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From the start, food delivery aggregators decided to create self-sufficient apps that didn’t imply integrations with restaurant point-of-sale systems.

Delivery Apps and POS Systems: Friends or Rivals?

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Is the disconnect causing an operational bottleneck?
By Rodion Yeroshek April 2019 Executive Insights

On-demand delivery apps have made the biggest shift in the restaurant industry over the last several decades. You could argue the drive thru was the last real innovation to change ordering to such an extent. These days, the entire concept of going to dine in a restaurant has changed. Record consumer demand is allowing food delivery startups to turn into giant international operators. Several aggregators gained enough power to set up new standards and dictate the rules.

The reason why GrubHub and UberEats gained popularity is the groundbreaking technology behind their delivery apps. They didn’t just provide restaurants with couriers and drivers—they also supported them with front- and back-office software for delivery order management.

From the start, food delivery aggregators decided to create self-sufficient apps that didn’t imply integrations with restaurant point-of-sale systems. In doing so, they directed online orders to flow through a separate gadget and app, which didn’t take into account the need of having the figures from all sales channels in one place. Several years have passed since the delivery operators first placed tablets in restaurants. Yet, waiters and cashiers continue to manually enter orders from the delivery apps into their POS systems.

In practice, the disconnection between delivery apps and POS systems appear to be causing an operational bottleneck, leading to plenty of error and inconveniences in workflow. However, fixing this wasn’t a priority for the delivery operators or the POS providers. The problem was sufficient enough, though, to attract the attention of third-party software developers that created solutions that bridge the gap and automate the delivery-app-to-POS order entry process.

In 2018, the leading delivery platforms took actions to ease this pain. GrubHub launched integration and entered into a partnership with five POS systems. UberEats decided to acquire orderTalk to absorb its expertise in POS integrations. But considering the variety of POS solutions that are used in restaurants all over the world, integration remains a challenge for delivery operators.

The amount of investments that popular food delivery operators put into software development shows their intention to strengthen their position as technology partners for restaurants. On the one hand, they can step toward POS software vendors and encourage integrations while still imposing conditions. On the other, they have enough technical talent and money to extend their own software range and launch full-fledged POS systems. Both scenarios would influence restaurant POS software vendors.

By default it was POS systems’ prerogative to collect all data and produce analytics features to make the information useful and actionable for restaurant managers. Now, delivery apps supercharge their back-office solutions with such functionality and may hog the blanket by reversing the data flow between them and POS systems. Nevertheless, to supplant POS systems from their position of core software for restaurants, food delivery marketplaces have to overcome resentments that restaurant owners have against them.

If restaurants manage to capitalize on third-party delivery and integrate it deeply in their business model, they might be eager to move to all-in-one restaurant management solutions provided by delivery partners. From the restaurant owner’s point of view, the less software pieces and devices they use the better. They strive to have a complete picture of their online and offline sales in one place and minimize manual operations on the menu and order management. By and large, it doesn’t matter whether the consolidative solution comes from their POS system provider or from their delivery partner.

However, the restaurant industry doesn’t have any strong evidence that partnerships with food delivery aggregators are profitable, for the most part. It’s still a debate. The delivery services charge 10–30 percent from every check, eating into restaurants’ profit margins, which make just 2–6 percent on average.  In addition, the drawbacks at different stages of the third-party delivery cycle keep food operators from long-term commitments. Restaurateurs have enough reasons to feel suspicious about the promises of driving incremental sales through delivery marketplaces. Unless restaurant owners get a proven recipe of success with third-party delivery and see the real value in long-lasting exclusive partnerships, the latter won’t be able to dominate the restaurant software market. 

POS software vendors continue to invest in their online order management functionality geared for restaurant owners, who are determined to launch delivery on their own. Having experimented with third-party delivery and optimized their part of the cycle, restaurateurs would usually find themselves halfway to launching in-house delivery. If they manage to adjust production processes and prep lines, re-configure restaurant space, train staff, and balance their workflow to serve both in person guests and customers who order delivery, they’ll be ready to take the last few steps to gain full control. POS vendors should get the proper functionality up and running to provide restaurateurs with software they can rely on when taking such initiatives.

Rodion Yeroshek is the co-founder and CEO of Poster POS, a cloud Point of Sale and management console for restaurants and shops.