mPOS devices and are easier to rollout and manage inthe field. HT

EXECUTIVE ROUNDTABLE

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MOBILE POS THAT ELEVATES YOUR BRAND

Agilysys partners with technology leaders who un-derstand that hospitality, unlike any other industry, exhibits the greatest demand for, and the greatest creativity in its use of mobile POS. With the advent of next-generation mobile tablets, servers need no longer run back and forth between guests and a stationary POS terminal. They’re freed from wait-ing in lines to enter guest orders. Instead they’re interacting more with guests, communicating via the tablet with the kitchen or bar, and processing credit card transactions, all while remaining at the guest’s side. Service staff can spend the rest of their time being more attentive, catering to the needs of guests. Mobile POS tablets make it possible to provide highly-personalized service that elevates your brand.

Diners everywhere are beginning to expect to connect instantly with their servers, regardless of the venue. Adding mobile POS ordering and payment technologies, restaurant managers are bridging a previously unacknowl-edged guest service gap. They’re bringing more opportunities to create in-stant connections with guests. As a result, the industry is beginning to see bigger returns due to greater wallet share, and perhaps more importantly, by creating a real transformation in the guest service experience. Making these meaningful connections using tech trends such as POS mobility is re-sulting in substantial revenue growth. In fact, Agilysys customers have seen increases anywhere from 10% to as much as 76%.

The more memorable the service experience, the stronger your competi-tive edge and your bottom line.

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