You often hear the term “POS” in restaurants—so, what is a POS system? POS is short for point of sale and is a combination of software and hardware that enables restaurants to operate more efficiently. I’ve worked with POS systems since they were black screens with green type and you had to ring in orders using alpha-numeric codes on a keypad. They’ve come a long way since then. I’ll walk you through what a POS is, the types of restaurant POS systems, their benefits, and key POS features.
Key Takeaways:
- Restaurant POS systems organize all types of orders and payments.
- Multiple POS features are optional, so restaurants can tailor a POS solution to suit their needs.
- POS systems are available at every price point, from free to more than $20,000.
What Is a POS System?
A POS system is both hardware and software that enables restaurants to organize orders and easily process payments. POS systems are a central hub for all types of business information. They can handle in-person and digital orders, catering orders, and even organizing food for special events. When it comes to payments, POS systems can track all sorts of transactions, from cash and checks to credit and debit cards and digital wallets.
POS systems are the natural evolution of cash registers. As restaurant business models and payment types became more complicated, small businesses like restaurants needed more complex business software. Luckily, in the same time frame, technology became more affordable. So, the modern restaurant POS system was born, with its touchscreen user interface, flexible software and hardware, and price points to fit any restaurant type.
How Does a POS System Work? Key Features
Modern POS systems have an extreme range of functions to help you with virtually any restaurant function. Most restaurant POS systems include:
- Order management: A POS system receives orders from multiple sources, whether they are placed in person, online, or via apps. With the addition of a kitchen display system (KDS), you can track every stage of a dish as it moves through your kitchen.
- Payment processing: POS systems excel at processing all types of payments, centralizing credit and debit transactions, digital wallet payments, gift cards, deposits, and cash.
- Tip management: If you accept tips, a POS can help you organize tip allocation, tip pools, and tip outs.
- Time-keeping: POS systems track employee hours, acting as a time clock. Many POS systems can also prompt for legally required meal and rest breaks. Some also include scheduling software.
- Inventory tracking: Every restaurant POS can track items as you sell them. Many also include options for ingredient-level inventory tracking that will track your costs and ingredient levels as items sell.
- Reporting and analytics: Reporting is where POS systems shine. By centralizing all of your menu items, sales, labor, inventory, and payments a POS allows you to compare all your key profits and costs. A POS shows your labor and food costs in real time and makes month-end and year-end cost analysis a breeze.
- Customer relationship management: POS systems automatically create customer profiles based on orders, payments, or reservation information.
- Marketing: The detailed customer profiles feed email and text marketing tools to help you grow your sales and drive repeat business.
- Employee management: In addition to time tracking many POS systems include productivity reporting broken down by staff member. Some also include human resources tools like digital W-4s and I-9s for complete digital employee onboarding.
- Integration capabilities: If a POS system lacks a tool you need, or you have an existing system—say, for reservations or online ordering—that you already use and love, you may be able to integrate a third-party tool into the POS. Integration means that the POS and the third-party tool share relevant information across platforms to save time and enhance reporting.
The most innovative restaurant POS systems include advanced features like:
- Reservations and waitlist management: Increasingly, restaurant POS brands are building reservation and waitlist tools that keep all your customer data in a central location. Built-in reservation tools increase your reporting and marketing power by unlocking even more customer data and tying it to sales and staff productivity data.
- Delivery driver management: If you operate a staff of in-house delivery drivers, many modern restaurant POS systems offer driver dispatch tools that give you Uber-like precision in route planning and driver management.
- Websites: Many popular POS systems include built-in website building tools, so you can design your website and keep it updated from the same back office platform you use to manage your restaurant. This saves you time setting up online ordering, updating menus, and rolling out marketing campaigns.
- Catering management: Increasingly POS providers are adding catering and special events management tools to their systems. These systems track leads, proposals, contracts, and banquet event order (BEO) sheets, keeping all your catering and special events information in a single, central location (a feature that this former special events manager adores).
- Voice ordering: Online ordering is so 2022; voice ordering, via kiosks, digital assistants, and smart speakers (like the Amazon Alexa and Echo devices in many US homes) is the next step in advanced ordering.
If a POS system lacks these advanced features, you can typically find these tools in freestanding, third-party tools. If you have a third-party tool you already use and love (for your website, online ordering, staff scheduling, or reservations), you can typically find a POS system that integrates with it.
