The Pioneer POS S-line System and POSitouch Software

The Pioneer POS S-line System and POSitouch Software A Proposal to The Observatory Adam Pye

Page 1 Table of Contents Glossary... 2 Executive Summary... 3 1.0 Introduction... 4 2.0 Bartending at The Observatory The Context... 5 2.1 Incorrect Entries... 5 2.2 Duplication of Effort... 5 2.3 Customer Service Slowdowns... 6 2.4 Employee Frustration... 6 3.0 Potential Solutions... 7 3.1 Our solution, the Pioneer POS S-line system and POSitouch software... 7 3.2 Same actions, same results... 8 3.2 Software-only solution... 8 3.3 Hardware-only solution... 8 3.4 Cheaper POS system... 9 4.0 Pioneer POS S-line system and POSitouch software is the Ideal Solution... 10 4.1 POS modernization... 10 4.2 Easier work for your employees... 10 4.3 Lower new-hire training costs... 11 4.4 Easy tracking of sales and inventory... 11 4.5 Future expansion... 11 5.0 Outcome: An Improved Observatory... 12 Works Cited... 13 Appendix 1 The Pioneer POS S-Line System... 14 Appendix 2 POSitouch Software Screenshot... 15 Appendix 3 The Observatory Purchase Process... 16 Appendix 4 The Observatory Purchase Process with the Ideal Solution... 17 Appendix 5 Price Comparisons... 18

Page 2 Glossary Integrated POS System a POS system that allows users to enter transactions once by entering the item to be sold; employees do not have to manually enter prices with an integrated system PCCD (PC Cash Drawer) a non-integrated POS system that holds money in a drawer and is connected to a PC where customer orders are input; often has no linkage to inventory; often uses a keyboard rather than a touchscreen; The Observatory s present system Pioneer POS S-line System an integrated POS system that has a touchscreen interface, attached card reader and attached printer POS (Point of Sale) System computer hardware and software designed to enable the sales of products by displaying prices, taking payments, updating inventory and calculating change. These include transaction terminals, cash registers, computer hardware and software POSitouch software computer software designed to run on a POS system with a touchscreen interface and designed to increase transaction speed

Page 3 Executive Summary The Observatory is a busy student bar and food service outlet at the Algonquin College Woodroffe campus. This proposal will demonstrate how unnecessary inefficiencies slow down bar service at The Observatory and cost you money, and how to correct those inefficiencies to improve customer service and increase profits. Currently, The Observatory bar has a point-of-sale (POS) system that costs you money. This POS system creates several correctable flaws, including: Duplication of effort (totals must be entered into the transaction terminal and orders must be entered separately into the cash register) Incorrect entries (specific alcohols do not have their own entries on the cash register, leading to mistaken entries and incorrect inventory totals) Customer service slowdowns (there is only one wired card reader for the whole bar, leading to delays in non-cash transactions and customer service delays as a whole) Employee frustration (Multiple unnecessary steps cause employee errors, creating frustration and costing money; this applies even further when attempting to integrate new employees into The Observatory environment) To investigate the fixable inefficiencies in The Observatory, I worked at The Observatory for four weeks. During that period, I came to understand that several factors kept Observatory management from implementing changes to reduce inefficiencies and reduce costs: The initial cash outlay for a new POS system was deemed too high Training staff was considered too difficult and too expensive There was no belief that a new POS system would help improve profits My proposed solution deals with all three of the above objections. It shows that: The initial cash outlay for a new POS system is affordable for The Observatory Training staff is easy and included in the price of the system The system will pay for itself from the beginning based on payroll cost reductions alone

Page 4 1.0 Introduction This proposal shows that Algonquin College s student bar, The Observatory, is losing money due to inefficiencies and mistakes caused by an older point-of-sale (POS) system. By the end of this proposal, you will understand the exact points where costs are unnecessarily increased, different potential solutions to these costs, and the ideal solution to these costs. To demonstrate where costs are unnecessarily increased, this proposal will first examine how bartenders at The Observatory are expected to work, and the multiple decision-points that can and often do increase costs. Then, the proposal will examine different solutions to these costs, including one solution that is demonstrably better than the others.

