Foodservice Kiosks: New World Order
Despite their convenience, self-service foodservice kiosks remain niche players.
By Kate Leahy, Senior Associate Editor -- Restaurants & Institutions, March 1, 2009
In many ways, Americans readily embrace the idea of eliminating the middleman. Experienced travelers are used to checking themselves in for flights and printing out their boarding passes at self-service kiosks. Increasingly, shoppers picking up a few items at the grocery store see the time-saving benefit of scanning and bagging their purchases at self-serve aisles. Drivers pump their own gas and consumers conduct assorted transactions at bank ATMs.
In foodservice, however, customers and operators alike have been less enthusiastic about latching on to the self-service concept—this despite how the trend is blossoming in the rest of the retail industry. Whether the ambivalence is because of the relatively small number of restaurant locations so far that offer self-service options or a sense that diners want to interact with people when ordering food isn’t entirely clear.
IHL Group, a Franklin, Tenn.-based retail analyst and consulting firm, estimates that sales through transactions at self-service kiosks in North America will triple from $607 billion in 2008 to more than $1.7 trillion in 2012. However, only 6% to 8% of retail self-service transactions currently come through food-ordering kiosks (in contrast, grocery stores account for five times that percentage).
Kiosk ordering can be more economical for operators and customers alike. At Philippe Chow Express in New York City’s Greenwich Village, a touch-screen self-service kiosk eases some of the the workload for two cashiers. The terminal’s screen walks customers through their food selection, asks for a credit card and prints a receipt with the order number. For dine-in customers, food runners deliver the food to the table.
Self-service generally means no tip is expected, even when food is brought to the table. “People love it,” says Stratis Morfogen, owner of the Philippe Chow Express and its fine-dining cousins, the Philippe restaurants in New York City, Miami and Mexico City. “They don’t have to tip, but they’re getting the service. They put in the order themselves, but it comes to them. People think we timed this for the economic crisis.”
Even so, Morfogen is part of a very small group of operators who use the technology. So why the resistance? Despite the machines’ purported benefits—reduced wait times, lower labor costs and increased check averages—kiosks’ usage problems can dampen enthusiasm, says Mark Godward, president of the operations engineering group at Dublin, Ohio-based design firm WD Partners.
Godward has worked on kiosk trials since the early 1990s with quick-service clients such as Arby’s, Taco Bell and Burger King. Some of the challenges he has encountered include consumer confusion over the interface, limited payment options, prank orders, wrong orders and customers who simply refuse to use a kiosk.
Such problems are at odds with an industry that banks on offering good service to draw customers, especially in a time of recession, says Tom Miner, principal of Chicago-based consultancy Technomic. “You’re asking the customer to do the work, and you’re taking away the personal aspect of service,” Miner says. “What’s missing from [kiosks] is the ability to improve the guest experience.”
In certain instances, however, experts say kiosks do actually improve the diner’s experience:
C-stores: Miner and Godward point to the successes of kiosks among convenience-store operators that have large foodservice businesses, including Wawa, Pa.-based Wawa Inc. and Altoona, Pa.-based Sheetz. In these stores, customers can order sandwiches at a kiosk, shop for other items while the sandwich is made, and then pick up their food and pay for all purchases at the register.
Airport restaurants: These establishments, with their customer base of time-strapped, tech-savvy travelers, are another market that’s ideal for self-service. At a Burger King operated by Bethesda, Md.-based HMS Host in Atlanta’s Intercontinental airport, 80% of transactions come via the self-service kiosk. (Even so, it’s the only such kiosk that HMS Host operates).
College campuses, malls and more: Locations that attract Gen Y consumers are prime kiosk territory. Jonpaul Leskie, CEO of seven-unit Hardee’s franchisee Geneva Enterprises, based in Bonifay, Fla., operates two kiosks at a Florida unit off a beach-bound highway. Not only do young beach-goers gravitate to the kiosks, but also they spend 12% to 15% more per transaction, Leskie says, thanks to the capability of kiosk software to encourage customers to order add-ons that aren’t always noticeable on a menu board. He acknowledges, however, that in locations that skew toward older patrons, kiosks would not provide a compelling return on investment.
“We’re in this transition in technology,” Leskie says. “There’s a younger age group using it and an older age group who is not.” He anticipates that kiosks and other self-ordering technologies will become prominent as younger generations move into the buying cycle.
In the current uncertain-at-best economic climate, though, operators are hesitant to step out ahead of the trend. Per-unit kiosk costs run between $5,000 and $10,000, and operators often need to spend additional money to customize the kiosk software.
“For the most part, investment in technology will be limited to things that [operators] absolutely need,” says Lee Holman, lead retail analyst at IHL Group.
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Contact writer at kate.leahy@reedbusiness.com
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