How Fast Food POS Can Bring on Fast Headaches

Having fought back from the ravages of the pandemic, quick-service restaurants now represent a large and fast-growing market for providers of point-of-sale technology—but also one presenting new and vexing challenges, according to top payments executives who specialize in this industry.

For fast-food or fast-casual restaurants, “building a point of sale today is a very different proposition from what it was a few years ago,” said David Burkhart, vice president for enterprise clients at Lombard, Ill.-based POS provider QSR Soft. QSR is an industry abbreviation for quick-service restaurant.

For one thing, system complexity, which was always challenging, has only grown more so, noted Burkhart and a panel of other QSR executives who spoke late last week at the annual meeting of the Midwest Acquirers Association in Chicago. For some panelists, this creates a fast-growing challenge not just for restaurants but for the companies supporting their payments flows. “When you’re dealing with millions of lines of code, things are going to break,” noted panelist Bryan Solar, chief product officer at SpotOn, a San Francisco-based POS technology provider.

For Solar, that means companies like his must be prepared to spend more than ever on research and development—not just to improve technology but also to be prepared for system failures. “We are spending millions on R&D,” he told the audience. “You have to have a lot of money to make these bets and have them go wrong.” The U.S. restaurant industry as a whole is expected to spend just over $10 billion annually on POS technology alone by 2030, up from nearly $6 billion in 2022, according to estimates from Grand View Research.

For Solar and other executives on the panel, though, the need for such investments is sharper than ever, at least in part because of growing complexity. “In any QSR in America, chances are there’s more redundancy than there is on an airplane,” noted Chris Siefken, president of Restaurant POS, part of the big Atlanta-based payments provider Global Payments. “The customer expectation is that it’s just going to work.”

When it doesn’t work, the POS technology companies often get the blame, regardless whether the source of the issue lies elsewhere in the system, the executives said. “We’re the face of the problem,” said Siefken. But the restaurant faces a backlash, as well. “This is going to be on CNBC,” noted Siefken. “We’ve got to get that operation up as soon as we can. The impact on that operator is going to be very large. Margins are very thin.”

To avoid that kind of heat, systems installed only recently require constant updating, the panel cautioned. “Somebody has to be on call. It’s a big deal,” said QSR Soft’s Burkhart. That’s because a system failure means loss of income for what is often a slim-margin business—an outcome that potentially impacts outlets’ managers and employees, the panelists said. “These are peoples’ businesses, their living. One single day can cause that problem,” noted Siefken.

But the opportunity for service and support can be attractive, despite the reputational risks a system failure presents. Said Solar: “Any business owner who buys a POS is not buying it for today, he’s buying it for the next 15 to 20 years.”