New technology helped restaurants through the pandemic. But when it crashes, they’re “shafted.”
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The early days of the pandemic was a great time to be selling retail point-of-sale systems to restaurants. The POS technology that lets customers order food using QR codes and the devices that let servers swipe credit cards at diners’ tables allowed restaurants to pivot to contactless and takeout dining.
But while the popularity of POS systems has surged during the pandemic, some business owners have concluded that some of the new technology doesn’t always work so well.
A couple of weeks ago, Marisa Johnson was working at a market and cafe near San Diego called Al Fresko. Early in her shift, she went to ring up some customers with the market’s point-of-sale system, Square, and the screen went “completely black,” she said.
Johnson tried restarting the machine. She unplugged it and tried a different outlet — all while customers were standing there waiting to buy fancy olive oil, cocktail mixers and a throw blanket.
“I see all these items, and in my head I’m doing the math like, ‘Oh my gosh, this is a huge purchase. I can’t let this go,’” Johnson said. “Just trying to figure out ways to make this sale happen.”
A big sale like that is a big deal for Al Fresko.
“Being a small business in unique times, if we have a couple-hundred-dollar sale coming through, we really need that right now,” said owner Jenny Niezgoda.
To make matters worse, Johnson couldn’t even reach Niezgoda when the system went down because Niezgoda was out of town, visiting family in Texas.
“It’s just, like, the worst thing that can happen when you decide to step away [for] your first vacation in five years,” Niezgoda said.
While the system was down, Johnson made a quick decision: She asked the customers to pay using the app Venmo instead. That method worked through the rest of her shift. It was a stressful day, Johnson said.
“You just have to be kind and charming and funny and make light of it, and let them think that this is funny and cute, and they’re actually having a good experience, when it’s an inconvenience,” Johnson said.
Niezgoda said Square shipped a replacement part a few days later.
Before these kinds of payment systems came along, businesses used separate devices to handle credit card payments and customer orders. Newer point-of-sale systems like Square do it all, said Lisa Ellis, senior equity analyst at MoffettNathanson.
“That includes that hardware, the card reader, the business software and the payment processing, all in one bundle,” Ellis said.
But that means when a point-of-sale system goes down, it can be a disaster for a business.
“At the end of the day, you can’t really control your own fate,” said Steve Chu, co-owner of Ekiben, a sandwich restaurant in Baltimore. “There’s so many different external factors that go into running a POS system smoothly.”
On a busy weekend about a month ago, Chu’s POS system, Toast, had a service outage. Chu said there wasn’t much he could do about it.
“You could call customer service, but in this instance, it was like, ‘We know there’s an outage. Give us some time, and we’ll fix it,’” Chu said.
Toast offers an offline mode that allows businesses to keep taking payments during service disruptions. But Chu said that wouldn’t have done much for him because customers still wouldn’t have been able to order online. He said the outage likely cost him hundreds of orders, which could have brought in thousands of dollars.
“We had no business for, like, four hours,” Chu said. “It really shafted us.”
Throughout the pandemic, point-of-sale systems have had to add a lot of additional features. MoffettNathanson’s Ellis said that includes things like contactless payments, QR code ordering and curbside pickup.
“The minute you had the pandemic, it was essential that you were able to do curbside pickup, right?” Ellis said. “And so some of these products maybe rolled out features out of necessity, very, very quickly.”
Ellis said these POS systems handle about a quarter of customer transactions for small businesses. She said the dollar volume the systems handle has been growing by 30% every year.
“It wouldn’t surprise me that there are some growing pains from a customer support and servicing perspective, because they were shipping product as fast as they could to try to meet demand,” Ellis said.
POS company Toast cut Steve Chu a check to reimburse him for the business lost during the service outage. Square said it continues to invest in the resilience of its systems and offers a warranty on equipment.
That said, Chu is in the market for a new point-of-sale system. So is Jenny Niezgoda.
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