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A restaurant POS system, or point of sale system, is critical for your establishment.
From the moment guests enter your restaurant to the second they leave, there are endless opportunities to deliver a remarkable dining experience. Staff must be at the ready, food must be expertly prepared, and everything must run smoothly.
An effective, trustworthy, reliable restaurant POS system can automate many of your day-to-day tasks so you can focus more on delighting your customers. But what is a restaurant POS system, and how does it work? How are point of sale systems different from cash registers, and how do you know which one will be the best investment?
Read on for answers to all of your restaurant POS questions as you’re researching the best fit for your restaurant.
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What is a Restaurant POS System?
How Do Restaurant POS Systems Work?
How to Use a POS System in a Restaurant
What are Common Restaurant POS Features?
Who Uses Modern Restaurant POS Systems?
How to Research Restaurant POS Systems
How to Work With a Restaurant POS Provider
Learn How Toast Can Help Your Restaurant
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Let’s start with the obvious: the definition of a restaurant POS system.
First, what is POS? POS stands for point of sale, which refers to the time and place - or the point - that a sales transaction is completed.
A restaurant point of sale system includes the POS hardware and hospitality point of sale software that manages a sales transaction, including credit card processing, receipt printing, and more. Restaurant POS systems are built specifically for restaurant businesses, not retail or hotel.
A modern restaurant POS system can streamline your internal operations, connect all of the various personnel involved in making your restaurant run smoothly, and automatically track sales, labor, and inventory metrics. This helps increase revenue, profit, and customer satisfaction while decreasing employee turnover, order mistakes, wait time, and your stress level.
The modern restaurant POS system is made up of two parts:
Restaurant point of sale hardware is made for the hustle and bustle of the restaurant industry: industry-grade and hard to break.
At the center of every POS system is the POS terminal, sometimes referred to as the touch screen cash register. This piece of hardware handles everything from ordering food and sending to the kitchen, to customer payment, table management, and more, and often comes in different sizes.
Some restaurant POS systems also offer mobile POS tablets that allow servers to send orders to the kitchen and accept payment and tips at the table. If you don’t own a table service restaurant, the mobile tablets can also allow your cashiers to take orders in the line, or "line bust."
Finally, some fast casual restaurants choose to implement kiosks to give guests control to place digital orders. As 42% of diners would use self-service ordering kiosks if available according to the National Restaurant Association, this is a big opportunity to stand out.
Tablets were a big thing for me in choosing a POS system. I've always wanted to have mobile technology because of our layout and the distance from our sidewalk tables to the terminal. A lot of labor was required to take somebody's order, travel back to the server station, and type in that order. The Toast tablets eliminate that.
Joe Guenther
Owner, O' Maddy's Bar & Grille
Now that you have restaurant hardware, you need restaurant software, which will make the hardware run. Restaurant management software will help you run your business more efficiently, with both front-of-house (order-taking, payments, and tips) and back-of-house (kitchen ticket fulfillments, in-depth reporting, and inventory) capabilities.
Restaurant POS software can either run on the Android operating system, the Apple operating system (iOS), or the Windows operating system. If your restaurant hardware is an Android tablet - such as Samsung - it will be on the Android operating system. With an iPad, it will be on an Apple operating system. With a computer, it will be on a Windows operating system.
Both systems have their pros and cons. iOS software is easy to use, as it’s a favorite among consumers. However, it’s not very customizable, as Apple requires app updates to go through a rigorous approval process in the App Store. Also, you have just three choices for hardware sizes: iPhone, iPad, or iPad Pro.
Android software might be less familiar, but it is extremely flexible and customizable, so your restaurant point of sale system can feel like an extension of your restaurant operation. The POS team can send updates to your software instantly, and there are dozens of manufacturers and hundreds of Android device models, with sizes as small as a 5" phones but as large as 22" tablets. It is also, in many cases, more affordable than Apple systems.
During our testing phases, we found that franchisees preferred the Android platform since it doesn’t limit the control a restaurant operator can have over their system.
Rich Long
Director of IT, Pieology
There’s a lot that goes on behind the scenes of a restaurant point of sale system. Most importantly, because the point of sale system accepts multiple tender types - credit cards, mobile pay, cash, etc. - the system should be secure.