Page 5 2.0 Bartending at The Observatory The Context Bartending at The Observatory requires staff to make numerous steps quickly and error-free. Some steps, such as whether or not to serve a customer at all, are necessary and therefore irrelevant to this proposal. Other steps, however, such as inputting the total into the transaction terminal and then inputting the order into the cash register are redundant and unnecessary. Figure 1 shows the steps needed presently to have a customer pay for his or her drink and to input that order into the cash register. Figure 1 The Observatory Purchase Process 2.1 Incorrect Entries Several of the steps in Figure 1 cost you money. For instance, when depositing cash into the register, the bartender is unable to input the amount of cash deposited. This requires the bartender to quickly mentally calculate the change owed the customer. Due to The Observatory rules, bartenders must mentally calculate change for cash transactions and many card transactions, too. This can easily lead the bartender to: Give incorrect change Short the till These mistakes can degrade customer relations if they are not caught, slow down service if they are, and potentially lead to employee theft. 2.2 Duplication of Effort There is also no connection between the transaction terminal and the cash register. This leads to:

Page 6 Bartenders mentally calculating order totals Incorrect order totals Duplicate orders Unbalanced books All of these issues cost you money. 2.3 Customer Service Slowdowns All card transactions must be completed at one end of the bar, because The Observatory does not have a wireless card reader. This causes confusion and delays. In my experience at The Observatory, I saw that the line-up for the transaction terminal was often longer than the line-up for drinks. This sometimes led people having finished their drink and ready to order another before they had paid for the first. In the confusion of a busy bar, it could also lead to customers not paying their bill. The steps shown in Figure 1 also slow down service. As stated above, the calculate change step ensures slower customer service. On average, it takes each bartender two seconds to calculate change. That is very little, until you consider the hundreds of transactions that take place at The Observatory each day. Approximately 75% of all transactions involve change, including all of the cash transactions and at least half of the card transactions. With an average 400 transactions per day, calculating change uses 10 minutes of employee time per day. The nature of the present PCCD system also slows down service. Bartenders must press worn, physical buttons to input drink orders. Beer is easy to input, but mixed drinks must be input from dropdown lists that are not sub-categorized. For example, to input a Caesar into the register you must: 1) press the mixed drink button 2) press page down three times 3) press 1 There is no shortcut to speed the above drink order. This also slows down service significantly. 2.4 Employee Frustration There are many employee rules at The Observatory. Bartenders are expected to check ID, refuse service to underage customers, refuse service to inebriated customers, and refuse service to customers without ID (no matter how old they appear). Bartenders are also supposed to check that people buying drinks are not passing those drinks to people who are unable to buy them themselves. With all of the above, bartending at The Observatory is more difficult than bartending at many other establishments. When you add the above difficulties to the problems created by the present cash register, employee frustrations will rise, increasing the odds that those experienced employees will seek employment elsewhere, and increasing your already high employee turnover.

Page 7 3.0 Potential Solutions Potential solutions to the issues detailed above include: Purchase the Pioneer POS S-line system and POSitouch software Leave things the same Purchase a software-only solution Purchase a hardware-only solution Purchase a discount POS system 3.1 Our solution, the Pioneer POS S-line system and POSitouch software This proposal recommends the Pioneer POS S-line system and POSitouch software from AM/PM Service. (AM/PM Service Website) This product costs $6,400 initially, but includes installation and staff training. The only extra costs for this system are the wages you will have to pay your employees while they learn the new system. These employee costs would equal approximately $740. To offset the higher initial price, financing can be arranged. The lowest monthly payment possible for this system would be $115 per month. This system allows staff to quickly input each precise sale (for instance, a Polar Bear shot vs. the present generic premium shot ), so that staff only have to input the items sold, and not worry about figuring out the cost of those items and the amount of change to be given. Figure 2 shows the expected savings from purchasing the Pioneer POS S-line system and POSitouch software, when compared to just payroll savings. $250.00 $200.00 $150.00 $100.00 Managerial Staff Part-time Staff POS System Cost $50.00 $0.00 Monthly Cost vs Payroll Saving Per Month Figure 2 POS System Monthly Cost vs. Monthly Payroll Savings

