Do You Know Your POS and Payment Processing Costs?
How to Reclaim as much as 2% Of Costs to Improve Your Profitability
Few restaurant operators understand the details of the full costs associated with their point-of-sale and payment processing systems. With ever-tightening profit margins, restaurant operators that can eke out an extra 1 or 2 percent of operating costs can make a world of difference to their bottom lines.Let’s just start with credit card payment processing.Did you know that a typical hospitality operator is paying their credit card processor an average of 3.5 to 3.6 percent every time a consumer swipes their card at POS? For an average $100 check, that’s $3.50 - $3.60. That doesn’t sound like much. But multiply that 200 orders on a given day and that’s almost up to $720 in processing fees. These costs add up faster than you think. And it’s important that operators have the knowledge they need to negotiate on a level playing field with their payment processors.Reforming Retail, a business publication covering the point of sale and merchant services space, shares a revealing look at Toast's payment margins, by way of example.
Let’s move to POS system costs. This is a particularly challenging area for operators because most of these costs are fixed, monthly costs. Which means the operator has to pay them regardless of how much business they actually transact. Add to the high fixed costs the fact that most restaurant operators aren’t buying technology on a regular basis. As a result, they tend to make decisions based on referrals and word-of-mouth. These are great ways to put together an evaluation set. But if they are not comparing apples to apples, operators can find themselves with inordinately high monthly fixed costs, with no real improvement to their guest experience or their bottom lines.
So how can you tell if you’re spending too much?
Look at your start-up and implementation costs. These can range anywhere from the low $100s to $1,000s of dollars depending on the scale of your operation.Hardware costs can also add up. Spending anywhere from $300 - $1,200 for a single mobile payment terminal isn’t uncommon. Yes, that’s right. Hundreds of thousands of dollars of fixed and monthly costs for the benefit of receiving an order and processing a payment. And because these costs are often buried in fine print, and paid for on credit, it’s easy to see how operators might overlook them.When we engage with new operators, we find a shocking lack of awareness of how much these fixed costs impact their operations and what they’re actually getting in return. GoTab is different. We don’t make any money on the hardware needed to run our systems. In fact, operators can oftentimes re-use their old hardware with GoTab. We also don’t require any long-term contracts. Our processing fees are some of the lowest in the industry. We like to say that we make money when our operators make money, because it’s true.
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Situated “in the heart of it all, yet tranquil enough to make you feel away from it all too,” The Limelight Hotel Snowmass offers 99 hotel rooms and 11 residences, as well as footsteps-to-gondola access in winter and summer — right in the middle of Snowmass Base Village.
Especially over the last few years, the Limelight Hotels IT team had witnessed a significant shift to contactless technology in the hospitality industry. After evaluating friction points in the guest journey, aligning with modern technology platforms in their restaurant was determined to be an effective way to offer elevated contactless dining experiences to their guests while also evolving their technology platforms to continue to support long-term company goals. Limelight Hotel partnered with GoTab to provide an enhanced on-demand dining experience on par with the brand’s reputation for exceptional guest service.
Reducing Staff Touch Points Without Sacrificing Guest Experience
Guests are now able to begin a tab from their room or the property’s restaurant by scanning a QR code, texting a link to friends or family members on the ski slope to add in their orders, then meeting up together at the patio or lodge to enjoy their meal and après ski festivities without interruption. By streamlining tasks like inputting orders and processing payments, this eliminates friction for hotel staff and allows them to focus on delivering renowned guest service for a memorable experience. Since partnering with GoTab, Limelight Snowmass has consistently seen higher check averages and sales.
“We found the Point of Sale platforms we were looking at offered the guest and staff limited opportunities to further reduce touch points or improve the traditional restaurant experience. The GoTab platform enabled the guest to take an active role over the flow of their experience while simultaneously reducing touch points and further streamlining restaurant operations.”Nick Giglio, Manager of Hotel IT Operations, The Little Nell Hotel Group
According to the Limelight Hotels team, some of the other platforms that were evaluated were either missing some of the pieces they were looking for, had weak customer support models, or had little willingness to develop integrations to existing hotel platforms already in place. To that end, GoTab integrated with cloud-based platform, Infor. Together, GoTab and Infor are providing dynamic solutions to support central, efficient service across hotel amenities and deliver exceptional guest experiences.
“Previously, guests would call down to the restaurant to begin an order from their room or while they were out enjoying the ski slopes. Using GoTab, guests can now place orders from anywhere on the resort, giving them the on-demand service they want without interrupting their day. GoTab empowers us to give control to the guest, reducing touch points and streamlining overall restaurant operations, making Limelight Hotel the resort of choice for Snowmass.”Nick Giglio, Manager of Hotel IT Operations, The Little Nell Hotel Group
Since introducing GoTab, The Limelight Hotel has seen a consistent level of upsells and items sold per check resulting in additional revenue capture. They have been able to maintain service levels in their restaurants during periods when there was reduced staffing available without significantly diminishing the guest experience.
Eliminate Phone Orders – Take Orders from the Slopes. Guests can start a tab from their room or on the mountain without interrupting the flow of their day.
Future-Proofed Technologies – Delivering elevated contactless ordering via integration with the Infor hotel management platform.