According to a recent article in Nation's Restaurant News, a robust point-of-sale (POS) system is virtually essential for every modern multi-unit restaurant chain.
Interactive and intuitive, these valuable tools give everyone from the store manager to the corporate headquarters a unit-level view of the pace of sales, minute-by-minute labor costs and rich detail on which items are selling and which aren't. However, about every five years, POS systems need upgrading, and the steep cost to multi-unit operators leaves some delaying such major expenditures. Here's why… and how a POS financing solution can help move past this hurdle.
Doug McKenzie, specialty finance leader at
CIT Franchise Finance, believes operators may put off upgrading POS systems because such technology isn't a direct customer touch point. He says operators prefer to invest in new lighting, signage and seating that are proven sales boosters, changes customers notice, he adds.
"If they're not seeing the direct benefit of better P&L management and system controls, [franchisees] may try to delay upgrading," McKenzie says.
Accepting that it's time to upgrade, operators often search out POS system and equipment financing options. According to Douglas Solomon, vice president of strategic relationships for
Direct Capital, a subsidiary of CIT, some lenders partner proactively with franchisors to package approved POS systems and lending options.
"If the franchisor is doing research on the best POS system for their franchisees, we will team up to build a campaign around that program," Solomon says. Those packages, he adds, are online for franchisees to view at their own discretion. "Whether they need one, two or 20 units, they can quickly apply for financing, take advantage of some established rate structures that we put in place, quickly get feedback … and get the product installed."
Should an operator consider financing a good option on larger, structured deals where POS systems are a portion of the financing, McKenzie advises borrowers to be prepared to discuss their financial statements as lenders will review both cash flow sufficiency and debt-to-EBITDA ratios. On smaller deals, financing is often very quick and easy, sometimes requiring minimal financial documentation.
The most obvious pitfall to avoid, he says, is researching POS systems without first consulting the franchisor.
"Don't make a POS system decision independent of talking to the franchisor," he cautions. "Don't be the franchisee who discovers after spending 500 grand that the franchisor has a new agreement with a POS vendor. I've seen it happen."
To read the full article,
"Financing a POS System Could Be Fiscally Prudent," go to the
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