Use Your POS System Properly

When it comes to point of sale (POS) systems, a common problem among restaurant owners (whether a full-service restaurant, A bar, or a delivery-only pizzeria) is that they buy an expensive system, but then don’t use any of the time-saving and valuable reporting features. Instead, they use it like an expensive cash register.

POS systems can do a lot more than ring up and cash out orders. The following are features found in most POS systems (please note: some of these features may be add-on modules, depending on the vendor):

• Finding your ideal food cost – When you enter all of your menu items into your POS, you enter the item descriptor, modifiers and price. There is also usually a box where you can input the item cost. When you do this, it gives you the ability to run an item-by-item sales mix report for any given period.

For example, if you run the report from the first of the month to the last day of the month, the report will display the number of each item sold, how much money it brought in, how much you used in product (total cost), and at the bottom, it will show you what your ideal food cost is. With this knowledge, you can easily identify problems and find ways to make more money from what you’re already selling.

• Controlling costs – Many POS systems can track your inventory. They allow you to input every line item on your invoices. Along with this feature, you can also build each recipe for every menu item you sell into the POS. For example, an order of hot wings has six chicken wings, three carrot pieces, three celery spears and 4 oz of blue cheese dressing. Every time an order of wings is prepared and sold, the POS depletes the appropriate portions of wings, carrots, celery and blue cheese dressing from your inventory.

Now you can compare what the POS says you should have on the shelves against what you actually have. If there are variances between what you have and what the POS system says you have, then it’s time to investigate whether the variance is due to possible theft, the need for additional training, or the need to review portion controls. Any one of these options has the benefit of setting you up to better control and reduce your food cost. In addition, this report can help you set par levels for proper ordering.

• Controlling labor – Labor costs are your restaurant’s number one expense. If you don’t pay attention to this one, you’ll lose money by the minute — literally!

Using the time clock feature of your POS lets you track labor costs by the hour, guiding how you ultimately cut staff time. It allows you to keep employees from punching in too early or riding the clock at the end of a shift.

• Avoid trouble with the IRS – It’s no secret that the IRS is gunning for businesses with tipped employees. When businesses don’t report those tips, it’s tax revenue the IRS is not getting. And restaurants are at the top of their target list!

Every year (with very few exceptions), you are supposed to file your 8027 Tip Report with the IRS. This report basically tells the IRS what percentage of sales your restaurant claimed as tips, and compares the cash tip vs. credit card tip percentages.

When there is a discrepancy, you’re going to get audited! You’re required by law to have a system in place for your directly and indirectly tipped employees to report their tips to you. You in turn are responsible to make sure they are reported as wages earned, ultimately making sure the government gets its share of tax revenue.

Most POS systems have a tip reporting system built into the software. Your employees enter their tips collected when they punch out and a manager can look for any discrepancy and make any adjustments needed. Finally, the manager can print off the tip sheet and have each employee sign their name verifying their tips reported. This can help you avoid an audit and hefty fines.

Using the power of your POS system is just one trick to make sure you are collecting every dollar you earned. Open your POS manual or call your dealer and find out what reports your system has that can make your life easier, and ultimately, make you more money.

By David Scott Peters, The Restaurant