How a POS system handles data is extremely important to your restaurant, especially if you’re running multiple locations. There are three models for data security: back-office, cloud, and hybrid.
“Legacy” POS systems store information in a back-office client server, rather than on the cloud.
These legacy systems are named rather ironically. While these systems have made a legacy for themselves in the restaurant history books - they are household names such as Micros and Aloha in restaurants - they require customers to restart the system to make changes to their menu, wait for a support rep to show up in person for any issue, and store all data, literally, in the back office.
This leaves your restaurant vulnerable to liability. With important customer credit card information stored on the premises, you’re opening your restaurant up to the possibility of thieves breaking into your restaurant and stealing your system. Plus, if your computer ever has a virus, all of that information could be compromised. This isn't the case with all legacy POS systems, but it's important to make sure your restaurant POS system is PCI compliant to protect cardholder data.
Because Toast is cloud-based and staffs a professional support team, we’ve been able to cut our internal POS resources in half.
Austin Brinson
VP of Analytics. B.GOOD
Many POS systems for restaurants now operate as a cloud-based system. These systems transmit information over the internet and store data in remote, off-site servers.
It’s not uncommon for the concept of “the cloud” in restaurants to seem daunting and unfamiliar. However, you’re likely already interacting with the cloud in various ways and don’t even realize it. The cloud is, in essence, the internet – a network of servers. When you log in to your email, use Google Docs, or access one of your social media accounts, you’re accessing data from “the cloud,” or web-based servers.
In your restaurant, a cloud-based POS system would enable you to view all of the information stored in your POS from anywhere - on your phone, tablet, or computer - as long as you have access to the internet. In addition, you won’t have to be onsite with access to your back office server to make changes to your system. If you want to make modifications to your menu, for instance, you can do so by logging into your POS platform on any device and all of your changes will be automatically transmitted across all of the POS terminals inside of your establishment in real-time.
Now, what if the Internet goes down? Many cloud POS systems still operate in "offline mode," so you can still take orders, process credit cards, and open cash drawers while your connection is restored.
Some point of sale systems are both cloud-based and back-office, meaning that all POS data is stored on a local server and syncs to the cloud. This is known as a hybrid POS system.
With this model, changes cannot be made to the menu, or other parts of the system, unless you are on a connected tablet or terminal. That means that the systems do not provide real-time data and instead have a ten-minute or more delay, and that restaurateurs cannot make remote modifications. It can also require customers to purchase a local server, which increases upfront costs, and perform regular backups to a thumb drive or portable hard drive.
The benefits of a hybrid solution are that, since it’s in the cloud and on the server, you will still have access to all of the POS features if the Internet goes down - a feature some cloud POS systems also allow through an offline mode. However, in some cases with hybrid systems, you will not be able to access payments until the Internet is back up, depending on your credit card processing provider. There is also still a risk that the data stored in the back office can be compromised by hackers and viruses.
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Data is a powerful tool in the restaurant industry. It’s also often sensitive and classified. The storage and protection of credit card data has been scrutinized in recent events, with hacker attacks in both retail and foodservice establishments. This section will help you understand areas of potential weakness in your POS system and important questions to ask the provider before making a purchase decision.
In order to prevent data breaches and fraud, your POS system should encrypt data the moment a credit card is swiped. All sensitive data should also be encrypted when it is stored on your POS server, so it’s nearly impossible for someone to access your database and steal classified data. How does the POS system encrypt data? Identify potential weak points by inquiring how and when credit card data is stored and encrypted in the system.
Your system should allow you to restrict access to sensitive data. Anyone who is granted access to the data should be required to enter personal login information so you can track who is interacting with your data and hold the right people accountable if something goes wrong. Usually, data access is limited to management. Decide who should have access to data and lock down the system from everyone else (your POS provider should help you).
If PCI compliance is important to you, make a point of asking POS providers to prove that they are certified. Every POS provider should have strict security measures in place to protect your establishment from fraud, viruses, and data breaches, especially in the event of third-party delivery and off-premise dining. If legitimate security measures are in place, providers will likely agree to take full responsibility should any data be compromised.
A POS system that is optimized for taking orders and payments should be almost mindlessly simple to operate. The user interface should be both simple and intuitive. With modern technology, there’s no benefit to putting up with clunky interfaces.