Benefits of a POS System for Independent Restaurants
Many small food businesses continue to operate with basic cash registers. If you haven’t made the switch to a POS yet, there are some distinct benefits of a POS system that you should consider.
- Improved accuracy: A 2023 study by Alexandria POS found that using a POS improved order accuracy by 25%.
- Faster speed of service: The same study found that using a POS reduced customer wait times by 30%.
- Enhanced customer experience: POS systems track customer purchases and preferences, feeding the personalization that customers crave. Most restaurant POS systems also include robust loyalty systems so you can easily reward regular customers with points or promotions. The Alexandria study found that using a POS improved customer satisfaction by 20%.
- Data-driven decision-making: Real-time reporting and analysis allow you to make changes in real time—like updating pricing or reducing staff levels—when they can actually make a difference to your bottom line.
- Reduced waste: POS sales reporting can help you improve supplier orders by showing you your highest-selling items. Many include built-in ingredient-level inventory tracking, which can help you reduce food waste, control costs, and prompt you to place orders so you never run out of popular ingredients.
- Easier employee training: POS systems grow more user-friendly every day. The ordering and reporting interfaces are easier to use now than ever before, so staff tend to learn a new POS system in a couple of hours.
Most brands have stopped manufacturing new electronic cash registers (ECRs). This means there is no customer service or technical support if something goes wrong. ECRs also lack the depth of reporting small restaurants need to take a deep look at their business and improve operations. Most food- and beverage-based businesses will be better served by using some type of POS over a cash register.
Types of POS Systems for Restaurants
There are three major types of restaurant POS systems: locally installed, cloud-based, and hybrid. These three types are distinguished by the way they are installed at your restaurant and where they store your business information.
A locally installed (also called “legacy”) POS is a system where all of your POS stations are networked onsite via an on-premise server. You access reporting and analysis via a back-office desktop computer. The system still uses the internet or phone lines to process credit card payments, but otherwise, your data is all stored onsite. Locally installed POS systems tend to be incredibly secure but can be expensive and difficult to customize if your needs change.
Average Cost
Locally installed POS systems require an onsite technician to install the system. They frequently also require the POS provider’s onboarding team to design your initial menu and modifier screens, which can take a couple of weeks to a month. This one-on-one support can reduce the administrative load of getting a new system up and running, but it comes at a cost; legacy POS systems come with a high upfront cost of $10,000 to $25,000.
You’ll typically pay for your whole locally installed POS system upfront. However, some providers offer a payment plan or financing. There may be ongoing monthly fees for technical support (usually around $100 per month) though some brands include 24/7 technical support for free.
Common Providers
Locally installed POS systems are called “legacy POS” because they have been around for decades. From the 1980s to the 2010s, legacy POS systems were the only options beyond paper tickets. So, most restaurant owners will recognize the names of stalwart POS brands—Aloha, Micros, and Speedline. Smaller legacy players include Digital Dining, Positouch, and Talech.
I’ve used all the major legacy POS systems over the years. They are functionally solid, though they tend to have a higher learning curve than cloud-based systems. These systems are rugged, built to withstand high-volume use, and less likely to have problems with going offline. They don’t tend to be great with integrations though. If you use a lot of third-party systems, locally installed may not be for you.
Cloud-based POS systems connect all your POS hardware via WiFi and stores your data in the cloud. They can operate on custom-built or consumer-grade hardware and are often affordably priced and self-installable. You can access reporting and analytics via any internet-connected device.
Average Cost
Cloud POS systems tend to be very affordable. It’s easy to find cloud-based systems with $0 upfront—but they do come with ongoing monthly software fees. Cloud POS providers also often require you to enroll in their built-in payment processing systems, so you can’t shop around for processing rates. However, if you are an existing business with a couple of years of processing records, most cloud POS providers will match your current processing rates to secure your business.
Overall costs vary widely, based on how many POS stations you need and what software functions you use. Monthly software fees range from $0 to $300-plus and hardware can run from $0 to more than $1,500 upfront. Some providers offer deals for free hardware when you switch from a competing POS system, while others offer lower hardware and software costs if you are willing to accept higher payment processing rates.
Common Providers
Popular cloud POS providers include Square (which is practically de rigueur in coffee shops and food trucks), Lightspeed, TouchBistro, and Clover.
