Chapter 26 — Self-Check Quiz

Twenty-six questions. Multiple choice and short answer. Answers and explanations are in the collapsed block at the bottom — work the whole thing before you open it.

Multiple choice

1. The single best description of what a POS system is, for management purposes, is:

  • A. an electronic cash register
  • B. the restaurant's system of record
  • C. an ordering and routing tool
  • D. a payment terminal

2. Which of these is charged interchange on a restaurant card transaction?

  • A. the food and beverage subtotal only
  • B. the subtotal plus sales tax
  • C. the subtotal plus tip
  • D. the full settled amount, including sales tax and tip

3. Interchange is paid to:

  • A. your processor
  • B. the card network (Visa, Mastercard)
  • C. the bank that issued the guest's card
  • D. the POS vendor

4. At Bellwether, the processor whose name is on the merchant statement keeps approximately what share of the total processing bill?

  • A. 20%
  • B. 45%
  • C. 73%
  • D. 95%

5. A restaurant's merchant statement shows an effective rate of 2.51%. Its P&L will most likely show payment processing at:

  • A. less than 2.51% of sales, because some sales are cash
  • B. exactly 2.51% of sales
  • C. more than 2.51% of sales, because the fee base includes tax and tips
  • D. it depends entirely on the pricing model

6. Which pricing model passes interchange through at cost and adds a disclosed markup?

  • A. flat rate
  • B. tiered
  • C. interchange-plus
  • D. bundled

7. Which is not a common cause of a downgrade in a full-service restaurant?

  • A. a batch left unclosed for more than 24 hours
  • B. a tip adjustment settled well above the authorized amount
  • C. a keyed-in, card-not-present transaction
  • D. a guest paying with a rewards credit card

8. Card-network rules on surcharging include all of the following except:

  • A. a cap on the surcharge percentage
  • B. a requirement to disclose at the entrance and the point of sale
  • C. a prohibition on surcharging debit cards
  • D. a requirement that the surcharge be at least 1%

9. The decisive advantage of a KDS over paper tickets, for a manager, is:

  • A. speed
  • B. cost
  • C. the timestamp record
  • D. legibility

10. A server rings four entrées through the "MISC FOOD" open-item button. Which number is most directly corrupted?

  • A. total sales
  • B. theoretical food usage and the menu mix
  • C. the tender report
  • D. labor cost percentage

11. A Saturday's true cover count is 123. The floor enters 113. What happens to reported average check and reported covers per labor hour?

  • A. both rise
  • B. both fall
  • C. average check rises; covers per labor hour falls
  • D. average check falls; covers per labor hour rises

12. On a third-party marketplace order, the restaurant typically does not receive:

  • A. the order details
  • B. the money, net of commission
  • C. the guest's usable contact information
  • D. a rating

13. A first-party online ordering platform fee behaves as which kind of cost?

  • A. variable — it scales with channel sales
  • B. fixed — its percentage falls as channel sales rise
  • C. semi-variable
  • D. it is not a cost, it is a commission

14. Which of these is capital rather than operating expense in Bellwether's plan?

  • A. the POS subscription
  • B. the payment processing fees
  • C. the terminals, KDS screens, and network hardware
  • D. the hardware replacement reserve

15. "Rung 0" of the integration ladder is described as the most expensive rung because:

  • A. it has the highest monthly fee
  • B. the number is never produced at all, so the decision is made blind
  • C. it requires the most manual labor
  • D. it fails silently

16. Under net settlement, a processor:

  • A. deposits the full amount and debits fees monthly
  • B. deducts fees from each deposit as it is made
  • C. holds funds for 30 days
  • D. settles only on business days

17. Bellwether's all-in technology cost as a percentage of sales is:

  • A. 1.92%
  • B. 2.81%
  • C. 4.73%
  • D. 6.10%

18. Of Bellwether's technology budget, payment processing accounts for approximately:

  • A. 25%
  • B. 40%
  • C. 59%
  • D. 80%

Short answer

19. State the effective-rate formula and explain why it should be computed twice, against two different denominators.

20. A vendor says "we integrate with your accounting package." Name the three follow-up questions that determine whether that statement is worth anything.

21. Explain why a single \$9 cocktail closed on its own card is roughly twice as expensive to process, as a percentage of the sale, as the house average — and state the free countermeasure.

22. Chapter 22 set a peak-hour cap of 32 covers and a quarter-hour cap of 8. Explain in two sentences why those caps depend on a reservation platform rather than on the host's discipline.

23. Name three categories of data you must be contractually able to export before you sign with a POS vendor, and say what each one is for.

24. A restaurant's POS renewal comes with a \$720 annual price increase. Switching would cost \$14,294. What should the operator do, and what general principle about vendor leverage does the answer illustrate?

25. Explain why "the rewards program on your guest's credit card is partially funded by your food cost" is a fair statement, and say what an operator can do about it.

26. Bellwether's stack costs \$73,273 a year. Chapter 32 will need this split into fixed and variable components. State the split and explain why it matters for break-even.

