Special Report: 'tipping point' on the way for restaurant self-serve kiosks

| by Elliot Maras
Special Report: 'tipping point' on the way for restaurant self-serve kiosks

Photo courtesy of iStock.

Is the "tipping point" for self-service restaurant kiosks on the horizon? The question presents itself after some national foodservice chains announced plans to move forward with kiosk technology this year. While the tipping point – that point in time where companies decide they have to invest to remain competitive – is difficult to pinpoint, most experts agree the pace of adoption has accelerated.

A special report, sponsored by Frank Mayer And Associates Inc., explores the state of self-serve kiosk deployments by restaurants. The report notes that widespread adoption has not yet occurred, but razor-thin margins are persuading foodservice operators to invest in the new technology at faster pace.

The cost of implementing the technology and the challenge of determining return on investment continue to force companies to be cautious. Determining return on investment is not simply a matter of comparing equipment costs with increased profits. There are intangibles such as ease of use, service requirements and impact on employee morale and customer satisfaction. Calculating return on investment is further complicated by the many variables involved, such as the cost of hardware, software and payment processing, and integrating with back-office systems and loyalty programs.

But restaurants are finding themselves forced to consider their options as signs of change are hard to ignore.

Signs of change

McDonald's and Wendy's grabbed the industry's attention this year in announcing plans to introduce self-order kiosks. Wendy's plans to have kiosks in 1,000 locations this year, while McDonald's will have them in all stores after testing kiosks in 500 restaurants.

The overall growth of kiosks in general also contributes to the positive outlook for restaurants. A March 2017 report by Transparency Market Research pegged kiosk growth at 10.9 percent combined annual growth from 2016 to 2024.

Results to date have been positive for restaurants.

Panera has been introducing kiosks as part of its Panera 2.0 initiative. Company CEO Ron Shaich said kiosks will reduce wait times, boost order accuracy and minimize crowding while creating a more personalized experience. In the fourth quarter of 2016, Panera's comparable store sales rose 3 percent over the prior year, credited to its digital efforts.

McDonald's reported that restaurants that deployed kiosks are experiencing gains in the mid-single digits.

Wendy's expects to see improved sales and lower labor costs.

Not just the big guys

While major restaurant chains have taken initiative, smaller foodservice outlets like airports, sports arenas and convenience stores are also deploying kiosks.

Corporate dining locations are also embracing self-order and self-checkout kiosks. In corporate dining accounts, return-on-investment is fast, in addition to reducing customer wait time by as much as 50 percent. The customers end up spending 12 to 14 percent more on their food ticket.

Cashless drives growth

Another factor driving the growth of kiosks in foodservice is the rising tendency to use credit and debit cards to pay for purchases rather than using cash.

The comfort that the younger generation has with technology also contributes to the demand for kiosks.

"As consumers become more comfortable with their own devices and payment transactions, self-service kiosks are the next logical step in the shopping experience," said David Anzia, senior vice president of sales at Frank Mayer And Associates.

Mid-size chains face challenges

Noting that the largest and smallest foodservice operators are deploying kiosks more aggressively than mid-size chains, Tommy Wojcik, president of Nextep Systems, said mid-size players are hamstrung by the cost of replacing point-of-sale software systems that don't support kiosks. Replacing the POS is costly and requires retraining.

Technology, however, does not stand still.

Self order technology establishes the foundation for additional kiosk capabilities, such as order pickup, nutrition information and loyalty programs.

QSRs, for instance, are already using digital messaging on screens and integrating with credit card payment.

Kiosks also integrate with mobile ordering, another technology that the more progressive restaurants are embracing.

The report surmises that obstacles notwithstanding, self-order technology adoption is destined to accelerate, and it is only a matter of time before a large number of operators invest in it. In time, customers will come to expect to use customer-facing screens when they go to a restaurant.

Topics: Customer Experience, Kiosk ROI, Manufacturers, Restaurants, Self-Checkout, Self-Ordering

Companies: Frank Mayer and Associates, Inc., Banyan Hills Technologies

Elliot Maras
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.

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