Cloud-based POS systems are incredibly user-friendly and flexible. They can feel a little flimsy if you are used to legacy POS hardware, and they can struggle to communicate in restaurants with lots of walls and multiple floors. However, they are much more affordable than legacy systems and loads easier to upgrade as your business grows and changes.
Hybrid POS systems operate as a combination of cloud-based and locally installed systems. Most operate mostly via the cloud and rely on local servers as a backup network. This hybrid installation improves offline functionality while giving you access to your business data from any internet-connected device. They tend to be as user-friendly as cloud-POS systems while operating on the industry-grade hardware you’d expect from a legacy system.
Average Cost
Hybrid POS systems tend to fall in the middle of the road cost-wise. You’ll typically pay for your hardware upfront (though some providers offer free hardware if you switch from a competitor) and pay monthly software fees for the duration of your service contract. Small restaurants that only need one or two POS stations can typically get a hybrid POS for $1,500 to $3,500 upfront, with monthly service fees from $70 per month.
Larger restaurants that need more hardware and more complex software should expect to pay from $8,000 to $15,000 upfront, with monthly software fees from $165 to $300-plus.
Common Providers
One of the most popular restaurant POS systems, Toast, is a hybrid POS. Other popular options SpotOn and Revel are also hybrid systems.
Hybrid POS systems are the best of both worlds for most independent restaurant owners. They offer user-friendliness and easy accessibility along with hardware that won’t fizzle in a hot kitchen or busy bar.
POS Type
Pros
Cons
Locally Installed
- Rugged hardware built for high-volume use
- Most support multiple payment processors; you can shop for low rates
- No (or low) ongoing monthly fees.
- Robust offline functionality
- Hardware can look dated and clunky
- Upfront cost is high
- High learning curve
- Can be difficult to integrate with third-party software
- Can only access data and reporting on-site
- Upgrading your system can be complicated
Cloud-based
- User-friendly
- Affordably priced
- Many operate on easy-to-find hardware
- Most are self-installable
- Quick to set up
- Easy to upgrade
- Offline mode can be limited
- Requires ongoing monthly fees
- Consumer-grade hardware can be prone to breakage and theft
- Technical support tends to be limited
Hybrid
- User-friendly
- Robust offline mode
- Industry-grade hardware
- Cloud-accessible reporting lets you access business data anywhere
- Easy to upgrade
- Ongoing monthly software fees
- Most have upfront hardware fees
- May be locked into built-in payment processing
Some industry folks put mobile POS systems—like those used by food trucks—in a separate category. Mobile POS systems are POS systems that operate via cellular or WiFi signals. Some mobile POS systems can switch between either. Whatever network a mobile POS uses for system connectivity, your data is stored in the cloud. So, I tend to categorize mobile POS systems as a sub-type of cloud-based POS systems.
Do You Need a POS for Your Restaurant?
So, do you need a POS to run a restaurant? In 2025, the answer is probably yes. If you want to draw customers, you need to make it easy for them to order from you and pay you. Customers increasingly want digital ordering, digital payments, and personalized service.
- In a 2024 McKinsey and Company survey, 92% of US customers reported using digital payments.
- National Restaurant Association data shows that 52% of US consumers say ordering takeout is “an essential part of their lifestyle.”
- Supplier US Foods found that US consumers ordered takeout four times per month on average in 2024.
- Delivery behemoth DoorDash reports that 70% of US diners order delivery from restaurants, and 70% of consumers place delivery orders online.
Is it possible to offer these without a POS? Technically, yes.
I’ve personally done all the analog solutions, from keeping a pocket notebook full of notes on my regulars to relying on paper guest checks and kitchen tickets and tracking orders over the phone, email, and third-party tablets. These low and no-tech systems can work. But they require a lot of time and hands-on attention, which today’s restaurant owners don’t have. In my experience, independent restaurant owners’ time is better spent growing their sales than manually tracking paper order tickets.
Frequently Asked Questions (FAQs)
These are some of the most common POS questions I get from independent restaurant owners:
Last Bite
A restaurant POS system is a hardware and software solution to streamline your orders, payments, and customer and employee management. They also frequently include advanced functions for everything from human resources, reservations, online ordering, and delivery management.
A POS is the fastest way to reduce your administrative load while serving customers their preferred ordering and payment experience. Assess your needs carefully and ensure any POS you’re considering has the tools you need at a price you can afford. The right system can grow your business and help you make data-based decisions for your restaurant.
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