Answer key **1. B.** It is all four things, but the one that determines whether the rest of the management system in Parts III, IV, and VII is possible is *system of record*. A and D describe a subset of its job; C describes the vendor's first slide. **2. D.** The processor charges on the settled transaction amount. At Bellwether that base is \$1,743,750 against \$1,395,000 of card sales — 1.25 times as large — because it carries the sales tax and the tip. **3. C.** The issuing bank. This is why your processor cannot discount it and why "shopping processors" has a ceiling. **4. A.** About 20% (\$8,713 of \$43,573). Interchange takes 73.2% and network assessments 6.8%. **5. C.** Higher — 2.81% at Bellwether — because the numerator is fees charged on a base that includes tax and tips, while the denominator on a P&L is net sales. Answer A is a real effect pulling the other way (cash sales are in the denominator but generate no fee) and it is smaller than the gross-up. **6. C.** Interchange-plus, also called cost-plus. Ask every quote to be restated in this form so the quotes are comparable. **7. D.** A rewards card is *expensive* — it carries higher interchange — but it is not a downgrade. A downgrade is a transaction billed at a worse category than it should have earned. A, B, and C are all genuine downgrade triggers. **8. D.** There is no minimum surcharge. The rules do cap the percentage, require disclosure at entry and at the point of sale and a separate receipt line, require advance notice to the networks and your acquirer, and prohibit surcharging debit entirely. State law applies on top and varies — verify locally. **9. C.** The timestamp. Without a record of when the ticket fired and when it was bumped there is no ticket time, and Chapter 14's 22-minute not-to-exceed is an opinion. **10. B.** Open items carry no recipe, so they never appear in theoretical usage (Chapter 13) or in the menu mix (Chapter 12). Total sales and the tender report are unaffected — which is exactly why nobody notices. **11. C.** Average check rises (\$5,658 ÷ 113 = \$50.07 against a true \$46.00, an 8.9% overstatement) while covers per labor hour falls by about 8.1%. The two errors run in opposite directions across two reports read by two different managers, which is why the corruption survives. **12. C.** You get the order, the money net of commission, and the rating. You do not get a usable guest identity — which means you did not acquire a guest, you rented a transaction. Chapter 28 works the economics. **13. B.** Fixed. At \$31,200 of takeout the all-in first-party cost is 9.4% of channel sales; at \$100,000 it is 5.1%, with no negotiation. A commission is the same percentage at any volume. **14. C.** The hardware — \$17,800 — sits in the FF&E line of the \$620,000 project budget. The \$3,600 replacement reserve is the operating consequence of that capital purchase. **15. B.** The number is never produced, so the decision gets made on instinct. That is Chapter 1's counting problem, and it costs more than any subscription. D is true of Rung 3, not Rung 0. **16. B.** Net settlement deducts fees from each deposit. It is convenient and it makes the largest line in your technology budget effectively invisible. Ask for gross settlement if it is offered. **17. C.** 4.73% — \$29,700 of software and infrastructure (1.92%) plus \$43,573 of processing (2.81%). **18. C.** \$43,573 ÷ \$73,273 = 59.5%. Processing is more than half again the entire software budget. **19.** Effective rate = total fees for the period ÷ total card volume for the period. Compute it a second time over **net sales**, because card volume includes sales tax and tips (money that is not yours) and excludes cash sales (sales that generate no fee). The first number tells you whether your processing agreement is competitive. The second is what appears on your P&L and what you must budget. At Bellwether they are 2.50% and 2.81%, and budgeting the first leaves you \$4,823 short. **20.** (a) *Which rung?* — native, certified, scheduled file, manual export, or re-keying. (b) *What does it cost on both sides?* — certified integrations frequently carry a monthly fee from each vendor. (c) *Who do I call when it breaks, and how will I know it broke?* — the failure mode that matters is silent, so ask specifically whether a failed sync generates an alert. A fourth question is worth more than all three: *name one operator running this exact pairing who will take my call.* **21.** Per-transaction fees are flat and do not scale down with the ticket. A \$9 cocktail settles at about \$11.25 with tax and tip; at roughly 2.20% plus \$0.25 of combined per-item fees that is about \$0.50, or 5.5% of the \$9 sale, against a house average of 2.81%. The countermeasure is free: bartenders open **tabs**, not tickets. Four drinks closed together cost about \$1.24 rather than \$1.99 — roughly \$0.75 per guest — and tabs are better for pour-cost control (Chapter 15) and the audit trail (Chapter 34) anyway. **22.** Enforcing a rolling quarter-hour cap by hand means tracking arrival counts in fifteen-minute buckets across a five-hour service while quoting waits, seating parties, and answering the phone. The platform enforces it structurally — the slot simply stops being available — across every booking channel at once, which is the only way it survives 6:50 on a Saturday. **23.** Any three of: item-level sales history by day and hour (your forecast and your menu mix); menu and modifier configuration (weeks of build work); recipe and cost-card data (Chapter 11's costing); guest and reservation records (Chapter 23's recognition, and irreplaceable); employee records, wages, and time punches (wage-and-hour records you are obligated to keep); invoice and vendor history (price trending); comp, void, and discount history (Chapter 34's audit trail). **24.** Pay the \$720. Spending \$14,294 up front to avoid \$720 a year is irrational, and the vendor knows the arithmetic as well as you do. The principle: **all of your leverage exists before the signature and none of it after.** Negotiate renewal caps, the data-export clause, and hardware ownership at the beginning, when you are still the party who can walk away. **25.** Interchange varies by card type, and premium rewards cards carry materially higher interchange than plain debit — the difference is what funds the miles and the cash back. The merchant pays it, and the merchant is you. What you can do about it: essentially nothing directly, since you cannot choose your guests' wallets. What you *can* do is negotiate the only piece that is yours to negotiate (the processor's markup, worth about \$2,616 a year at 15 basis points), choose interchange-plus so you at least capture the benefit of every cheap debit transaction, and understand the mix before you accept anyone's claim that your rate is "high." **26.** Roughly **\$29,700 fixed** (software and infrastructure — owed whether you sell anything or not) and **\$43,573 variable** (processing — it only happens if you ring a sale). It matters because break-even (Chapter 32) divides fixed costs by the contribution margin ratio: the \$29,700 raises the break-even point directly, while the \$43,573 reduces the contribution margin on every dollar of sales. Two very different levers, in the same budget line, on the same P&L row.