Your staff should never have to dig through the interface in order to find the menu or payment option that they are looking for. When guests are ready to pay, servers should be able to complete the transaction in seconds with just a few simple clicks. By prioritizing ease-of-use, staff can be engaged with guests as they take orders and accept payments rather than struggling with “the freaking POS system.”
Want to learn how to use a POS system in a restaurant? Here are some ease-of-use musts:
When you’ve got a line out the door for brunch reservations or running a busy nightclub on New Year’s Eve, things need to move fast! As your business grows, your POS software should be able to keep up. How does the restaurant POS system you're evaluating handle volume?
Ensure that your modern POS system will be able to scale with your business and help you get through the line faster so you can serve more guests. Ask the POS provider about their other customers that handle the volume you expect. Use referrals as a way to validate the scalability of a system.
The restaurant environment is extremely fast-paced and often unpredictable. A POS system should be able to adjust and accommodate changes on the fly. If a guest wants the house salad, but does not want tomatoes and would prefer Italian dressing rather than Greek, servers should be able to make all of the desired modifications quickly and easily on the POS interface. This is called conversational ordering. Great POS systems will let you color-code items or perhaps place them strategically in different tabs so they are easy to locate.
Servers should also be able to easily split checks. Advanced systems will allow staff to split checks by seat number and individual menu item.
If your servers are happy with the flexibility and customizability of the system, you’ll have faster, more accurate service and a happier staff. Customers will quickly be able to make their payments and be on their way and servers will see larger tips come their way.
Staffing & Hiring
Ready to become a better waiter or waitress? Download our free list of 30 Ways to Become a Better Restaurant Server to start earning more tips from your guests.
According to study by Javelin Strategy and Research, only 23% of all purchases will be made using cash by 2017, so it’s important that your POS system accepts many tender types including check, all major credit cards, and restaurant gift cards.
On that note, listen to your customers! If you’ve received requests for alternative payment options like LevelUp or Samsung Pay, be sure to investigate that type of flexibility as well.
No two restaurants are the same. When you implement a modern POS system, it will seamlessly integrate with your restaurant’s specific operations. When deciding which POS to bring into your restaurant, think about how the system will connect different roles and processes to help decrease errors and waste.
How will the POS process orders in relation to the setup of the kitchen? Maybe kitchen orders need to be split between different prep stations. Salad, for example, should go to the cold station, sliders should go to the grill station, and both should come out at the same time.
Maybe a manager is required to approve voids, comps and discounts before they are accepted. The POS system should require these actions before approving transactions. With a modern POS system, there’s no reason the POS operations can’t be totally customized to your restaurant’s operations.
A modern POS system is more than a fancy calculator. Because POS systems process many different tender types - credit and debit card, cash, etc. - they have access to data that could revolutionize the way you do business. Here are a few common restaurant POS features besides being the place where purchases are made.
Reporting is one of the most important aspects of a POS system. While the front-of-house features should be designed to improve workflow organization and efficiency, a POS system’s reporting capabilities should be optimized to help cut costs and uncover little tweaks you can make to improve your bottom line.
The POS system you select should offer robust reporting features that automate the process of tracking and organizing your sales, labor, and inventory data.
You don’t have to be a data junkie to grasp and get value from these reports. With the latest technology, there should be no manual labor required to track and report on data that has been entered into the system. Detailed, customizable reporting will allow you to spend more time identifying the areas that require improvement.
With the latest technology, there should be no manual labor required to track and report on data that has been entered into the system. Detailed, customizable reporting will allow you to spend more time identifying the areas that require improvement.
Here are three types of reports for restaurant owners and managers.
All POS systems are capable of reporting net daily, weekly, and annual sales. Modern POS systems can run real-time reports on individual menu items and menu categories. With these insights, you can determine which specific menu items are generating the most profit and which ones create more waste than revenue.
For example, your reports could tell you that the bacon burger is selling out every week, but only two salmon entrees have been ordered in the past month. This data would tell you to order more bacon and fewer filets or to take salmon off the menu altogether.
Data should be actionable. With easy access to detailed reporting, you will be able to make better decisions when you place food orders and update your menu.
