More point-of-sale technologies are going mobile as they move to such platforms as smartphones and tablets, posing a “significant” threat to the traditional POS market, according to technology researcher Greg Buzek.
The migration is particularly evident at independent restaurants and start-ups, where less-expensive options are more readily embraced, said Buzek, president of research and services firm IHL Group.
He recently spoke with Nation’s Restaurant News about these trends, which appear in IHL’s "Mobility — A Gutenberg Moment for Retail, A Threat to POS" study.
How are mobile devices affecting POS purchasing and deployment decisions among U.S. foodservice operators?
There is a very significant impact so far on the smallest of restaurants and food trucks. The Square POS solution on an iPad or iPhone provides a POS solution and a payment solution for about $500. The benefit of not having to pay $2,000 or more for a POS unit or get into a four-year lease for EFT [payment card terminals], plus the ability to go mobile [represents] a big challenge to traditional POS at that level.
At the larger chain level, it will not be as significant, although we expect to see more and more tablet/hand-held devices at the restaurant level for wait staff, and that will ultimately mean less POS terminals will need to be replaced. So in the near term, the tablets and mobile devices are additive in terms of technology in the store. However, at the point of replacement of traditional POS, some users will plan to install fewer traditional POS [terminals].
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How are operators responding to this development?
The independents are the most bullish, at least among the restaurants. For the chain operators, the decisions come down to table turns and then to maintenance costs and replacement rates. For instance, with the Amazon Kindle, you can buy 10 of them for every hardened POS purchased today. So the question is what type of customer experience are you looking to have in your restaurants, and does the replacement rate of the devices in your environment make sense from a total cost of ownership standpoint.
When will these mobile devices significantly penetrate the U.S. POS market?
Overall, for retail and hospitality, it will be the fastest penetration of any technology since the introduction of Internet connectivity at the store level. For traditional sit-down restaurants, it will be much slower [than in other industries]. We are projecting shipments of 2.7 million tablets a year to North American retail and hospitality [businesses] by 2015.
Some suppliers and buyers of ruggedized handhelds or tablets say consumer devices can't stand up to restaurant work. What has changed to make the use of consumer devices viable for restaurant POS systems?
The price point. The discussion now is “what is rugged enough” and what is that value point. It is not $1,500 for a rugged device. Is it $600 or $750? The question is also how long do you want to keep the device and the purpose for having them in your store? If it is to create a leading-edge environment, you don’t want to keep them more than two years anyway.
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Quite frankly, the rugged devices at previous price points would never take off in volume; the return on investment is just not there. So there is a happy medium on price, performance and ruggedness, [and] that’s what vendors and customers now are trying to figure out. Is a protective boot device with a magnetic stripe card reader rugged enough? For some companies, yes; for others, no.
You recently wrote that the forthcoming Amazon Kindle Fire tablet might work well for the foodservice industry. Why?
The size of the device and the price point. It is much easier to handle than an iPad and is not as small as an iPod Touch. You can put that [Kindle] into a book-like cover for protection … and it will be lighter [while offering] the benefits of a tablet for table turns. And at $200 a unit for the base [model], the price point is ideal.
Do you think restaurant guests may one day order and pay solely using their personal smartphones?
I think this will become a reality in fast food in the next two to three years. It will be tied to the success of mobile wallet technologies, like ISIS or Google Wallet, [and impact] anywhere in hospitality where speed of the transaction is critical and cash is a big part of the process today. It will be a lot longer before we see this in large quantities in the traditional bar/restaurant category.
Contact Alan J. Liddle at [email protected].
Follow him on Twitter: @AJ_NRN