HoReCa POS data is a potential source of great insights but extracting value out of it is hard

In this article, we will look at some of the HoReCa software providers' opportunities and challenges when it comes to deriving value from data.

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Big data, big opportunities

We live in a world where business decisions are ever more based on data. Big data is an important source of information for most businesses that want to strive in today’s competitive environment. The global big data market is forecasted to grow to 103 billion U.S. dollars by 2027, more than double its market size in 2018.

The HoReCa industry is no exception to this new business reality. Big corporations spend billions of dollars on analyzing their sales and the use of their products. For instance, the market for Big Data In Food and Beverage is forecast to reach $ 2.1 billion by 2026, due to rapid increase in data availability, technological advancement and consumer behavior changes.

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The real value of POS data

The size of the restaurant POS terminal market gives us an idea of the importance of POS terminals for gathering data. The global restaurant point of sale (POS) terminal market was valued at $16.5 billion in 2021 and is projected to reach $44.6 billion by 2031.

POS systems collect a wealth of information, which could be used in a variety of ways:

• Restaurants/outlets can better understand the structure and trends in their revenues, uncover changes in customer preferences, see how the revenue comes throughout the day, week or any other time period and identify opportunities for improvement

• POS system providers who might have the data for a large set of outlets, can (a) better understand what is happening in their portfolio and (b) build a set of benchmarks they can provide back to their customers to add value. For example, showing that a peer set of restaurants make 15% of their revenues from high-margin products such as homemade lemonades can be insightful to some restaurant providers who have so far missed this trend.

The transaction data from POS can also be used to see trends in consumption of various products, for example, Beers, Spirits, Cold Drinks or specific meals, which is a valuable insight for product manufacturers or distributors.

However, most POS companies struggle to extract value from their data. It is in fact rare for POS providers to use the full potential of the data they have.

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POS data is potentially very valuable but it is also messy and hard to use unless you decide to make a significant investment in it.

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POS data challenges

The most common scenario is that POS companies sit on the data and do nothing with it. Even those companies that realize the potential value of the data often struggle to use it to their advantage, use it to empower their customers or monetize it. There are several good reasons for that:

• There is a lot of data. The amount of data is obviously dependent on the # of outlets using the specific POS software but even with a few hundred customers there are already millions of data points to look into, which requires technology and know-how to do properly.
• The data itself in its raw form is usually pretty messy, mainly because there is no or little standardization in how each outlet manages its “product list”. There are often tens of variations in naming one single product. As a result, products are not even categorized into coherent buckets such as Beer, Drinks or Meals.
• The above makes seemingly simple things such as understanding how much beer is consumed in a specific outlet and what its share of the total revenues complicated.
• Solving this issue requires the employment of a data team to clean, structure and synthesize the data and extract some insights or useful reports. This is often outside of the budget and focus scope for companies who aim to provide user-friendly and reliable POS software.
• Even when the data is clean and structured, it is another huge effort to do something meaningful with it or make money from it.
• Last but not least there are legal concerns or what can be done with this data without compromising terms & conditions or other legal agreements.

As a result, the data often remains unused.

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What can be done about this?

We will continue this article with a sequence of additional write-ups about our ideas and approach to data processing, data monetization and its legal aspects. In the meantime, if you see yourself in the situation outlined above, we are happy to discuss how we can help you start extracting value from your data.

Get in touch with us‍