Cloud vs On-Premise POS for Restaurants

A growing number of restaurants are transitioning from traditional on-premise point of sale (POS) systems to cloud-based platforms. Migrating to the cloud has a number of advantages, including lower upfront costs and greater flexibility.

However, on-premise POS systems offer unique benefits, such as increased customization and enhanced data security. Therefore, when choosing a POS system, it’s important to understand the pros and cons of each deployment.

In this guide, we’ll compare cloud versus on-premise POS systems for restaurants head-to-head, so you can decide which is right for your business.

Comparing Cloud vs On-Premise POS: An Overview

Let’s start with a comparison of how cloud-based and on-premise POS systems perform across key categories.

What Is a Cloud-Based POS System?

A cloud-based POS system uses software and servers hosted by your POS provider. It’s also known as a web-based POS system.

With a cloud POS system, you don’t need servers or any other technical infrastructure — all of that is handled by your provider. Instead, all you need is an internet-connected device that can run the software, like a computer or tablet.

All of your data is stored remotely on your POS provider’s servers. Since you connect to these servers over the internet, you can access your data from anywhere. For example, you can make changes to your menu on a home computer or even on your smartphone. This also means that data from multiple restaurant locations can sync automatically in real time.

POS providers handle the hard work of keeping your software up-to-date and ensuring the infrastructure needed to run your POS is maintained. In exchange, you’ll typically need to pay an ongoing subscription fee.

Pros of cloud POS systems

Cloud POS systems offer numerous advantages. Let’s explore the most important benefits.

• Reduced upfront costs: With a cloud POS, all you need are internet-connected devices that can run your POS software. You don’t have to pay for expensive servers, development or licensing fees. Expect to pay $60 to $150 per month for a cloud POS subscription.
• Remote data access: You can access data from your cloud POS from any internet-connected device, anywhere. Nearly all cloud POS systems have mobile apps, allowing you to change your menu, monitor sales and create employee schedules on the go.
• Real-time reporting: Data from all your restaurant locations can be shared over the internet in real time, so you can easily run up-to-the-minute reports showing your business’s performance.
• Automatic updates: Your POS provider will automatically maintain and update your software, so you don’t have to. This means you gain access to the latest features, helping your restaurant deliver the best experience and drive revenue growth.
• Easy scalability: As your restaurant expands, you can easily add locations and manage additional data without incurring the cost of investing in new technical infrastructure.

Cons of cloud POS systems

While cloud POS systems have a lot going for them, there are some significant downsides to bear in mind.

• Internet connectivity required: One problem with cloud POS systems is simply that if your restaurant’s power or internet service goes down temporarily, you won’t be able to use your POS system. This can be a significant issue for tracking orders.
• Subscription fees add up: While cloud-based POS systems have low upfront costs, monthly subscriptions can accumulate over time and ultimately become more expensive than on-premise setups.
• Limited customization: Compared with on-premise POS systems, cloud-based systems have fewer customization options. You can’t choose how to store your data, for example.
• Vulnerable to data leaks: Large POS providers are targets for hackers and your restaurant’s data could be included in any leak. With a cloud POS system, you have little control over your provider’s data security.

Which restaurants are cloud POS systems best suited for?

Cloud-based POS systems are suitable for a wide variety of restaurants, including:

• Small- to medium-sized restaurants that want to minimize IT costs.
• Restaurants with multiple locations that require real-time data sharing for efficient management.
• Delivery-focused restaurants that need access to order and customer data on mobile.
• Growing restaurants that will require more features or support for extra POS devices in the future.

Top cloud POS systems to consider

There are many cloud POS systems available for restaurants. Here are some of the top providers to consider.

• Toast POS: Toast POS is a comprehensive cloud POS system ideal for large, established restaurants with multiple locations. It especially stands out for its customer engagement features, like points programs and gift cards.
• Square for Restaurants: Square is a budget-friendly POS that’s popular with new restaurants, cafes and food trucks. It works with a wide range of POS hardware and streamlines back-office management with a user-friendly menu and inventory tools.
• TouchBistro: TouchBistro is a flexible POS solution for large restaurants and chains. It’s particularly good for marketing to an extensive customer base thanks to its built-in customer relationship management software and a branded app creator.

What Is an On-Premise POS System?

An on-premise POS system runs on your own servers and technical infrastructure. It’s also called a traditional POS or legacy POS system.