Page 8 As Figure 2 shows, the monthly savings in payroll is over $50 more than the monthly cost of the POS system. If you amortize the $740 in training costs for eight employees over one year, then you will break even on payroll savings every month for the first year. Your savings will increase after that, as you will only have to train new employees, who you have to train anyway. The payroll savings were calculated based on an average of 10 minutes in savings per day per employee. To determine that, I examined the time savings created by: not having to calculate change quicker order input quicker customer payment processing As well, through discussions with an assistant manager, I estimated 10 minutes per day time savings due to decreased cash balancing errors. See appendix 3 and appendix 4 for more details. For a full breakdown of the costs of the various solutions, see appendix 5. 3.2 Same actions, same results Another option for you is to let things stay the way they are. Your staff is trained in the present system. Depending upon who graduates and who stays, you ll either have a partially new or completely new staff to train then, as The Observatory is mandated by the Algonquin Students Association to only hire full-time students as part-time employees. Over the long-term this is a more expensive solution as training employees to use your present system it time consuming and expensive. As well, eventually your present system will breakdown and will need to be replaced. 3.2 Software-only solution Theoretically, another option is for you to buy and install a cheaper software-only POS system, rather than the one recommended in this proposal. This will solve some of your problems, like the independence of the transaction terminal from the cash register, but will also cause new ones. Any software you purchase will come with system requirements higher than your present system can handle. If you wish to upgrade at all, you must upgrade the hardware, too. 3.3 Hardware-only solution This solution does not improve the bartending process described above (see Figure 1), but it is initially inexpensive and allows you to replace your cash register. New cash registers cost $300-$600, and generally last 10-15 years (though the computers needed to operate the registers only last three years on average). The next graphic shows that long-term costs are significantly higher. (Perry & Witty, 2006)

Page 9 Figure 3 Total Costs per Checkout System POS vs. PCCD The above graph shows the average costs per checkout system of European and North American retailers with over 6,500 locations in total. The initial POS cost is $19,000, which is slightly higher than the $18,500 cost of the PCCD system. Each year, however, the PCCD costs grow faster than do the POS system costs. By year five, the POS system cost $87,000, while the PCCD system cost $124,000. A PCCD system is what you have presently. 3.4 Cheaper POS system Finally, another option is to buy an inexpensive integrated POS system from an online retailer, which would be initially less expensive than the one this proposal recommends. These systems, while partially suitable for your needs, all have glaring weaknesses. Most of these resellers are based out of the United States. They will often sell to Canadian customers, but offer no service or installation. Instead, these resellers offer an installation guide, web-based help, and training DVDs. The web-based help and training DVDs are usually not included with the price. Poor training and do-it-yourself (DIY) installation make these systems more expensive than the ideal solution.

Page 10 4.0 Pioneer POS S-line system and POSitouch software is the Ideal Solution Pioneer POS S-line system and POSitouch software is the only solution that provides for the long-term needs of The Observatory. It: modernises The Observatory POS system makes work easier for your employees lowers new-hire training costs allows easy tracking of sales and inventory All of the above reduce your costs. It is also easily expandable, allowing the future integration of bar service and food service. 4.1 POS modernization Your equipment is over a decade old, and is at the end of its expected lifespan. Cash registers have expected lifespans of 10-15 years, so you are going to have to replace it soon. By making a planned and conscientious choice now you can minimize disruption to your business and minimize costs. The Pioneer POS S-line system and POSitouch software can be installed within one day, and employee training can be completed within two days. This makes the Pioneer POS S-line system and POSitouch software perfect for The Observatory, which closes over the winter break. By the time students come back to class in January, newly trained bartenders will be ready and able to take their drink orders using your newly installed Pioneer POS S-line system and POSitouch software. 4.2 Easier work for your employees Instead of having to mentally calculate change and perform multiple inputs to complete single transactions, employees will now be able to complete sales with only one input; this saves time and allows them to proceed quickly to the next customer. As business at The Observatory tends to go in waves, with peak periods being when classes let out, it is imperative that employees be able to proceed from one customer to the next efficiently. Another issue for employees is that of running tabs. Technically, customers at The Observatory are not allowed to have tabs: they must pay for each order at a time. In reality, however, some customers are allowed to run tabs. With the system as it stands today, the bartender must keep track of what those customers ordered by memory. With the Pioneer POS S-line system and POSitouch software, an accurate running tab can be kept, allowing easy completion of the orders when the customer is ready to pay. As well, the Pioneer POS S-line system and POSitouch software can change generic premium drinks into specific shots, cocktails or other types of drink, all on a touch-screen monitor. See appendix 1 and appendix 2 for screenshots and further description.

