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Streamlining Profits

By Maura Keller

Having trouble keeping track of inventory? Wishing you knew which hours were the most profitable? Looking for an easier way to streamline complicated orders? Enter point-of-sale systems. These computer-enhanced software systems are making life a little bit easier for coffeehouses across the nation.

For Deb Hoffman, owner of The Big Bean, a small specialty coffee store/espresso bar in Severna Park, Md., investing in a POS system for her small outfit made perfect sense. Not only has the RedEye POS system she uses helped enhance her customer service, but it has also helped her make more money and simplify her life.

“Our espresso bar is very busy and the POS system allows us to ask the customer once, what kind of milk, syrup, extra shots, etc., that they want, enter the information on the touchscreen, and it is then printed out next to the barista who then makes the drink correctly,” Hoffman says.

Hoffman admits that her POS system has helped her make informed decisions about purchasing now that she can easily get reports on what the store is actually selling. “We tried to sell prepared sandwiches to bring in lunchtime business,” Hoffman says. “With a ‘click’ I could see how many we sold in a given week or month to easily determine we were not even breaking even on this product.”

As Lee Alexander, vice president of sales and marketing at Redmond, Wash.-based Coffee Shop Manager, says, POS systems can do this and so much more. “Point-of-sale systems fall into two categories—general merchandise systems and restaurant-style POS systems. Coffee Shop Manager falls into the category of a restaurant-style POS.

“In most cases, a general merchandise system is going to incorporate bar code scanning as the primary method of item look-up, whereas a restaurant-style system will use a touchscreen monitor and easy-touch buttons to identify items to the register for sale,” Alexander says.

What’s more, either type of POS uses some form of PC, an electronic cash drawer, customer pole display and receipt printer to create the cash register functionality. “Additionally, some POS systems may include integrated credit card processing to allow this transaction to occur within the POS software rather than be handled on a swipe terminal and external printer,” Alexander explains.

What POS Systems can do for you
“A well-designed POS system will help a coffeehouse retailer run their business more efficiently and thus more profitably,” says Barb Hibbert, vice president of RedEye Point of Sale Software. And she should know. The RedEye Point of Sale Software was developed by Brian Patterson, a software architect and network engineer, for use in Hibbert’s own drive-through coffeehouse and ice cream stand, called Jo’s Java and Ice Cream in Peoria, Ill.

“I knew from my research before opening that in order to be successful, the operation must be fast,” Hibbert says. “To keep the lines moving quickly, I needed the help of a computerized system to take orders and have them sent to the various prep stations. The plan was to have the finished drink, sandwich and/or ice cream at the drive-through window by the time the customer had pulled up. I invested in a point-of-sale system designed for restaurants and this worked fine—most of the time.”

The problem was that Hibbert had made a bad choice in the first POS system that she installed. “That first system was limited in number of items that could be listed on each screen. The reports would often ‘lock up’ when I tried to run them. But the worst problem was that the whole system went down all too often,” she says.

Before opening her second location, Hibbert investigated other POS systems but none of them were designed to fit her business or her budget. “I wasn’t sure what to do—until I discussed it with Brian Patterson, who offered to design a POS program for my business from scratch. After it was successfully installed, Hibbert and Patterson formed RedEye Enterprise.

About six months ago, Starbucks opened a drive-through within sight of Jo’s Java and Ice Cream. “I know RedEye POS has helped me retain my business in spite of this tough competition. It has helped us build customer loyalty by allowing us to greet customers by name,” Hibbert says.

Determining capability
So is a POS system right for you? Experts agree that if a small retailer doesn’t have hectic rush times and has plenty of down time in their shop, which they can fill with manually tracking sales and employee time records, then a POS system may not be a necessary investment. “However, the cost of a POS system can easily be justified if the coffeehouse is able to serve just a few more customers a day because of their increased speed and accuracy during their busy hours,” Hibbert says.

Craig Fuss, national sales manager at Cash Register Sales, Inc., Minneapolis, agrees. “The most important benefit for mom-and-pop shops would be the ability to handle integrated payments through the cash register, rather than having to buy separate systems,” he says. CRS developed and distributes the CRS 3000 POS terminal, a low-cost foodservice terminal with a multi-line operator screen.

In addition, Fuss says that mid-size outfits benefit from a POS system’s multi-store reporting capability. “It allows them to get a snap shot of their business from a remote location,” Fuss says.

Experts agree that purchasing a restaurant-specific POS system is beneficial. For example, SP-1 by SelbySoft is a full-featured POS for the coffee industry. “We handle everything from easy-to-use basic order taking to full-featured inventory control, time and attendance, marketing, gift card, loyalty and more,” says Ed Snyder, sales manager at SelbySoft, Puyallup, Wash.

A key advantage of a computer database-driven POS system is the ability to run comprehensive reports including sales by hour, sales by menu product, and sales by day of the week and month. A master report gives an executive summary of receipts including credit card transactions, sales tax collected, discounts for customer loyalty rewards or other discounts, employee hours clocked and order counts for any given time period.

“Any retailer going into business should have more than a cash register,” Alexander says. “An industry-specific business management system, such as Coffee Shop Manager, will allow the retailer to better keep track of the multitude of details that they face on a daily basis. From the employee time clock and scheduling to the easy item ordering register system linked to a mainstream accounting solution will help the retailer manage their business and not have the business manage them.”

