Address the Needs of Small Restaurants

August 25, 2016

Experts share details about the most significant needs of small restaurants and what solution providers can do to help.

Small restaurants need your help. Numerous challenges pop up every day, threatening to cripple their operations or even put them out of business. With so many challenges present, opportunities are created for IT solution providers with a keen focus on addressing and overcoming those challenges. I recently discussed this trend with four industry experts to get their varied approaches to this market and its opportunities.

What are the most significant IT needs of small restaurants that VARs are in a position to address?

Joe Gage, executive director IPOS Channel, Sterling Payment Technologies: Security services are needed, ongoing, and include things like choosing and implementing a security architecture (e.g., using out-of-scope payment solutions, whether tokenization is appropriate, LAN segmentation, etc.), maintaining antivirus protection, and best practices to remain secure. Additionally, if remote access is utilized, VARs can help with implementing a higher level of security for such access (e.g., dual factor authentication). Finally, it’s important to keep POS and payment systems compliant with the latest security standards (e.g., EMV, P2PE [point-to-point encryption], migration from SSL and older TLS [transport layer security] to TLS 1.1 or 1.2, migration from SHA [secure hash algorithm]-1 to SHA-2).

Doug Free, VP, MagTek: Small restaurants need help addressing fast table and customer turnover. Mobile POS improves operational efficiency via faster service (server doesn’t need to waste time going back and forth between table and POS station). Small restaurants also need help with network uptime and internet connectivity. Even a small restaurant may require multiple routers to cover the bandwidth needed to power the POS, security cameras, and the back office computer.

Hunter Menton, VP, Worldpay US: Today’s franchisees and small restaurant owners should spend less money attracting new customers and more time adding value for their loyal and returning customers. To do this, they must first identify customer needs using tools in the marketplace, such as or, to help them understand their customers. Once they’ve identified these needs, small restaurant owners can then use beacons, customer opt-in mobile apps, and other applicable technologies to drive offers to customers in real time.

Laura Kirby-Meck, EVP of sales and marketing, MerchantLink: Today, small restaurants are looking at many of the same things that their larger counterparts are, including EMV and other security solutions offering protection for both themselves and their customers. As well, we find many small restaurants are further ahead when it comes to loyalty and mobile applications. The millennial world continues to drive many of the innovation requirements.

What IT solutions for large restaurants should VARs be keeping an eye on for small restaurants?

Gage: Larger restaurants are already implementing security infrastructure, and some are implementing the pay-at-the- table solutions described above. Unfortunately, smaller merchants may be price-sensitive to implementing higher security standards. However, they need to consider the implications to their businesses if they were to be breached. While implementing security standards is not a 100 percent guarantee that no breach will occur, restaurants can dramatically reduce the chances of that happening. And merchants that have implemented strong security measures will be subjected to dramatically lower expense, both financial and to their brands, if a breach were to occur. VARs can offer services on a monthly billing basis, making the pricing more palatable to merchants while creating enhanced revenue opportunities for themselves.

Menton: With more than 60 percent of restaurant transactions coming from QSRs in the U.S., VARs need to focus on delivering a solution that reduces PCI scope, includes EMV, and drives consumer engagement. This can be a centralized offering from one VAR, offering POS, loyalty, mobile app, and beacon service, instead of several providers.

Small restaurants can benefit from tools such as P2PE and EMV immediately. Other solutions, such as loyalty and gift card programs, require additional time based on restaurant size and the cost of implementation.

Loyalty and gift card programs can help drive new business, whereas P2PE and EMV can help protect them from risk or help control costs. Price has been a barrier in the past for small merchants, but the introduction of less-expensive POS solutions such as tablets has eliminated this problem.

Kirby-Meck: Anything that has to do with security (tokenization, P2PE, and EMV) and building a loyal following (specifically those that attract millennials). In the past, price justification was an issue for some of the mobile and loyalty concepts — many small restaurants turned to very generic solutions that didn’t quite meet their needs, but with today’s innovators and availability of tech-savvy, affordable development small restaurants have many more options.

What is the biggest mistake you see small restaurant owners making that VARs need to be aware of?

Free: Failing to adequately monitor and measure inventory and sales can lead to lost revenue and sunk costs and, left unchecked for a long enough time period, will force an otherwise successful business to shut down completely. The best inventory management software out there is connected to the POS, simplifying the laborious and tedious task of having to verify every week and every month that the food and beverage remaining in stock, subtracted from the total food and beverage ordered from the suppliers, matches the sales report on the POS.

Menton: Some small restaurants are unknowingly locked into proprietary POS systems that prohibit their ability to expand consumer engagement loyalty, gift, or a better payment processor.

Kirby-Meck: Most small restaurant owners are focused on the customer and the experience, in the moment — and not planning for the longer term. It’s hard for a small restaurant owner to see what might be down the road in a year or so when they have to meet payroll this week. Mistakes could be avoided with planning and research being done a few quarters out (at a minimum). New technologies can actually help small restaurant owners increase revenue and can have a profound impact through multiple areas of ROI.

Where’s the lowest hanging fruit for VARs?

Gage: Security services, pay-at-the-table solutions, and LAN and Wi-Fi setup services to serve the business as well as its consumer customers (e.g., order at the table).

Free: Protecting data and implementing a secure environment via card readers that do end-to-end encryption (E2EE). We’ve all heard of P2PE and its benefits, but there are card readers out there that do encryption inside the reader head so the card data is protected from theft at the earliest possible point — at the point of swipe or dip. For a restaurant, that means credit card data never enters their system and is never on their networks. Since the data is already encrypted, it’s impossible to use, thus removing the incentive to steal it in the first place.

Menton: Beacon technology is the easiest to implement. It’s also inexpensive, and it can drive real results when integrated with the right partners.

Kirby-Meck: Security, mobile, and loyalty applications. Giving a small restaurant a differentiator that has a proven ROI is the lowest possible hanging fruit.

What are the most common objections?

Gage: The biggest objection today is facing a capital expense and large cash outlays. This can be overcome by financing options, 0 percent lease costs, and SaaS models.

Free: Sometimes it’s not an objection, it’s the contract. Many restaurants lease their POS equipment from a provider, paying monthly service and processing fees in exchange for “POS-as-a-Service.” This can be convenient for the restaurant, since it allows them to upgrade to newer technology as it comes out, and the service provider handles all the installation and repair. The downside of such an arrangement is that it often comes with a contract, binding the restaurant to the provider on three- or four-year terms. That becomes a problem when the restaurant wants to upgrade to technology that the POS provider does not have, such as EMV-capable POS hardware and processing.

Menton: During the qualification process, VARs focus too much attention on the product as opposed to its value to the business. VARs can overcome this objection by providing customer testimonials, such as video references, to deliver scalable examples of the product’s proven success.

Kirby-Meck: Price. This is something that isn’t going to change anytime soon, and the sooner VARs realize this the better opportunities they will have. Find creative ways to price (e.g., subscription/pay as you go, etc.). While you may have the best solution around, if the restaurant owner cannot see how they can immediately turn a profit on it/with it, or how it can save them money, it isn’t going to fly.
 By Mike Monocello, editor-in-chief, Business Solutions magazine

Originally published in Business Solutions Magazine August 25, 2016


Back To Blog