Labor is likely one of your biggest overhead costs. According to a 2014 report by the National Restaurant Association, about one-third of restaurant sales revenue goes toward salaries and wages.
To maximize margins, it’s important to understand how that labor is divided and how it’s impacting your bottom line. Look to your POS system to track labor costs and provide reports based on role and individual employees. This insight will allow you to identify changes you can make to your employee scheduling to cut labor costs (especially during your slowest hours) and increase profit.
If your sales reporting can track the sales of individual menu items, you will be able to easily compare the actual sales of specific menu items with your inventory levels to ensure you always have the right stock on hand. The data in your sales reports will also help you forecast future supply more accurately so you can decrease waste and cut costs by eliminating unnecessary spending.
Consider how you are keeping track of inventory today and how that method could be improved. It’s possible that the POS you’re researching has features to expedite and simplify this process. Whether it’s an indirect inventory comparison against sales numbers or a full inventory management feature down to the garnish, make sure you understand how your POS keeps track of supplies.
What happens to the customer data that’s entered into the POS? Whether you’re using a cloud-based or traditional system, that data is stored somewhere. POS systems have the ability to collect customer data and create a history of activity over time.
Your POS should store your guests’ contact information and detailed order history so you can better serve them in the future. With advanced cloud-based POS systems, this information can be used to identify regular customers and to send them personalized rewards when they visit your restaurant or in conjunction with a loyalty program.
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People have an endless number of options to choose from when they are looking to dine out. If you want to encourage guests to return to your restaurant, you need to be visible to them beyond your restaurant’s walls, provide personalized service, and show your regular guests how much you appreciate their business. If you don’t nurture your existing customers and encourage repeat business, your competition will.
Believe it or not, your POS system has the potential to drive these personalized campaigns. Here are some common customer and guest engagement add-ons that many modern restaurant POS systems support.
If you think you may want to incorporate a loyalty program at some point in your restaurant’s future, then choosing a POS system with an integrated loyalty program is essential. How will you keep customers coming back to your restaurant? How will you create loyal regulars who will eagerly promote your brand?
With a loyalty program aligning with your data analysis, gift card program, and customer database, you will be able to interact with customers more wisely and profitably. Even better, when a customer is close to unlocking their loyalty reward, they spend 39% more than usual. Why pass up on the opportunity to not only incentivize eager customers, but also incorporate this feature with an all-in-one POS system?
POS systems with integrated loyalty programs make collecting rewards and points easy for the customer. Modern POS systems even link each loyalty account to the customer’s credit card, so they automatically earn points (which they can view online) whenever they come in. Finally, restaurants can customize rewards instantly on the POS system.
Here are some questions to ask when evaluating a restaurant POS system's rewards program:
A 2016 study by Toast found that people spend 72% more with restaurant gift cards, especially at full-service restaurants. When digital and physical gift cards are integrated in your point of sale system, you will increase check average and garner more repeat guests at your restaurant.
You may be accustomed to using physical gift cards, but digital gift cards allow customers to use their phones to cash in on their gift card money. The modern POS system will scan the code from their phone, and guests can check their balance anytime using the link stored on their phones.
Digital gift cards simply require guests to provide their email or phone number (which is automatically stored in the customer database) and select the amount they want to purchase. The digital gift card will be emailed or texted to the intended recipient. If purchasing a digital gift card for a friend, customers can select the amount, include a personalized message, and choose if they want the gift card emailed or texted to the recipient immediately or at a later date and time.
Whether a customer uses a digital or physical gift card, however, modern POS systems will store their information in a gift card report. Restaurateurs can examine all gift cards sold and transactions processed. This report can be used to analyze all active cards, including purchased date, initial value, most recent transaction date, the server who processed the last transaction, and the remaining balance, all broken down by card number or account ID.
Ask these questions about the POS gift card program:
In a 2013 study by Statista, 24% of respondents said that they order delivery or takeout food from restaurants two to three times per week. Running a restaurant is rarely just a brick and mortar operation. For both pickup and delivery, restaurants now utilize online ordering software to appeal to a wider audience, lessen the amount of time employees spend on the phone, and streamline the entire ordering process.
