Qu, a cloud POS targeting fast casual and quick service enterprise customers in the food service space, recently published a survey that deserves analysis. This is the first update to a piece we published a few years ago discussing the inevitability of cloud POS.
First, it looks like restaurants are managing way too many menus. The explanation might be that a restaurant brand uses multiple types of POS systems (it’s not uncommon for a corporate group to have bought franchisees who used different types of POS systems) or that they use multiple online ordering or delivery partners, each of whom requires a different type of menu.
As a bit of good news, the respondents in Qu’s survey seemed to finally understand that centralizing data was imperative for operational excellence. Accordingly 77% considered a new POS for a single source of data. We’ve written about this before because it’s so obvious to anyone who wants to make objective decisions.
As a bit of credence to our assumption that menu complexity is born from delivery partner promiscuity, the average restaurant brand seems to use 4 delivery partners, proving that there is no loyalty, the services are basically commoditized, and customer (and merchants) flock to whomever showers them with the most investor cash.
But because POS companies continue to suck, many restaurant brands are using middleware to make the POS integration work. Remember, the merchant wants the POS integration to avoid the headache of keying in data and finding erroneous information later on. The POS companies don’t want to do the integration because that involves work, and most of the POS companies have shitty, legacy technology or are otherwise too hard to work with in any rational way. Then, of course, there’s the theory that the delivery companies just don’t want to take their time to build the integrations correctly because that slows down growth.
This next graphic deserves some conversation. Qu is asserting that 41% of their respondents, in enterprise, are using a cloud POS. We predicted that half the market would be cloud by 2022, and this puts our prognostication right on track. We are a bit curious what cloud POS systems those enterprise customers are using, however, because much of the enterprise market (Xpient, Aloha, POSitouch, et al) are not cloud. At all.
Qu shared the following graphic which breaks down the survey responses by POS. Qu, Toast, Revel, Square, Par, and Micros Simphony were cloud. One could argue that Task is cloud, but that system is pretty much dead as far as we’re aware.
The respondents once again reiterated that they saw the need for a single source of truth in the data, and that was the main factor in considering cloud POS.
Lastly, we’d like to remind everyone that nobody likes POS. Granted these ratings are dragged down by legacy POS companies who refuse to do right by their customers (Global Payments and NCR are large offenders here), but even the cloud POS companies aren’t angels. While we were not allowed to publish specifics, suffice it to say there was nobody in the ratings who scored more than a 3.5.
Merchants seem content enough to shop for other POS providers too. Qu’s survey showed that 41% of merchants were planning to move POS over the next year and another 33% in the following year. Of course with a pandemic hanging around their necks operators will try to survive as long as possible, and that means forgoing a pricey upgrade on a new POS.
POS is just a very thankless task: it’s a huge engineering lift and massively underpriced for the value it brings. When investors size up the market they realize that merchants won’t ever pay what POS is worth, but they’ll pay out the wazoo on payments processing and not be the wiser. This is why POS companies are too often a Trojan Horse for payments.
Enterprise merchants are supposed to be smarter about this but how much smarter is certainly up for debate. That it’s 2020 and only 70% understand the value of unified data tells us that the industry still has a long way to go.
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