Typically, for an on-premise system, your restaurant licenses POS software from a provider and then runs that software on servers located in the back office of your business. Since you own these servers, you’re responsible for maintaining them.

On-premise systems aren’t connected to the internet. Rather, they operate like closed circuits within your restaurant. Devices such as registers and tablets must be connected to your server, either by wires or a private wireless network. If you need to sync data across multiple restaurant locations, you have to connect your system to the internet or transfer data manually using hard drives.

A key benefit of on-premise systems is that they don’t require an internet connection to operate, so they can continue working even if your internet goes down. In addition, they give you more control over how your POS system is configured and enable you to store all your restaurant’s data in-house.

Pros of on-premise POS systems

While on-premise POS systems are often considered “legacy” systems, they have some important benefits over cloud-based systems.

• Full control over hardware: With on-premise systems, you own the servers and other technical infrastructure required to run your POS system. That means you can choose what payment terminals to use and customize your hardware to best meet your restaurant’s specific needs.
• Local data storage: On-premise POS systems store data on servers you own, ensuring full privacy. Local storage also reduces the risk of losing customer data in the event of a breach.
• No internet connection required: On-premise POS systems don’t require an internet connection, which means they continue to work even if your Wi-Fi network goes down.
• Cost structure can save money: Software licensing fees and hardware purchases are expensive, but they’re typically one-time costs. So, on-premise systems can save money in the long run, compared with the subscriptions that many cloud POS providers charge.

Cons of on-premise POS systems

On-premise POS systems also have several important drawbacks to consider.

• High upfront costs: The upfront costs of licensing software and purchasing servers can be substantial. This expense can be overwhelming for many small restaurants and startups.
• You’re responsible for maintenance: The burden of maintaining and updating your servers is on your business, not your POS provider. This can be costly and may require an in-house IT team.
• Difficult to sync across multiple locations: If your restaurant expands to multiple locations, each will require its own server and software license. This makes syncing data across locations challenging and could negatively affect your business management.
• Not easy to access remotely: You must be physically connected to your POS system’s servers or on the private network to make changes, like updating your menu. You typically can’t access your system remotely.

Which restaurants are on-premise POS systems best suited for?

On-premise POS systems are best for:

• Established restaurants with high traffic volumes.
• Restaurants in areas with poor or intermittent internet service.
• Restaurants that need highly custom POS features or workflows.

Top on-premise POS systems to consider

If you’re interested in an on-premise POS system, here are some of the top providers to bear in mind. Remember that all of these providers still require you to have your own servers and technical infrastructure to run their software.

• Aloha POS: Aloha POS is a feature-rich platform that offers an on-premise contactless ordering solution, making it a good choice for restaurants that want to offer this option. It also has powerful tools for customer engagement and HR to help you grow your business.
• Squirrel POS: Squirrel POS is a highly customizable on-premise POS ideal for creating complex menus and diving deep into your restaurant’s data. It also supports cloud-based syncing to enable real-time data sharing across multiple restaurant locations.
• Oracle MICROS POS: MICROS POS is designed for fine dining restaurants, offering robust reporting and inventory tools. It features an open API to enable integrations with other software your restaurant is using.

How To Choose Between Cloud and On-Premise Software for Your Restaurant

There’s a lot to consider when choosing between a cloud or on-premise POS. Here are some questions to ask when making your decision.

• Do you already have POS hardware? If your business already owns on-premise servers or POS terminals, it can dramatically reduce the cost of launching an on-premise POS system. On the other hand, if you’re starting from scratch, a cloud-based POS will have much lower upfront costs.
• What features do you need? Think carefully about what features your restaurant needs for ordering, back-of-house, inventory, customer engagement and employee scheduling. On-premise POS systems offer more flexibility to customize your software, but the customization process may require hiring a programmer.
• How much are you willing to spend? In general, cloud-based POS systems for restaurants are cheaper than on-premise systems. They have lower upfront costs, and you don’t have to pay for maintenance. On-premise systems can be more affordable in the long run, but don’t forget to account for equipment maintenance costs.
• What are your business’ growth plans? If your business plans to expand to multiple locations, cloud POS software is likely the best option. It can scale across locations easily and enables real-time data syncing. On-premise systems can be scaled, but the expansion process is costly and complex.