Five Business Tips for Restaurants

While some of these Five Business Tips for Restaurants may apply to retail and other types of businesses, we all know the restaurant industry is a bit different. In addition to being highly competitive, requiring long hours and having a menu from just a few items to 100 or more items, there are some nuances to consider when a restaurant has to make a decision with regard to online ordering apps, POS systems, and merchant processing.

Before we get into the five business tips for restaurants, let’s first take a look at what factors we need to consider as they relate to café’s, diners, quick serve restaurants, also known as a QSR, fast casual and fine dining.

Checkout counter at restaurant

Five Business Tips for Restaurants Criteria

  • Type and size of restaurant (Is it a small or large restaurant? Is it a QSR or fine dining?);
  • Current POS system being used if any;
  • Does the restaurant do a large volume of takeout ordering and if so can orders be placed and paid for online;
  • If the restaurant does takeout out ordering does it use online ordering software; and
  • Does the restaurant currently have a gift card or loyalty card program?

These factors are actually quite important in doing a proper analysis and making the best decisions for the restaurant in terms of saving money on credit card processing and having a system in place that saves them time and maybe even helps them increase their gross and net profits.

Restaurant owners and managers are dealing with various situations and having to make numerous decisions on a daily basis. They need to be able to save time, reduce costs and have a secure system in place to process payments from their customers.  Business owners in general, not just restaurant owners, have to make decisions regarding how to accept and process payments both in-store and on-line. Online ordering for restaurants has become almost as important as in-store processing, since according to several studies, takeout ordering and ordering online has seen dramatic increases in recent years and is predicated to grow even more in the just the next few years.

With these factors in mind, we hope these five business tips for restaurants provide you with some valuable information you may not have previously considered.

1.  Use Online Ordering for Takeout

Unless your restaurant is small or fine dining and you have made the decision not to do takeout, you need to capitalize on the growing trend of online ordering. There is a high profit in takeout ordering since you obviously are not taking up table space and you can accept as many orders as your kitchen can handle. Of these five business tips for restaurants, this one could have the largest impact on your business, depending on how much takeout ordering makes up your monthly gross revenues.

            Online Ordering Misconception

Don’t just sign up with any online ordering service. Some of the services are not worth what you are paying them. The devil is in the details and you could be paying anywhere from 12% to 30% (plus processing fees) with percentage based services or $89 to $450 (plus processing fees) for flat fee online ordering services. One additional cost we discovered was a higher fee if orders come through their system rather than through your website, even if they are your regular customers.  Why would a restaurant pay a percentage to a software company just for putting through an order for its existing customers?  That’s crazy, and that’s why percentage based online services are costly and significantly lower your profit margin.

Another thing we found was some online ordering companies charge extra if you want a downloadable app at the App Store and Google Play, instead of the low rate they quote which you later learn is just for desktop ordering and does not include smart phones. Restaurant owners are busy enough without having to worry about hidden fees and costs that were not made clear when they signed up.

            Takeout Rocket Online Ordering

After looking at all the games software companies were playing with online restaurant ordering systems and how much they were charging for a simple system and some basic marketing we decided to build a better online ordering system and at a lower cost.

We focused on three things:

1) It had to be easy to use on desktop, iPhone and Android devices;

2) It had to be low cost; and

3) It had to include social media marketing and promotional materials at no extra price.

1)  Easy to Use

Keeping the restaurant and the customer in mind, we wanted to implement takeout ordering software that would be easy to use on any device. “It’s not rocket science”, not for us anyway.

The Takeout Rocket app allows people on the go a quick and easy way to order takeout using their iPhone or Android device. Our team designed a very simple model with the goal of being best in its class.

2) Low Cost with Great Features

Takeout Rocket is probably the most cost-effective plan available, without skimping on features. We have two pricing plans, our Standard Plan for $49.99 per month or our Premium Plan for $29.99 per month, plus credit card processing fees on each plan, not PayPal.

Zero transactional fees.

Zero percentage based fees.

No annual commitment.

3) Social Media Marketing and Promotional Materials

We know the importance of exposure and how that can increase a restaurant’s business which is we decided to integrate social media software into our model, as well as a few other ideas we felt would help restaurants with increased order flow.

As part of the monthly fee, the Takeout Rocket team provides hundreds of social media posts to each restaurant client to help promote their business. We believe in assisting restaurants with marketing and promotion, and don’t charge extra for those services. We even provide our restaurant clients with these five business tips for restaurants to increase sales.

It is difficult to be a restaurant and not post on social media channels such as Facebook, Twitter, Pinterest and especially Instagram, since most restaurants understand the importance of social media and having a presence on the internet. If your local competitors are active on social media, you have to be active as well.

 2.   Does Your Restaurant Really Need a POS System?

This is a question that requires careful consideration. Some smaller high volume restaurants we represent simply use a terminal and hand write the order for the kitchen and it works fine. They actually feel using a POS system would slow them down, and they are correct in most situations. So we included this question in our five business tips for restaurants, because you may not really need a POS system, no matter what sales people tell you.

Think of it this way. If the waiter or waitress writes the order down at the table, they simply need to go to the kitchen and hand the kitchen staff the order and keep the duplicate for later when they total the order to bring to the table for payment.

If they had a POS system they would have to go back to the POS system and enter all those orders in the system and then fire it off to the kitchen printer. If you are serving a table of six that orders a combination of appetizers, soups, salads and entrees, having to go to the POS station and enter all the orders you just wrote down on your pad would actually slow down the process. Also, you may need to have two POS stations so wait staff is not waiting in line to enter orders. With old school paper the order can be submitted to the kitchen 10 minutes faster in some cases, and we all know waiting 10 minutes longer for food at a restaurant seems like forever.

