Restaurants are buying new POS technology, but leaving much unused

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Getting a new payment terminal with advanced capabilities is not unlike getting a new phone or computer with its bells and whistles — there's so many new features that some will no doubt go ignored.

Restaurants in particular have a dizzying assortment of new options for ordering ahead, digital payments and loyalty. But many still need more knowledge on the topic of advanced point of sale services, and just as many who have upgraded to new technology have to learn how to use it.

Eighty-five percent of restaurant pros say mobile payment and loyalty offerings would help their business attract and retain millennial customers, but nearly half don't have loyalty capabilities at their POS, according to data from Cherry Hill, N.J.-based TD Bank Merchant Solutions. More than a third of respondents expressed a desire to implement a cloud-based loyalty system at some point.

TD Bank conducted its survey of restaurant professionals — owners, chefs, general managers and suppliers — attending the National Restaurant Association Show on May 22-23.

A restaurant owner has to take multiple steps to better understand his or her customer base and the best way to serve patrons through new technology, said Doug Mearkle, head of merchant solutions, sales and service for TD Bank Merchant Solutions.

The survey didn't speak to restaurant owners' knowledge, or use, of the services available in a new POS, but TD Bank merchant account servicers are seeing it firsthand, according to Mearkle, who came up with the cell phone analogy.

"A credit card terminal is very similar to what a cellphone was like 10 years ago," Mearkle said. "That phone just made calls, and that terminal just took cards … Many restaurant owners are still using credit card terminals like they did five to 10 years ago, with the device sitting on a counter, with separate pieces processing credit and debit cards. But we are also seeing businesses adopting new POS systems, but not taking advantage of their full capability."

TD Bank distributes First Data Clover POS equipment to its merchant clients, providing a good example of how a terminal can now be customized through apps to better serve the merchant and customers.

"Too many are using a new terminal at its most basic form as a replacement of a credit card terminal," Mearkle added. "They are not always looking at it from the standpoint of how does it help manage and grow the business through apps to get data, consumer behavior analytics or loyalty programs."

Some confusion among restaurant owners is understandable. The payments technology in this market segment is developing and changing rapidly because providers are not standing by idly when it comes to restaurant point-of-sale services.

Mastercard has made various recent acquisitions and technology upgrades to bolsters its offerings in ordering and payments at restaurants.

Square acquired startup OrderAhead last year to obtain needed technology to become more relevant as a payment processor in the restaurant landscape.

And this month, Google and First Data partnered with Panera to use the chain's Clover point of sale system to deliver targeted offers to customers who store the MyPanera loyalty card in Android Pay.

The fact that some restaurant owners would take baby steps with new technology, even if they already purchased it, is understandable, said Richard Oglesby, president of AZ Payments Group and a senior analyst at Double Diamond Payments Research.

"A lot of platforms have a lot built into them, and the restaurant owner buys the platform for the POS capabilities, and it just happens to have loyalty built in, but they don't really care about that right away," Oglesby said. "There a lot of platforms that come with stuff you don't need."

Even if restaurant owners — or any small business owners — are eager to use these systems to their fullest potential, they are involved in so many different aspects of the business that they can't make time to learn new features, Oglesby added.

The TD Bank survey confirmed that interest and awareness of what POS advancements can bring to a restaurant is growing among those working in the field.

Nearly 30% said having access to data on customer trends was most important to their business, while 22% rated implementation of the most innovative payment technologies as the top priority.

"Businesses are trying to catch up with consumer behavior as far as mobile technology goes," Mearkle said. "But there is still some hesitation from consumers and business owners and much of that goes into a better understanding of how it all works and the strong security behind it."

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