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Hot and now: kiosks in fast-food market

Name a way that consumers can get their fast food even faster. Ordering for themselves, of course. And not only is self-serve ordering faster, it may also ensure that orders will be placed correctly and be more satisfying.

December 9, 2003

Quick, name a way that consumers can get their fast food even faster.

Ordering for themselves, of course. And not only is self-serve ordering faster, it may also ensure that orders will be placed correctly every time.

Those are the promises kiosks offer in the fast-food arena. As a testament to this market's potential, kiosk companies need look no further than the fact that Lake Mary, Fla-based Kinetics USA, leading provider of self-serve technology for the airline and travel industries, has jumped in full force with a new venture, Quick Kiosk, a Kinetics Company LLC.

The new company has McDonald's franchisees already lined up. Also, Owings Mills, Md.-based Intermedia Kiosks has been in successful trials with Burger King for the past six months, and will pursue other fast-food customers, according to David Henry, vice president for business development.

Ordering kiosks in Florida McDonald's

Making it Quick

"We will change the landscape of the fast-food industry like we did for airports in the United States. It will be an easier challenge for us," said David Melnik, president and chief executive officer of Kinetics. Two-thirds of all U.S. airline self-service in nearly 150 North American airports is based on Kinetics technology, he said.

In July, Kinetics formed the new joint venture with Framingham, Mass.-based Quick Kiosk LLC, a provider of self-service ordering systems for the quick-serve retail market.

Todd Liebman, president of Quick Kiosk, said, "Quick Kiosk has the market knowledge and established relationships in the quick-serve retail area. Kinetics brings the software and hardware platforms and self-service expertise."

Quick Kiosk has already introduced its self-ordering kiosks at about 40 McDonald's franchises in several U.S. state. Liebman said those areas include Florida; Georgia; Texas; Washington, D.C.; Virginia; Michigan and Kansas. He said the market potential in the quick-serve retail market is in the millions of dollars.

At the kiosks, which can be freestanding or placed on countertops, McDonald's customers place orders and pay using either credit card, debit card or cash. They also allow for easy ordering, with a suite of multimedia capabilities like audio and animations prompts.

Franchisee fan

Liebman said Quick Kiosk's main pitch to fast-food operators is that the kiosks can increase the average check by 20 percent to 40 percent.

"It's suggestive selling. The customer doesn't feel rushed and has more freedom to order," said Liebman.

Gary Moulton, owner/operator of six McDonald's franchise restaurants in the area of Winter Haven, Fla., agrees. He has the terminals in all of his units.

"Our increase in food sales has been substantial," said Moulton, who would not disclose sales figures. "The kiosks are cleverly engineered to give customers options for items they wouldn't normally purchase."

While he said the cost of the kiosks is substantial, it took just 12 to 18 months of increased revenues to pay for them. Neither he or Quick Kiosk's Liebman would disclose the cost of the units, which were installed two years ago, before the venture with Kinetics.

Moulton said he has achieved new operational efficiencies with the kiosks, such as being able to better allocate his staff. "I'm managing my business better. If lines get long, I have someone take customers over to the kiosks. It's very personal."

Moulton is optimistic about the new venture with Kinetics. "I suspect they will introduce technology at a greater pace and offer more upgrades now that they have more resources," he said.

Moulton said other McDonald's franchisees and restaurant operators frequently ask him about the kiosks.

Future plans

Melnik sees his new venture as a turning point for self-service in the fast-food business. "We are different from traditional companies in the kiosk marketplace. If our systems for the airlines don't work, for instance, there is significant operation impact -- flights don't take off, tickets don't get sold. We don't supply ancillary services, we supply theservices."

Kinetics builds enterprise systems first, and uses kiosks simply as a delivery mechanism, Melnik explained. The company often partners with Kiosk Information Systems on enclosures, but also produces its own

Melnik said he is already in talks with other franchises including Wendy's, KFC, Taco Bell and Burger King.

"Just as we successfully captured multiple airline carriers with a core technology we can penetrate this market at a greater speed," said Melnik.

Have it your way

At a Burger King in Baltimore, customers have been using self-service kiosks for the past six months. Intermedia Kiosks has installed two kiosks in the first of 17 stores.

The outcome has been "amazing," according to Henry. "We have increased the check average inside the store by $1 per person. On many days we actually beat the drive-thru check average, which can be as high as $1.50 to $1.75 over the inside cashier," he said.

The kiosks accept bills and dispense bills and coins, as well as take credit cards. The next version due out in August will accept coins.

Henry said that the main lesson learned in the trial has been that the kiosk application must be intuitive, simple and fun to use or consumers will not use them. "More importantly, customers have to feel that they have the same flexibility to customize their orders just the way they want it or they will go the cashier instead," he said.

Intermedia offers a voice-assisted application available in any language. "It makes all the difference in the world," Henry said.

How does Intermedia sell its kiosks to clients? "We have demonstrated in the variety of foodservice market verticals that we are in -- fast food, convenience stores, supermarkets and contracted foodservice management -- that we consistently raise check average minimally 20 percent, reduce labor costs, improve productivity, increase customer service, reduce waste and more." He said fast-food establishments, in particular, need to be convinced about technology.

One challenge is getting high-speed connections to restaurants so content on the kiosks can be updated on the fly across a central network.

"It's kind of odd, but getting high-speed connectivity to the fast food industry is a huge ordeal," Henry said. "Changes like new items or new promotions come at the last minute. You have to be quick and responsive to keep everyone happy."

[Editor's note: Info Touch Technologies became Tio Networks in April 2006.]