Restaurant POS Software Market Fueled by Digitalization but Hampered by Inflation

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The COVID-19 pandemic may have brought tumultuous times to the restaurant industry, but it also carved out a path for technology to immensely improve the operations of food businesses. At the height of the pandemic, United States establishments lost sales amounting to $280 billion and ended up letting go of more than 8 million hospitality workers. To stay afloat, restaurants had to adapt and turn to technology for solutions, which led to a surge in demand for restaurant POS software.

Now, the threat of COVID-19 is significantly lower but the demand for these platforms remains high. A new report by JCMR shows the global restaurant POS software market increasing from $1.93 billion in 2020 to $4.58 billion by 2029 at an annual growth rate of 10.1%. This goes to show that these systems’ functionalities are truly beneficial to bars and restaurants, and not mere band-aid solutions to the pandemic.

After all, restaurant POS systems act as digital cash registers and afford users solutions for various operational segments, including restaurant management, stock and inventory management, customer relationship management, debit and credit card processing, billing, and data analytics. In addition, many of these platforms integrate with useful tools like payment gateways, project management systems, and restaurant management platforms to streamline entire operations.

However, another global event has befallen both the restaurant and the restaurant POS software industries—high inflation. And it’s dampening the growth of both markets.

Inflation Diminishes Restaurant Revenue

Based on the numbers, one would think that the US restaurant industry is primed to outdo its performance prior to the pandemic. A report from the National Restaurant Association projected that the country’s food establishments would pull in $898 billion in sales this year, higher than 2019’s 864 billion. The growth partly comes from the current popularity of takeout and food deliveries. But when the $898 billion is adjusted for inflation, it’s worth less than 2019’s sales.

The market size of the food service industry is still climbing but its growth would have been more pronounced had it not been for today’s high inflation. According to NPR, the labor cost in the US is up by 15% year-over-year, and rent has increased by 15%. Additionally, data from the US Bureau of Labor Statistics indicate that the overall food cost in September grew by 0.8% even though fuel prices have dropped.

As a result, some food and beverage establishments have resorted to cost-cutting measures and reduced investments in the restaurant POS software market and other tech solutions to remain profitable. It has come to the point that 40% of diners in the US feel that the value of what they receive from restaurants has dropped, according to a 2022 report from Revenue Management Solutions.

Moreover, recent restaurant software statistics reveal that 82% of diners complained that the prices are too high, 37% didn’t appreciate the shrinking portion size, and 12% noticed a decline in food quality. All these have contributed to consumers cutting their spending on restaurant fare and their fewer visits to brick-and-mortar stores.

Battling Inflation with Operational Efficiency

Food establishments need not look far and wide for solutions since the POS software that they use can improve the efficiency of their operations, should they be leveraged properly. For this reason, these platforms’ collective market value continues to grow amid high inflation and a potential recession. Restaurants still ride or hop on the restaurant software trend of using restaurant POS software to boost customer service and enhance the experiences derived from in-store dining and ordering online.

It is important to note that top-tier POS systems are not mere cash registers. Their functionalities enable restaurants to streamline the workflows surrounding ordering and food preparation. With the system taking orders (via pushed button for some), collating order data, and sending the info to the service crew and other relevant departments, the likelihood of preparing incorrect items is dramatically reduced.

These platforms also record, store, and sort large volumes of transactional and financial data to simplify billing, accounting, and even payroll for some systems. This opens the window for adding delivery and online ordering options to one’s operations, which adds potential revenue streams for food businesses. The same is extended to loyalty and rewards and programs for frequent diners, particularly for systems that have or integrate with CRM solutions.

Furthermore, seeing restaurants use fancy equipment powered by restaurant POS platforms like tablets and mobile card terminals gives off the impression of class and sophistication, which a lot of diners adore. Consumers will feel more valued and associate positive experiences with the store even before their orders arrive. If the food manages to impress, the experience would likely lead to subsequent visits, recommendations, and glowing reviews.

Investing in POS Software

Food establishments might be apprehensive in purchasing POS apps since tech solutions are often viewed as expensive commodities, especially at a time when the prices of consumer goods are generally high. Interestingly, the average POS software cost is quite affordable, ranging from $29 to $300. The cheaper ones have basic features, possibly concentrating on just a few functionalities, which are sufficient for small operations.

However, large operations, like restaurant chains and hotel dining, will need premium packages that cost more but come with various modules to thoroughly streamline the workflows of various branches and office departments. These establishments would also need to splurge around $2,000 or less for hardware and $700 or less for installation. Additionally, third-party payment processing yields a rate of 1.5% to 3.5% per credit card transaction. All these might appear pricey but the value and long-term benefits they bring far outweigh the costs.

It is advisable for food businesses to conduct a bit of research on the platforms available since the range of POS software costs and features tends to vary. They can take advantage of free trials and costless packages just to see which system works best with their operations as well as read up on expert reviews and user comments. Once they find a suitable solution, they can increase profits, provide more efficient service, and retain more customers in the long run.