Your restaurant should look for a POS system that has online ordering capabilities integrated into the software. Most third-party online ordering services charge extremely high fees and take up to 13% of each online order. By bundling your online ordering platform and POS system, you can avoid those hefty fees and instead pay a fixed fee and simplify your ordering process at the same time, so all online orders go automatically to the kitchen.
Ask these questions about your POS online ordering system:
When a restaurant implements a new POS system, everything changes.
Depending on your role at the restaurant, and depending on that restaurant’s concept, the POS system can affect the way you work.
In many ways, the POS system is the heartbeat of the restaurant. We rely on it to give our customers a valuable experience.
Ben Kaplan
Director of Operations, Barbara Lynch Gruppo
Every restaurant has wildly different roles, but the core staff usually looks like this: owner, manager, server or cashier, chef, and guest. Each stakeholder will have a specific set of feature needs from a point of sale system. When convincing these members to get on board with your decision, here are some features to hammer home. (P.S. Download our POS Comparison Sheet and check off each benefit as you’re researching!)
As a restaurant owner, the restaurant POS system can increase your visibility into the goings-on of your business - or greatly inhibit it. Many owners want to spend less time in the restaurant, but need to be there to make sure the kitchen doesn’t set on fire. The benefits of modern POS systems for restaurant owners are:
Restaurant managers are on the ground, actively tuning in to the servers and cashiers and making sure operations are running smoothly at all times. Therefore, they may not be as in tune with the data; they just want something that will make their lives (and their team’s lives) easier. Here are a few features restaurant managers will look for in POS systems:
Even though the restaurant owner and manager are usually making the decision to purchase the POS system, they aren’t usually the people using it day in and day out. Those are the servers and cashiers. The happier your employees, the more successful your restaurant will be, so make sure to look for these features in a POS system for your restaurant:
Even though the definition of a point of sale is the point where a transaction takes place - so inherently, the front of house - the point of sale system affects both the front of house and the back of house. Here are some features that chefs, line cooks, and runners might benefit from in a restaurant management system:
You might not think your guests are affected by the point of sale system. After all, they’re not tapping it and sending orders, are they? No, but there are several features that could impact your guests in the long run, and actually turn them into repeat guests. Here are a few:
Depending on the type of service your establishment offers, you will likely prioritize different aspects of a POS system’s functionality. Here are some things to consider for different types of restaurants
Full service restaurants need a POS system designed to help improve customer experience and increase table turn times. More tables served in a shift means maximized revenue. Your POS system should have features specifically designed to help you decrease the time it takes to fire orders and to complete the payment process after guests have finished their meal.
Features to look for:
Speed is particularly important if your business offers quick service or fast casual service. According to a 2012 report, Chipotle serves one customer every 11 seconds during peak lunch hours. Wendy’s processes drive-thru orders at an average of just 134 seconds.
Choose a POS system based on its optimization for volume, speed, and accuracy. More customers processed daily means increased revenue, so self-ordering kiosks can be greatly beneficial to QSRs. The POS system should have features in place designed specifically to help reduce the time it takes to get customers through the line.
Bars and nightclubs need to be able to handle large volumes and fulfill drink orders quickly. You need a system that is easy to use, designed to handle volume, and makes it easy to customize every type of whacky drink combination your guests can dream up. Customization is key. It shouldn’t be too difficult to enter a mojito with vodka instead of rum, basil instead of mint, and a pink straw instead of a green one.
You’re convinced that your restaurant needs a restaurant POS system. Now, however, you’re plagued with the decision: Which one?
There are hundreds of POS systems out there, but only a handful are built specifically for restaurants, and only a select few will have all the features you need.
Follow these steps to make sure your restaurant point of sale investment doesn’t go to waste, and download the POS Comparison Sheet to start comparing which point of sale systems you’re evaluating check off which boxes.
You can also check out this Toast vs Competitors Comparison Guide.
Before you start researching POS systems, create a clear outline of your biggest challenges and the tasks that require the greatest time commitment. This will help you identify the primary ways a POS system can help your restaurant improve. Try to find a system that meets most (if not all) of your many technological needs in this industry.
There are many aspects of your business that could be simplified in smart, efficient ways - inventory and labor tracking, customer relationship management, and credit card processing safety can now all be controlled by one program thanks to the features and the capabilities of the modern POS system.
