The POS market has become saturated in recent years. While you have more options to choose from than ever before, there is a downside to this unprecedented level of choice. With so many options available, it’s often difficult to determine which POS system will be the best fit for your bar or restaurant.
There is significant research indicating that too much choice can be paralyzing. In his TED Talk, psychologist Barry Schwartz explained the downsides of excessive options. In addition to being paralyzing, it can lead to greater levels of dissatisfaction. When deciding between over 40 POS systems, you’re likely to have a great deal of uncertainty regarding the specific features that are most important for your needs. As a result, it can lead you to have doubts about whether you’ve made the right decision.
Determine the Features You Value Before Evaluating POS Systems
It’s crucial that you clarify the features that are important to you before evaluating new POS systems for your bar. Back-end reporting has become the baseline expectation for all modern POS systems. Your POS should provide a cloud-based solution that makes it easy for you to log in and see your reporting on any device. This is especially crucial for multi-location bars.
Beyond this detailed back-end reporting, the specific features that are valuable to you will be dictated by the type of establishment you operate. For example, ordering integration to make online orders from Grub Hub, Uber Eats and other delivery apps run smoothly may be important to a pizza restaurant or any establishment with a large volume of takeout business. Bars in college towns, on the other hand, may want to prioritize a POS that makes it easy to split checks.
The Most Important Features Are the Ones that Make Your Business More Profitable
The items discussed above fall in the category of “nice to have” features. They add value to your business and would potentially be a deciding factor between systems where many of the other features are roughly the same. However, if you find a feature that can make your bar more money, it should rise to the top of your list of items you value in a new POS system.
At Bar-i, we have experience working with bars that utilize a wide range of POS systems, and our software integrates with over 40 of the most common POS options. Based on this experience, we’ve found that the single most important feature a POS system can provide is the ability to ensure your drinks are sold at the correct price and can be accurately tracked for level 3 inventory (comparing what was poured vs sold to reduce shrinkage and improve profitability).
Generic Modifiers Create Problems with Pricing and Tracking
One of the most common problems with POS systems involves a lack of granularity when generic modifiers are used. Often, the use of generic modifiers can lead to two serious problems:
- Undercharging for drinks – In many instances, the use of a generic modifier will levy a fixed upcharge for every drink using that modifier button. This results in undercharging for upscale liquor drinks. You’re leaving a lot of money on the table when your premium double or rocks drink gets the same upcharge as your well drink. Instead, you want the upcharge to be based on the original price of the drink to ensure your premium liquor drinks are being priced properly.
- Inability to track what was sold – When you run your POS report, most systems will show you the number of drinks that were poured using the modifier, but you won’t be able to see specific liquors which used it. For example, you may see that doubles were poured 50 times, but you won’t know how many times it was poured with Jack Daniels vs. Jameson vs. Johnny Walker Black. This makes it extremely challenging to accurately track the usage of each liquor.
The Standard Solution to this Problem – One Drink, One Button
With most POS systems, the best solution to this issue involves adding specific buttons for every different pour size used by every liquor you serve. This can result in as many as four buttons for each type of liquor:
- Standard cocktail
Creating separate buttons for each of these types of drinks ensures that every cocktail you serve is priced appropriately, but it’s also a very labor-intensive and time-consuming process.
In addition, it requires constant maintenance. You have up to four buttons to update every time the cost of a bottle of liquor changes. For example, when your cost for a bottle of Jack Daniels rises from $25 to $28, you need to update the prices of your drinks accordingly to ensure you maintain your profit margin. To accomplish this, you must update the pricing for every POS button associated with that drink. This is extremely time-consuming and creates a lot of extra work for your staff, especially at a time when inflation is rampant and product costs are rising regularly.
The Better Solution Eliminates the Need for Multiple Buttons
Some POS systems have a feature that eliminates the need to program separate buttons for each pour size. Instead, you use one button per liquor type and can still get the accurate pricing and tracking data you need with modifier buttons. In our experience, we’ve found that SmartTab has created the most effective functionality for this solution.
The SmartTab feature leverages three important elements:
- The price of modifiers is based on the cost of the original drink – Instead of a fixed upcharge for each modifier, the button charges a percentage of the original drink. This ensures you’re pricing premium drinks properly and not losing money when modifiers are used in conjunction with these products.
- Sizes of drinks are automatically reported – This eliminates the need for separate buttons for each pour size. When you run your POS report, you’ll see a breakdown of how many rocks, doubles, shots and other drink sizes were poured for each type of liquor.
- Auto pricing updates based on bottle prices – If you update the cost of a bottle in your system, it will automatically update the price of those drink sizes for you in the system. Without these automatic updates, many bars simply neglect to make these updates manually which causes you to lose money. By implementing automatic pricing updates, you are always ensured of making your desired margin when costs increase.
One of the nice features about the Bar-i inventory system is that our software automatically updates the prices of bottles every time you purchase an item. We’re currently working on a potential feature that allows Bar-i users who also use SmartTab as their POS to have these pricing updates get automatically sent to SmartTab as part of our integration with their POS. This would ensure that when the latest bottle prices are entered as part of our inventory audit process, your POS prices remain up to date as well.
Profitability Features Should Drive Your Choice of POS System
Ensuring every ounce of alcohol is sold at the correct price and can be accurately tracked for level 3 inventory might be the most important feature your POS system can have. This feature results in higher profits by:
- Charging customers correctly when prices go up or when modifiers are used with certain pour sizes
- Allowing you to see exactly what was sold so you can compare it to what was poured, enabling you to avoid the 10-20% shrinkage experienced by the average bar
While there are other “nice to have” features which may impact your choice of POS system, none of those should be prioritized as highly as a feature which drives greater profits for your bar.
If you’d like to learn more about how Bar-i can streamline your operations and maximize your profitability, contact us today to schedule a free consultation. We serve bars and restaurants nationwide from our offices in Denver, Colorado.