Slim profit margins are nothing new in the restaurant industry. But today, rising labor and food costs are making it harder than ever to protect these slim margins. A lot of owners and operators are turning to technology for help.
That makes sense. After all, today we have access to some truly amazing tools for things like reducing waste, managing labor more efficiently, and enhancing the customer experience.
But how much of your revenue should you really be investing in these tools? And how can you set a technology budget that makes sense for your operation?
I recently had the opportunity to join fellow Back of House tech consultant Spencer Micheal as well as panelists from 7shifts and MarginEdge for an excellent discussion on the role of restaurant technology in combating inflation and protecting margins. I shared a few tips during our discussion that I hope will help you make sense of your own restaurant technology costs.
Framing Your Restaurant Technology Budget
Before we get to the tips, let’s take a quick look at how most restaurants decide on their technology budget. Of course, I can’t tell you exactly how much to spend on your restaurant tech. Every restaurant has its own needs, objectives, and budget constraints. Not only that, but as your operation grows, you may choose to invest additional resources into your technology.
That’s why it makes sense to think about your restaurant tech budget as a percentage of your revenue. According to a 2025 report from Restaurant 365, restaurants spent just 1.97% of their revenue on technology in 2024. That’s a pretty low number. By comparison, the average rate of tech investment across all industries is 7%.
This means restaurants are lagging behind other industries when it comes to technology adoption. But that seems likely to change. According to the National Restaurant Association’s 2026 State of the Industry Report, 8 in 10 restaurant owners believe technology can give them a competitive advantage. Over the next several years, I expect many restaurants will be willing to spend a higher rate of their revenue in pursuit of this advantage.
Where Most Restaurants Are Spending Their Tech Budget
It certainly helps that a lot of these technologies are becoming more readily available, affordable, and reliable. Advanced solutions like automated inventory management, AI-powered labor management, and AI voice answering systems are becoming more commonplace even in small and independent restaurants.
So where are most restaurants actually investing their tech money?
The NRA says that most restaurants are using tech in the following areas:
- Enhancing the customer experience (60%)
- Investing in front-of-house efficiencies (54%)
- Improving back-of-house operations (48%)
- Boosting cybersecurity defenses (44%)
But what makes sense for your restaurant? Which of these areas should you prioritize? And how can you be sure that you’re allocating your tech budget wisely?
5 Things To Consider When Setting a Tech Budget For Your Restaurant
Here are a few things to keep in mind as you decide how much of your revenue to put back into your restaurant technology costs.
1. Build Your Budget Around Your POS
Your POS (point of sale) system is the single most important piece of technology you’ll invest in. Budget accordingly. Don’t sacrifice quality in the name of affordability.
Choose a POS system that has all the capabilities you need today and everything you’ll need in the future. The reality is, whether you choose the right POS or the wrong one, you’re probably stuck with it for the next several years. That’s because switching POS providers is costly and disruptive.
The point is, you really want to get this decision right. Your POS should be compatible with most of the technology you plan to add in the future, from labor management tools and inventory management software to loyalty programs and delivery apps. Your POS system should offer most of the integrations you’ll ever need.
That’s actually why a lot of restaurants choose all-in-one POS providers like Toast, Square, or SpotOn. A growing number of industry-leading POS systems now include staffing tools, inventory management systems, loyalty programs, and much more. This is a good way to streamline your tech situation.
But if you do go this route, make sure to compare costs for software implementation, hardware, and transaction fees. Together, these POS costs will form a significant part of your restaurant tech budget.
Subscribe to the Operation Station Newsletter
Run tighter operations with practical POS and operational tools, delivered monthly.
2. Prioritize Value in Every Tech Solution You Choose
Obviously, price will be a major factor as you choose your tech. But when you’re comparing prices, there’s more to consider than just cost. Value is just as important.
The cheapest solution is not always the best solution. If you under-invest in your tech, you could end up with a vendor that doesn’t provide adequate support or a “solution” that costs more than it saves.
As you choose your technology, find the balance between low cost and high value. While you’re comparing costs, also look for features like:
- Responsive, high-quality support for training, onboarding, and troubleshooting
- Integration with other tools like your scheduling platform or inventory management system
- Scalability as your operation grows and changes
Beware of “cheapest system” decisions. Make sure every solution you choose is compatible with your operational needs and backed by real, human support. Otherwise, you’ll most likely end up paying hidden consulting fees down the line, or, worse yet, facing costly implementation failure. Pay a little more for the value upfront and avoid these long-term costs.
3. Pay Close Attention to Your Tech Contracts
Your technology budget can actually change without you even realizing it. That’s because many of your vendor contracts include automatic renewal clauses along with automatic transaction rate hikes. Over time, these rising transaction rates can quietly erode your profit margins.
A big part of keeping your tech budget in check is paying close attention to contract renewal dates and conditions. Keep a simple calendar of contract start and end dates for your vendor relationships and software packages.
And be sure that you understand exactly where your rates may be subject to change, especially for digital transactions. Take a closer look at:
- Per-transaction “swipe” fees
- Percentage rate hikes (for example, transaction fees rising from 2.5% to 3.5%)
- Hidden fee differences based on transaction type (such as contactless vs. chip, online vs. in-person, Amex vs. Visa)
Make sure you know exactly when your tech contracts are set to renew, and how much renewal will cost you.
4. Don’t Be Afraid To Renegotiate Terms
Once you understand what you’re paying for, you’re in a better position to renegotiate rates. In fact, the key to getting better rates may be to simply ask.
Many of the clients I’ve worked with tell me that they originally selected their POS system online without ever speaking to a human being. In other words, many owners and operators simply sign vendor contracts for this expensive piece of technology without negotiating terms.
However, you may be able to negotiate better rates with your providers, especially as your business grows.
Instead of passively letting automatic contract renewal and rising transaction costs cut into your tech budget, use the approaching expiration of each contract as an opportunity to negotiate better transaction rates and lower fees.
Even a modest improvement to your transaction rates could make a big difference for your margins.
5. Review Your Restaurant Technology Costs Regularly
The most important thing to keep in mind when setting your tech budget is that every expense should be absolutely necessary. Be sure that every tool in your tech stack is actually useful. And remember that your needs are likely to change over time. You may currently be paying for older software subscriptions that you don’t use, or that you’ve forgotten about altogether.
Review your tech expenses at least quarterly so you can see exactly where your tech budget is going. Take a full inventory of all the memberships, tools, and subscriptions that you’re paying for. Cancel anything that you aren’t using.
This is also an opportunity to identify valuable tools that you might not be using to their fullest potential.
- Are you taking advantage of all the features that you pay for with your all-in-one POS system?
- Do you know how to make sense of the data available through your inventory management software?
- Are you making the most of the technology that you already have at your fingertips?
These routine reviews can help you cut out the tech you don’t use, and identify areas where you could be getting more out of the tech you do use.
Build a Restaurant Tech Budget That Drives Value
Whether you’re adding new tech solutions or reevaluating your current set of tools, every piece of technology should help drive value for your business. This likely means something a little different for every restaurant.
Not sure where to start? Our tech starter kit will point you in the right direction — or set up a call with me to talk through what you need.
