Square, the mobile payment start-up firm, sets its sights on the food industry

Astrid Riecken/For The Washington Post - Harold Chacon, right, founder of White Apron Specialty Sandwiches in Northwest Washington, trains his staff on how to use Square mobile devices.

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Among those quickest to embrace the funny, square-shaped credit card readers poking out from the top of smartphones or iPads has been small restaurateurs, food truck operators and other food businesses.

And now Square, the mobile payment start-up that pioneered the equipment, is moving to embrace them.

(Astrid Riecken/For The Washington Post) - The small squared card reader, through which credit and debit cards are swiped, is attached to i-pads for which he had constructed wooden stands.

Several months ago, Square launched a “Business in a Box” package for $249, including two card readers, an iPad stand, a cash drawer and an optional receipt printer, all wirelessly connected to the Square Register app. Last week, Square announced an update to that app designed specifically for quick-serve restaurants, allowing operators to modify orders and print kitchen tickets.

These newer products deliberately target Square’s growing customer-base of food entrepreneurs, which has almost tripled in the past year, according to the company.

“Square is focused on building features specifically for the food industry,” Square spokeswoman Faryl Ury said. “There are a lot of pain points within the industry that Square wants to make easier for both businesses and customers.”

Mobile goals

Twitter chief executive Jack Dorsey’s San Franciso-based company has sought since its founding three years ago to upend the credit card processing market that has been traditionally dominated by banks and credit card companies. Instead of requiring merchants to sign contracts whose fees vary depending on the card type and volume of transactions, Square charges a simple 2.75 percent swipe fee, or, for businesses bringing in less than $250,000, a flat monthly fee of $275.

Square is hardly the only company seeking to undercut the traditional giants on fees. PayPal, Intuit and a start-up business called LevelUp are just a few that have also rolled out mobile payment options. But Square has attracted a lot of attention for deals, such as its partnership with Starbucks, which allows customers at all 7,000 U.S. locations to pay using a Square app on their smartphones.

Tyler Combelic, restaurant manager at Cochinita, a taco shop in Brooklyn, has been using Square exclusively for almost two years, and the quick serve update since its release. The restaurant’s eight employees — including cooks and dishwashers — are all trained to use the system, so now “the need for a position that’s just a cashier is limited for us,” Combelic said.

With the quick serve update, a cashier at the mostly takeout restaurant can print separate slips for customers and for the kitchen staff. Cooks do not need to know which drink the customer ordered, but they do need to know which modifications to make in a meal, Combelic said. “If we’re selling a pork taco, before we had to have separate buttons to say ‘we need to add extra cheese,’ ” he said. “Now each item can be edited.”

The Square update saves about 10 seconds per order, Combelic said. Hem is used to seeing potential customers leave if orders take too long — a quicker system can save a few hundred dollars in business a day, he estimated.

Flaws vs. savings

But Square isn’t without flaws. Like any new technology, there can be glitches.

Ernesto Giron, owner and manager of Churreria Madrid in Northwest Washington, has been using Square at his Spanish restaurant for more than three years. He has two iPads and three iPhones equipped with Square readers, which he uses in the restaurant and for deliveries.

If Square’s plastic card readers have trouble connecting, the restaurant’s payment system bogs down, Giron said. Credit card information can be manually entered into the app, but the process takes longer and the fee is higher (3.5 percent and 15 cents per transaction). Giron, like many other Square users, doesn’t have a backup card processing system.

About a year ago, Giron found his only Square reader wasn’t working, so he immediately had to drive to Best Buy to get more. “I lost time being here [at the restaurant],” he said. “I needed a new one right away.”

Now, he said, he has three readers for everyday use and another three on reserve in case those stop working.

Despite the infrastructure challenges, Giron said Square’s analytics have helped him cut costs in the kitchen. For instance, Giron suspected a couple of fish dishes weren’t doing well, and after checking sales trends, he confirmed his restaurant was selling only a handful a week. He decided to offer them seasonally.

Harold Chacon, founder of White Apron Specialty Sandwiches in Northwest Washington, has been using Square since he opened his shop three months ago.

During lunch rushes, his staff sometimes processes as many as 400 transactions in an hour. Chacon uses Square Register on two iPads at the shop’s counter and keeps a third iPad on reserve for busy days. He commissioned a carpenter to build wooden stands for the tablets, and he wirelessly connected a cash drawer to deploy after a cash transaction.

Between the iPads, wireless routers, four printers and limited equipment maintenance, Chacon has spent about $10,000 on the Square infrastructure, which he said is about a third of what he’d pay for a traditional credit card system.

Every week or so, Square Register or the iPad malfunctions and needs to be reset, costing the business a few minutes, Chacon said. If one of his two wireless networks falter, he can process the transaction on his phone’s network. But since the cash drawer depends on the wireless connection, he sometimes must open it manually with a key. And when the wireless network is functioning, the cash drawer can be deployed automatically without a sale, which Chacon views as a security concern.

For now, the system works, Chacon said, but it may not hold up when his business grows — he said he hopes to open four or five new locations in the next few years — because it still lacks such capabilities as opening tabs for customers who call ahead.

“It doesn’t have all the features for a businesses that sells many different items,” Chacon said. Until then, “you have to be creative in how you set up your system.”

 
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