Page 11 4.3 Lower new-hire training costs The present POS system at The Observatory inhibits the ability of new staff members to integrate smoothly into The Observatory environment. Bartending is a stressful position that demands multiple decisions made as quickly as possible. Integrating new staff quickly into The Observatory is important, as there is an approximately 50% turnover rate per year, due to students graduating. As a result, every fall The Observatory must train three to five new bartenders. The new Pioneer POS S-line system combined with POSitouch software will lower the time requirements for training new staff, making it easier for them to focus on their other responsibilities, such as checking ID, mixing drinks and cleaning the eating/drinking area in The Observatory. 4.4 Easy tracking of sales and inventory With the Pioneer POS S-line system and POSitouch software, you will be able to track sales and inventory precisely, and know which bartender completed which transaction. Accurate tracking of sales and inventory allows mistakes to be easily pinpointed and corrected, and helps prevent employee theft. This will make for less work for you in the long term. As well, better inventory control will ensure that The Observatory does not run out of popular products. During the month I worked at The Observatory there were shortages of specific beers on multiple occasions. These shortages included draft beer and bottled beer. 4.5 Future expansion At this point, The Observatory bar service and The Observatory food service are completely separate entities. With the Pioneer POS S-line system and POSitouch software, bar service and food service can be integrated for easier inventory tracking and bookkeeping. To integrate the two, you would only need to expand from one Pioneer POS S-line system and POSitouch software solution to two Pioneer POS S- line systems and POSitouch software solutions. This would substantially increase The Observatory s efficiency and profitability without substantially increasing The Observatory s costs. Instead of $6,400 for one system, you would pay $10,750 for two.

Page 12 5.0 Outcome: An Improved Observatory When it comes to purchasing the Pioneer POS S-line system and POSitouch software, there is no way for you to lose. Your system is old and needs to be replaced. This is the ideal time for The Observatory to upgrade from an old and inefficient system that costs you money to a new, improved POS system that will save you money over the long term. The Pioneer POS S-line system and POSitouch software is the ideal solution to your bartending system problems, and could integrate your bar service and food service also.

Page 13 Works Cited (n.d.). Retrieved from AM/PM Service Website: www.ampmservice.com (n.d.). Retrieved from POS Nation website: www.posnation.com Perry, R., & Witty, M. J. (2006, November). Retrieved from www.idc.com: ftp://129.35.224.112/software/retail/marketing/whitepaper/pos_vs_pccd_1106.pdf

Appendix 1 The Pioneer POS S-Line System Page 14

Page 15 Appendix 2 POSitouch Software Screenshot As you can see, it is very easy for employees to enter orders with POSitouch software. The example above shows food items, but drinks would be entered into the system during installation. Tab 1 above (Soups) could be changed to Draft Beer. Appetizers could be changed to Domestic Bottles and Salads could be changed to Import Bottles. This would continue until every drink combination ever ordered at The Observatory was entered into the system.

Appendix 3 The Observatory Purchase Process Page 16

Page 17 Appendix 4 The Observatory Purchase Process with the Ideal Solution There is the same number of steps in appendix 3 as there are in appendix 4, but some of those steps are significantly different. Instead of having to calculate change, the POS system calculates change. Also, the POS system automatically charges the $10 minimum when a card purchase is made. Finally, the ability to input specific drinks instead of generic drink categories also quickens customer service.

Page 18 Appendix 5 Price Comparisons Present System Purchase Price Installation Cost Training Cost Employee Hours for Training Employee Cost While Training NA NA NA 40/employee 1 $9.25/hour on-the-job training Software $500-$800 DIY DIY 20/employee 2 $9.25/hour for bartenders, $16/hour for assistant manager Hardware $300-$600 DIY DIY 20/employee $9.25/hour for bartenders, $16/hour for assistant manager Retail POS $1,000- $3,500 (POS Nation website) 3 AM/PM Service DIY DIY or $100-$200 for training DVD 20/employee $9.25/hour for bartenders, $16/hour for assistant manager $6,400 Included Included 10/employee $9.25/hour for bartenders, $16/hour for assistant manager Intangibles System at end of expected lifespan Need to upgrade hardware Another PCCD system does not decrease long-term costs No service, little support. How much is your time worth to install this? Full service installation and support 1 Based on my own experience. After 35 hours of work, I still did not feel totally comfortable with the cash register. 2 For software, hardware and retail POS solutions, it is assumed that the installation and training will be completed when The Observatory is closed. This will decrease training time substantially. Installation will be slow, however, as untrained staff will perform the installation. 3 See POS Nation for sample price ranges.