Magazine Article | November 13, 2012

Q&A: Where Should Hospitality VARs Turn For Business Growth?

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By Mike Monocello, Business Solutions Magazine

As a traditional market for POS technology, the hospitality vertical holds great potential for those VARs willing to seize the opportunities.

What is the current health of the restaurant industry?

Bill Brennan, senior director, channel sales – resellers, Panasonic: According to the National Restaurant Association’s 2012 Restaurant Industry Forecast, the full-service segment is expected to generate annual sales in excess of $200 billion in 2012 — nearly a 3% gain from 2011. The study also found that consumers are looking for ways to save time; options for ordering online in advance remain popular. In the limited-service segment, total sales are expected to reach $209.9 billion dollars, a 3.2% increase from 2011. Snack and non-alcoholic-beverage bars are expected to experience the strongest growth at 4.1% or $27.7 billion in total projected sales. Limited-service operators are generally optimistic that conditions will be better in 2012 than they were in 2011; 45% expect sales to be higher in 2012. The noncommercial foodservice segment, including businesses, educational, government or institutional organizations that operate their own foodservice, is expected to generate sales of $54.2 billion in 2012, a 3.7% increase over 2011. According to the National Restaurant Association’s recent surveys, smartphone apps and tablet computers for menus and wine lists will become popular in the future.

What’s the most significant trend in hospitality to which VARs should be aware?

Craig Bednarovsky, director of sales & marketing, Action Systems Inc (ASI): A shift that is occurring on two fronts ... the changing nature of solutions themselves, and a gradual evolution of the actual business model VARs operate under. As we all clearly heard at RSPA, which may as well have been called “MobilityNow” instead of RetailNOW, solutions that are not either being developed for, or migrated to, a mobile platform will be left behind. We do believe traditional POS terminals won’t disappear tomorrow, but the in-store technology/hardware and operational model (e.g. customer self-ordering) will see amazing change. From a VAR business model standpoint, mobility means less hardware margin, and a need to become even more knowledgeable of, and proficient in, wireless networking. Combined with owners and managers who increasingly grew up thoroughly engaged in technology, they will expect their VARs to be more than “just POS software” providers. VARs will need to be able to bring value beyond programming a menu, and help a restaurateur build a complete solution from in-store operations to mobile management, mobile loyalty, promotions, payment options (credit cards, NFC, mobile wallets, etc).

Brennan: Security and surveillance has reemerged as a significant trend in the hospitality space. Video surveillance systems have long been used to prevent shrinkage and lawsuits through security monitoring. Newer technologies now offer even greater promise — including the ability to study and fine-tune employee performance and customer behavior to further identify internal and external theft. VARs should work with their customers to consider surveillance systems that provide integrated tools beyond video monitoring, such as video analytics. Taking an integrated approach will allow restaurants to acquire insight into employee and consumer behavior. With real-time access to customer data, companies can reduce overall shrinkage and increase revenue.

The other significant trend in the hospitality space is POS integration. Restaurants have the opportunity to integrate POS terminals with drive-thru operations, digital signage, and security cameras in order increase sales and streamline efficiencies.

What technology trends exist that VARs should be aware of?

Bednarovsky: The iPod Touch gave tableside ordering a huge boost, and the iPad Mini will push it over the top. Dealers must have mobile solutions to offer customers. Payments is the other trend VARs need to understand — mobile wallets, NFC, EMV, etc. have payments in a very amorphous state right now. What payment capabilities and technologies will take off and which will falter is yet to be sorted.

Brennan: In addition to data analytics, we are seeing digital signage as a significant trend in the foodservice space. These digital displays are one of the most effective ways to efficiently communicate menu offerings, meet nutrition labeling requirements, increase sales, enhance a restaurant’s image to customers, and generate additional revenue by selling screen time to third-party advertisers. Digital menu board systems integrated with POS analytics software can change breakfast, lunch, and dinner menu items along with pricing based on inventory levels, time of day, or customer traffic patterns. An operator can promote specific food or beverage items, or events based on customer data, while messaging can be changed onsite or remotely across multiple locations.

Many VARs struggle with profitability. What advice can you offer to help them become more profitable?

Bednarovsky: Don’t sell the value of their expertise and services short. Many dealers feel they can’t sell maintenance packages or charge for recurring services. The reality is they provide a mission critical system to restaurant owners and there’s a cost associated with being there when needed. Dealers must shift the margins they were making on hardware and software to services.

Brennan: For VARs to maximize profitability, they should work with customers to develop a solution of technologies that will address their business challenges. To sell these integrated solutions, VARs should emphasize the return on investment customers will receive by examining business challenges as a whole. This approach allows VARs to upsell security cameras, data analytics software, digital signage, etc. when making a POS sale. VARs should work with their vendors to offer integrated solutions instead of standalone products. Many times this requires VARs to recommend technology that meets customers’ current needs and can address future trends.

We’ve been preaching to our readers that they need to adopt a more holistic view of their customer’s IT. Rather than just offer POS, look at all the other systems to which the POS can be integrated. What are some adjacent technologies or services hospitality VARs should be considering?

Bednarovsky: Wireless networking is near the top of the list. Some of the other services or technologies VARs should consider have been around, but not necessarily called out as value-adds that VARs can position as part of that more holistic view you reference. Basically, take this phrase “____ as-a-service” and fill in the blank. Digital signage as-a-service. Wireless networking as-a-service, and so on.

Brennan: There are a few technologies that can be integrated to POS systems in order to address QSR and hospitality business challenges. First, VARs should work with their customers to implement a POS and security camera integration in order to manage internal shrinkage. An integrated solution allows managers to compare the video stream with POS data, as well as search specifically for higher known risk transactions such as refunds, no sales, voids, and coupons.

In addition, POS terminals and security cameras can be connected to digital signage for targeted marketing and advertising purposes. Through the use of facial recognition technology connected to IP cameras, restaurants and retailers can display content most relevant to the individual customer based on gender and relative age. This analytics data can integrate with the POS software in order to measure campaigns or promotions.

Some hospitality customers are also considering handheld tablets for line-busting applications. Tablets allow employees to engage with customers directly at point of sale and help keep lines moving efficiently during heavy traffic times. Tablet software must integrate with POS terminals in order to ensure accurate inventory counts and enable mobile payment.

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