One solution for high volume restaurants would be to use a mobile POS system so the wait staff can enter orders at the table and then send it directly to the kitchen without having to enter the orders a second time at the POS station.

3.  Choosing the Right POS System for Your Restaurant

Once you have decided you want to use a POS system, now you have to decide which one and which features are most important to you and the way your restaurant operates. Key features we have found most restaurants want are table mapping, coursing, bill splitting in various ways, gift or loyalty card program, integrated online ordering and last but not least, integrated chip card acceptance (also known as EMV).

Make sure you discuss all the necessary features with your sales agent. Even though chip cards have been around for a while now, as of the date of this article, September 2017, there are still a number of POS systems that do not have an integrated chip reader to work with their system. Aloha does not yet have one. Micros and Oracle/Aloha have integrated solutions at the POS station but they are quite expensive.

Lost revenue from credit card fraud can be significant. If you are not able to process chip cards on your current processing equipment you are putting your business at risk. What’s more, if you have a data breach at your POS system because you are still swiping cards with the magnetic strip, it could put you out of business.

Keep in mind that there will probably be a push in the near future for pay at the table solutions for restaurants. There are some banks that are requiring PINs for credit cards, as well as debit cards. I know what you are thinking, that’s just great, another number I have to memorize. The problem is that if more and more restaurant customers use credit cards that have PINs, restaurants are going to have to ask them to get up from their table and walk over to the POS station to put in their PIN to process the transaction. Once that becomes a more common occurrence, more and more restaurants will adopt pay at the table solutions.

It is strongly advised to use a POS system that currently has a pay at the table solution, or at the very least, an integrated chip card reader. Pay at the table solutions include integrated and non-integrated wireless tablets and wireless and Bluetooth terminals. Of these five business tips for restaurants, this one on choosing the right POS system probably requires the most time, research and comparison before making a decision.

Don’t believe the POS sales agent that says the pay at the table solution or chip card integration should be done shortly. They leave restaurant owners hanging thinking the solutions will be done in another month or two. We have seen this drag on for years (the EMV deadline was October 1, 2015) with some POS companies that either didn’t want to spend the money or didn’t have the right technology to do the upgrade and integration. As a result, it is the restaurant that suffers with credit card fraud, chargebacks and increased rates as a result of non-compliance.

4.  Get a Written Quote on Credit Card Processing Rates

Always get your rate quote in writing before you sign anything. Then make sure you compare that quote to what you are currently paying. If you are not certain how to do these calculations feel free to contact us.  “Interchange plus” pricing is the most common form of pricing used today. Interchange plus pricing is easier to understand than the old “tiered pricing” structure and in most cases is less expensive than complicated tiered pricing.

Processing fees are those fees quoted by a sales agent and should not be confused with Interchange Rates, which are explained below. “Processing fees” are the fees charged by the acquiring bank or merchant’s processing bank.  There can actually be three separate fees charged for processing the transaction, although some sales agents in the industry like myself only charge an authorization fee and discount fee on each sale.  Authorization fees on each sale should only be a few cents and discount fees should be stated as basis points, which are fractions of a percent. Example:  50 basis points equals .005 or one-half of a percent.

If there is also a “transaction fee” you would then have to add the authorization fee and transaction fee together to see how many cents you are paying on each sale. Some sales agents may try to hide the fact that there are those two fees, and if you see those two fees on your application before your sign, you are very likely overpaying. There is usually no reason to be paying an authorization fee and transaction fee, unless both are very low.

It is important to understand what “Interchange Fees” are, since they make up the majority of monthly credit card processing fees.  “Interchange fees” are the fees set by the major card brands such as Visa®, MasterCard®, Discover® Network Cards and other card brands that represent the various payment networks. Interchange fees are paid by the merchant’s bank to the cardholder’s bank, also known as the issuing bank, to pay that issuing bank for the value and benefits that merchants receive as a result of agreeing to accept credit card payments. Interchange fees are used by card issuing banks to cover costs and help them deliver value and services to customers.

You also want to understand the monthly amounts you are paying for things like a statement fee, PCI compliance fee, debit enablement fee (if you will be taking debit payments) and next day funding fee (an optional fee). Also, ask if there are any monthly fees, setup fees, monthly minimums or activation fees.

If possible, ask to get the application in advance of signing so you can review the application and ask any questions after a good review. If you need additional help you can also refer to our Five Tips on Credit Card Processing for Restaurants.

5.  Engage with Customers on Social Media

As we have discussed, social media is a necessary evil, especially for restaurants. While Takeout Rocket provides hundreds of free social media posts monthly to each of its restaurant clients, restaurants do need to monitor their own Facebook page and other social media accounts. Restaurant management and owners need to thank customers for their kind words or respond to complaints in a timely and very professional way.

Thanking customers who have posted pictures of or praises about you food really does send a great impression to others who may be considering trying your restaurant or a particular dish on your menu. Similarly, responding promptly and professionally to customer complaints tells others about the type of establishment you run and how you deal with complaints instead of ignoring them. So as part of your implementation of these five business tips for restaurants, make sure you or one of your staff are designated to periodically review social media posts of your customers and respond if necessary to recommendations or complaints.

Conclusion

We hope these Five Business Tips for Restaurants have given you some guidance in your restaurant business. We are always available for free consultations and look forward to assisting you.