The Evolution and History of Restaurant POS: What Matters Most Now

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A brief history of how POS systems were first used in restaurants, their application today, and what we can expect from them in the future.

Restaurant management software is always changing and evolving — just like the restaurant industry itself.

Restaurateurs are demanding features that didn’t exist 20 years ago. The straightforward point-of-sale system — designed to get orders to the kitchen quickly and efficiently — is now being replaced by all-in-one technology platforms that offer not just point-of-sale, but online ordering, loyalty, gift cards, CRM, and more.

Let’s take a look at the evolution of the restaurant POS system: how it has evolved, and what features are most essential to your business today. 

And to help you evaluate the tools along the way, you can download our POS comparison guide and check out the Toast point of sale comparison page

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The First Restaurant POS Systems

The first restaurant POS systems weren’t unlike simple cash registers augmented with crude tech features. In the mid-1970s, IBM introduced the electronic cash register (ECR), the first computer system used by the restaurant industry. At the time, it was revolutionary.

The early IBM POS could get orders to the kitchen in a regulated fashion. It could also provide the customer with a clean, error-free receipt that allowed them to see exactly what they ordered and the total cost of the meal. 

The advantage of these early POS systems was that for the first time, restaurant owners had the ability to calculate how much money should go into the bank versus how much money should stay in the cash register. The simplest things that we take for granted now in a POS system were seen as innovative at the time.

But the advantages didn’t go far beyond that. Most restaurants could not process credit cards through the POS; that still had to be taken over the phone. That frustrated owners and caused delays at the POS terminals, leaving many restaurant owners wary of this new technology.

Enter… The Internet

The dawn of the Internet In the 1980s changed everything. Now, transactions could be fast and efficient, and the front of house (FOH) and back of house (BOH) could be virtually connected. Increasingly, restaurant owners were requesting the ability to process credit cards over the internet to speed up their operations.

For the first time, POS systems could provide one huge report, showing credit card transactions, cash transactions, and overall restaurant sales. For example, rather than balance a credit card machine against your POS, that could now be all done through one system. That solved a lot of headache for retailers and shops of all kinds, including restaurants.

In 1986, Gene Mosher adapted this technology for his deli by developing the first graphical point-of-sale software, with colored widgets and a touch screen interface. 

In 1992, Microsoft launched the first POS software for Windows. In the next few years, the notion of computers running internet-based software that could automate restaurant transactions took off at breakneck speed. Silicon Valley took notice, investing in restaurant solutions and systems.

There was no turning back, and more restaurant owners were demanding high functionality for their POS solutions.

Increasingly Impressive POS Features 

Over the years, simple feature updates would prove revolutionary. The ability to split a check, modify items, and create customized menus from the ground up was life-changing for restaurants. A simple burger with cheddar could be swiftly adapted to a burger with cheddar or goat; servers could easily upcharge for extra avocado.

Yet still, POS systems didn’t offer loyalty and gift-card functionality. Most relied on punch cards or loyalty stamps. Now, having loyalty and gift cards automated and integrated into your system is a must for tracking guest engagement.

How the Modern POS Is Changing the Restaurant Industry

The modern point-of-sale system is changing the restaurant industry in two ways:

  1. Standards of service are increasing. With a streamlined process, restaurants are now able to create a restaurant culture built on quality service and stellar guest experiences. POS systems also allow you to keep restaurant employees on the floor (rather than running back and forth between the kitchen and the cash register). That way, they’re within eyeshot and earshot of their customers, so they can head off or address any problems immediately.

  1. Labor is decreasing. With modern POS systems, you can be smarter about how you distribute your labor. You may need one less server on the floor. You might not need a bar back. You might not need an extra line cook. Employee and labor reports can also help to identify who in your establishment is driving the best customer experience.

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The Next Generation of Handheld POS

Cloud-based POS Systems

The restaurant industry is quickly evolving, especially after the events of 2020. Technology is evolving, too, to allow restaurateurs to be more responsive to — and in touch with — their customers. Using a handheld POS system with cloud technology is increasingly the way to deliver on both service and efficiency.

Cloud-based POS systems, whether stationary, handheld, or kiosk-based, offer restaurant owners the ability to know:

  • Who their customers are

  • How much they’re spending

  • What their favorites are

  • Where they’re from

  • How long it’s been since their last visit

And that data allows restaurant owners to tailor their menus, promotions, and guest experience for their most loyal customers — and this data is accessible from anywhere. 

From the customer point of view, these cutting-edge POS system add a layer of ease: they don’t have to carry a wallet full of gift cards and loyalty punch cards; their debit card can be remembered on the system for both speed and ease.

From the owner side: cloud-based POS systems provide complete control over their restaurants from anywhere. If a restaurant owner is away, working after hours at home, or running to the bank, they can make changes on the fly or look back on the data from the day. 

See a trend on your POS dashboard that your restaurant ticket times are running slow? Call your restaurant employees and ask if they need help. Are voids too high, or sales too low? You can react immediately.

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What Essentials Do Restaurant Owners Need in a 2020 POS Solution?

First, you need a cloud-based solution. What differentiates cloud-based POS systems from traditional or legacy systems is their ability to continually evolve and adapt to market conditions and your needs. Modern, cloud-based POS systems are constantly updating features and capabilities. In other words, your software is continually upgraded (at no additional cost to you), and your data grows (and is always secure). And in COVID times, a restaurant’s need for technological advancement is increasing.  

Here’s what your POS system must offer in 2020: 

  • Tracking for sales and financial dataThe ability to take control of your restaurant’s financials with detailed analytics is now more essential than ever. Owners need to be able to keep tabs on their restaurant's performance from anywhere, and on any device, with cloud-based access to key reports and sales performance.

  • Order & pay at the table: Allowing guests to order and pay from their phones creates a better experience overall -- for you and your guests. Toast Mobile Order & Pay™ increases tips, lowers labor costs, and limits guest-server interactions, streamlining the whole operation.

  • Integrated online ordering: Online ordering is a lifeline for so many restaurants right now. Ensuring online ordering is integrated seamlessly with your POS is essential for smooth service. Even better, using your own online ordering and delivery platform allows you to increase sales, pay zero commission, and own the guest relationship. 

Restaurant technology is constantly adapting, and that won’t be changing anytime soon. The future of the restaurant point of sale system will work to further combine both customer-facing and restaurant-facing features, to create a fluid experience. 

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.