How Hospitality Can Thrive Amid a Tech Cost Crunch

The hospitality industry is no stranger to external pressures. From labor shortages and wage increases to pandemic-driven operational shifts, this industry really has seen it all. But now, a new wave of cost pressures, including potential tariffs on imported goods that may affect electronics, poses a less visible but deeply consequential threat to an already strained sector.

Many of the tablets, payment devices, and point-of-sale (POS) terminals used by restaurants and hospitality businesses are assembled overseas. With new potential pressures added to hardware costs, operators face yet another blow to already thin margins. For large chains managing hundreds or thousands of terminals across locations, the price hike could total millions. For independent restaurants, even a small increase could mean delaying upgrades or dipping into already tight cash reserves. They could also cause them to increase prices for consumers who are already feeling the pressure on their wallets

But rising hardware costs don’t mean operators have to put innovation on pause. In fact, with the right strategies, this moment can be an opportunity to shift away from old assumptions and toward more flexible, future-proof solutions.

Rethinking Replacement Cycles

One of the most immediate responses to rising hardware costs should be to reevaluate hardware replacement cycles. Historically, many restaurants followed a rigid three- to five-year cadence for swapping out POS terminals, whether or not the old systems were still functional. That pattern is not only costly but financially impractical.

The good news is that POS modernization no longer requires a full hardware refresh. Cloud-based software solutions can extend the life of existing terminals, enabling restaurants to upgrade functionality and add new capabilities without ripping and replacing their tech stack. By leveraging more flexible, software-defined tools, businesses can stay competitive while preserving capital. As an example, TRAY replaces Windows with Android, speeding up hardware and remove PCI Compliance concerns.

Build Flexibility Into Every Layer

Hospitality operators need to think beyond cost-saving and consider flexibility as a core design principle. That applies not just to hardware, but to how services are deployed, integrated, and adapted across the business. Flexibility has always been a must in running a restaurant, but with the uncertainty of our current political and economic climate, it’s paramount. 

A modular approach, or what most refer to as best-of-breed—where components like ordering, payments, loyalty, and kitchen display systems are decoupled—makes it easier to swap in better or more affordable options as needed. This minimizes vendor lock-in and creates a buffer against future price volatility.

Empower Franchisees and Local Operators

For franchise-based businesses, cost pressures can be especially painful. Franchisees are often required to use standardized equipment, leaving them with little recourse when hardware prices spike. Corporate leadership should consider revisiting these requirements with an eye toward empowering local decision-making.

Providing franchisees the flexibility to use hardware they already own, so long as it meets minimum specs, can soften the impact of rising costs and build trust with operators on the ground. This is particularly important in a moment when margins are tight and loyalty among franchisees is being tested.

Turn Compliance Into a Competitive Advantage

Regulatory and security requirements (such as PCI compliance) often drive upgrades in POS hardware. Rather than viewing these requirements as burdens, forward-looking operators can use them as a catalyst to modernize operations in a smarter, more efficient way.

Systems that decouple compliance from hardware, delivering security and functionality at the software level, can help operators meet regulatory needs without unnecessary spend. It's a subtle but significant shift that turns a compliance challenge into a strategic win.

A Moment to Evolve

Cost pressures are unlikely to disappear overnight, and hospitality businesses will need to adapt. But adaptation doesn’t have to mean downgrading guest experiences or delaying growth. With a mindset focused on flexibility, efficiency, and smarter deployment of technology, the industry can absorb external shocks without compromising its core mission: serving people.

As we face the next chapter of economic uncertainty, the hospitality leaders who thrive will be those who see constraints not as a ceiling, but as a prompt to build more resilient, adaptable businesses from the inside out.

About the Author

Peter Kellis is the founder and CEO of TRAY, the Entirely Better POS™ purpose-built for enterprise restaurants. A double graduate of MIT with over 35 patents in enterprise data technologies, Peter believes the future of hospitality will be shaped by openness, agility, and customer-driven innovation.