As Alexander explains, a cash register does not handle the prepaid gift card needs of this industry or allow for loyalty tracking. “If a new business goes to a cash register and an external gift card system, they can be paying 75 percent of the lease cost of a POS and getting a much smaller fraction of the functionality. If their gift card volume grows, their costs grow. With a POS, those costs do not grow with each new customer.”

Indeed. “Any retailer can see the benefits of a POS system in a very short amount of time,” Snyder says. “Most stores that move from a cash register to SP-1, for example, see a bottom line increase of 3 percent to 5 percent. Because all the pricing is set, our POS system eliminates the mistakes made by crew members, and the gift and loyalty systems help reduce both employee mistakes and theft. Being able to see on-the-fly labor and beverage costs means that even a small retailer can reduce operating costs and focus on customer service.”

Investing in your profitability
The cost of implementing a POS system can vary considerably depending on a number of factors. “A major variant is in the cost of the computer hardware used to run the POS software system,” Hibbert says. According to Hibbert, the following are options that the coffeehouse owner needs to consider when deciding how to set up the system in their coffeehouse.

• The number of POS workstations that the coffeehouse will need to take customer orders. “With the right POS system, orders can be taken very quickly. This means that if the coffeehouse had two places to take orders before, they may be able to drop back to only one,” Hibbert says. They also have a choice between the less expensive computer POS hardware or the compact, “small footprint,” all-in-one type POS workstation.

• The number of drink/food preparation stations where you will need to have a nearby prep printer. If the coffeehouse needs only one barista prep station and it is very close to the POS workstation, the receipt printer could also be used for your prep printer. Or separate printers may be required for your sandwich prep station, barista and coffee bean sales area.

• Whether or not the coffeehouse needs a separate back-office/server computer for administering the program and for generating reports. “Besides the cost of the additional computer, this would add the cost of the network cables, router and the network installation,” Hibbert says. The POS workstation computer at the counter could be used to take orders and also to generate reports.

So how much does implementing a POS cost?
“A complete restaurant-style POS from a primary vendor to the trade will run between $4,500 and $7,000,” Alexander says. “It should be noted that some POS vendors do not include all their features for a base price and require many add-ons such as ‘back-of-the-house’ reporting, credit card processing software, card swiper, customer display, delivery, etc. It is important to ask questions about what is included when comparing products to make sure that you are comparing apples to apples.”

Installation requirements
In general, the hardware installation of a POS system requires a few hours for a first timer with limited computer experience. Establishing credit card services and remote access will take an additional hour or two and often will include the assistance of the POS vendor.

“A single register installation should generally take no longer than setting up a basic PC,” Alexander says. Considerations should be made prior to the installation for issues of power, phone or data cabling and the physical limitations of the counter that will contain the PC. After the physical installation, the retailer should expect that the POS vendor will assist in some fashion with training on the POS.

“Most retailers will choose to install the SP-1 system and hardware themselves,” Snyder says. “Because the equipment is not proprietary, most people find the actual hardware setup as easy as plugging the cables into the right spot—we even label the ports.

The majority of vendors provide some level of initial training. During this training session, the vendor reviews menus, transactions, reporting, maintenance and internal controls that are used throughout the system.

“Retailers in general should be patient with any installation and set a day aside to get everything installed and checked over,” Snyder says. “After all, you would not install a new espresso machine and serve drinks without looking it over first.”

On the horizon
Like most technologies, POS systems just keep getting better and better. “Over the years there have been many advancements,” Snyder says. “The ‘buy 10 get 1 free’ system of loyalty cards has been in use for a long time and with SP-1 we have seen many retailers use the flexibility of the POS to come up with more innovative methods of rewarding their customers.

Smart Card technology is also making headway into the industry. For example, one feature that RedEye offers is the eCard feature, which uses Smart Card technology. The plastic cards have a computer chip embedded in them, allowing one card to work as a gift card or prepaid account card. The card can track two different frequent buyer programs and it holds the customer’s contact information, as well as their last five orders.

A soon-to-be added feature utilizing the RedEye eCard will even allow coffeehouse owners to offer their customers a “self-serve” terminal. The customer would walk into the coffeehouse and insert their eCard. The POS system would pop up a window that asks the customers if they want to order their “regular” and would show them the last item ordered by them. They tap “yes” and the order is sent to the barista to be made. The RedEye POS then asks if they want to deduct the cost of the order from their eCard account. When the customer taps ‘yes,’ the amount is deducted and the customer is informed of their remaining balance.

Another enhancement planned in the near future is to integrate WiFi with the RedEye POS system. This would allow coffeehouse owners to offer a certain number of free access minutes with the purchase of a drink, for example. They could also offer their customers the ability to purchase a certain number of minutes of Internet access, which would be integrated from the POS system into the WiFi system.

Speaking of the Internet, Fuss has seen the role of the Internet playing an increasing role in helping coffeehouse retailers share data. “The Internet is being used as a place to go out and retrieve your data,” he says. “An individual store can go out and send their data to an Internet site and then the home office can go and retrieve it. It’s an example of the way technology is playing a key role in this industry.”

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