By Alex Barrotti

Historically, the restaurant industry has been slow to adopt technology. The paper pad and pencil have been the standard for hundreds of years in restaurants and are still used by many smaller food establishments.

However, with the advent of tablet-based point of sale (POS) solutions that offer low upfront cost hardware and monthly subscriptions, restaurants of all sizes are finding it possible to embrace the advantages technology can offer. This includes payment processing. Even roadside food vendors, tiny food shacks and food trucks now find it essential to provide their patrons with the multiple payment options, besides cash, that only payment processors can offer.

The explosion of online ordering and delivery apps—with no clear market leader or consolidation yet in sight—are other technological advancements that restaurant operators are finding that provide an edge in highly competitive markets.

Yes, all restaurateurs don’t 100 per cent buy into the maxim: “If you are not on Yelp or Grub Hub, your customers will go someplace else.” But most restaurants that are not currently active with an online ordering marketplace are at least exploring their options to make sure they do not get left behind competitors that do have a presence.

At the same time, besides their core business of serving great food in an inviting environment, restaurant owners are challenged to navigate technology. They are finding that entering orders and payments from multiple marketplaces can be time-consuming and error-ridden without the right tools in place. Owners are also having to learn how and when to be engaged on which social platforms and ways to create loyalty rather than accepting business from one-off customers who only buy the best deals and which mobile wallets or payment types to accept.

While each of these technologies can increase market reach and operation efficiencies, each has fees that chip away at the bottom line and can cut margins to unprofitable levels when implemented with a shotgun approach. But determining the best mix of these tools can be daunting even for the largest operations and experienced technologists, never mind the smaller operations with fewer personnel and capital resources.

In good part due to these complexities, industry-targeted mobile or tablet-based POS solutions have emerged as the hub of restaurant operations and payment processing. They are designed to mirror the way restaurants actually operate, integrating ordering, payment processing, deliveries, online marketplaces, loyalty and operations into a single efficient access point that is easy to manage by restaurant operators. These tools can fit the budget and functionality needed by virtually any size restaurant, from start-ups, small cafes, roadside shacks and food trucks to established multi-unit operations that are upgrading. They can also generate reports of the multiple costs affecting profitability that help the restaurant operator make better business decisions.

The industry’s payments processing order

One of the most important commitments restaurant owners realize very rapidly that must be made is the types of payments they will offer customers and the best way to process them. It may surprise some, but at TouchBistro we often get calls from new restaurant owners who want to be up and running on their POS in just a few days. About half of the nearly 500 restaurants that start using TouchBistro each month do not already have a payment processor and ask for recommendations.

During onboarding, we standardly ask the restaurant operators what is important to them in a payment processor. The top asks are:

  • Instant approval to accept payments;
  • Transparent and competitive fees;
  • Accept all forms of payment (the more technically-savvy ask about near field communications (NFC) and mobile wallets;
  • Security, namely EMV/PCI compliant (when they understand what this means);
  • Reasonably priced payment devices that can be used mobile or stationary; and
  • Able to accept payment information from the POS or online marketplaces directly without having to rekey the price into the payment device and have it fully integrated into their accounting system.

We have found restaurant operators are extremely displeased when they realize the “free” payment processing equipment they were given ends up costing considerably more from back-end fees over the term of the contract they locked into than the hardware would have cost if they purchased it up front.

Understandably the lowest rate is desired by most restaurant owners. The flat rate pricing model, while inviting due to its simplicity to food establishments that are new to payment processing, inevitably becomes less popular as the restaurant operators realize this model is generally the most expensive. The hidden fees, complicated calculations and statements and misleading advertised lowest qualified discount rate all leave restaurant owners disgruntled with Interchange differential and tiered pricing models – and searching for alternatives.

The small print that allows payment processors to increase the rates during the term of the contract at any given time, needless to say, results in serious discontent amongst restaurateurs who are generally already working on very tight margins.

Working with restaurants

Payment processors, just like online marketplaces, will need to be sensitive to these issues as restaurant owners become more knowledgeable about what is available from vendors and how the offerings affect their bottom lines. Some consolidation and attrition of these companies that serve the restaurant segment are unavoidable long term. Those left standing will be the ones that understand the nuances of the food service industry and are committed to partnering with hard working restaurateurs to help them flourish.

Alex Barrotti is CEO and founder, TouchBistro ( He is a successful serial entrepreneur who has emerged as a visionary in the advanced technologies that help retail and hospitality businesses expand. As of today, TouchBistro has helped over 15,000 restaurants in more than 100 countries to increase sales, improve the customer experience and make better business decisions.

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