Think about the questions posed below and complete the checklist to identify your priorities:
These questions are designed to get you thinking. Take some time to really consider the aspects of your restaurant that are not working or that you feel could be improved. Think about how each POS system would address these issues and simplify your most time-intensive tasks.
Before you make your selection, make sure that you can clearly explain the different ways the POS system will help you overcome your biggest challenges, save you valuable time, and help you improve your bottom line.
Remember - this is the guide to buying a modern POS. There are now aspects of your business that could be simplified in smart, efficient ways - inventory and labor tracking, customer relationship management, and credit card processing safety can now all be controlled by one program thanks to the features and the capabilities of the modern POS system.
Some POS systems are plug and play; the vendor will send you a box with the system inside, along with directions on how to plug it in, and you can get started.
Other POS systems not only ship the hardware, but also send teams of implementation specialists to hardwire your system, connect to your wifi, and handle any issues the first day that you’re live with the system. They’ll even send training specialists to train your team on how to use it.
Finally, some vendors offer both options, with different price points associated. If you own a mom-and-pop restaurant, and the owner was a hardware engineer back in the day, you may want to save money by opting for the self-install. However, if you have a restaurant with over 1000 square feet and 20 staff members, you might want to consider paying for installation and onboarding.
There are typically two ways to contact your POS vendor when you need support: email and phone. If the POS vendor does not offer phone support, it will be difficult for you to get immediate help if you have a crucial issue. If your system goes down during your busiest hours and you can’t get the help you need right away, it can negatively impact customer happiness and devastatingly impact sales.
Most restaurants don’t operate on a 9 to 5, Monday through Friday schedule. Saturday and Sunday are likely your busiest days of the week. If you own a nightclub, you’re establishment is open well into the early morning hours.
Before you make the decision to purchase a POS, understand when you will have access to support and how that will impact your operations if you need help outside of normal business hours.
If you have a modern POS system, the vendor can almost always provide support remotely by securely accessing your POS information in the cloud server. If you choose a traditional legacy system, it’s more likely that on-site help will be needed because the data is stored on a back-office machine, which can cost time and money that you can’t afford to give up.
Make sure you fully understand what costs, if any, are involved with sending someone on-location to troubleshoot your system.
Some POS providers offer different types of support plans. These plans are similar to an insurance plan, designed to only cover specific issues. Read the fine print and carefully review what is covered by your POS provider’s support team and how you can get the support you need for potential issues that are not covered in the plan.
Budget considerations were one of the first things you considered when outlining your requirements. While you should certainly make sure that you have the budget to afford the POS system and shop around to get the best deal possible, functionality, scalability, and overall quality should be top concerns as well.
There’s a lot more to POS pricing than what is paid on day one. Here are a few things to consider when buying a restaurant POS system.
No matter what, there will be upfront costs associated with the purchase of a restaurant POS system. However, under some pricing models, those numbers could be astronomically different
Over time, you may pay more to keep your point of sale system up to date. Every provider is different, but these are some common long-term costs associated with POS systems.
When you purchase a POS system, you are also entering into a potentially long-term relationship with the POS provider. The vendor will likely be responsible for completing the installation, training you and your staff, making updates to the system, and providing long-term support.
As is true for any partnership, it’s important to pick a POS vendor that you feel is trustworthy and will work to make your business successful. Choose a vendor who is dedicated to providing the best POS system and service possible and is constantly innovating - not one that could fold as a company.
There is no way to guarantee that your POS provider will prove a reliable and dedicated partner, but if you pay careful attention to how you’re treated throughout the buying process and make a point to talk with some existing customers, it’s possible to get a sense for how the company treats its customers.
At Toast we power successful restaurants of all sizes. By combining point of sale, front of house, back of house, and guest-facing technology with an unrivaled commitment to customer success we enable our community of restaurateurs to delight their guests, do what they love, and thrive.
Toast is designed and built for restaurants like yours with:
Easy-to-use software that can scale with your business
Tableside ordering and payments, with digital receipts, to grow your customer list
Hardwired terminals and offline mode so nothing slows you dow
Simple, flat rate payment processing for all transactions
Cloud-based reports accessible in real-time
As you're researching restaurant POS systems, schedule a free demo of Toast for a custom walkthrough catered to your restaurant's unique needs. We'll follow up with a quote built just for you.