Technology: Button Pushers

Ordering kiosks boost sales and speed of service but don't necessarily cut labor costs.

By Lisa Bertagnoli, Contributing Editor -- Chain Leader, 1/1/2004

Sheetz, the Altoona, Pa.-based chain of convenience stores, used to hand customers pads of paper and golf pencils when they came in to order sandwiches. Using those traditional implements, customers indicated what sort of bread, meats, cheeses and condiments they wanted, then relied on the counter person to correctly interpret the matrix of check marks.

These days, customers at all 295 Sheetz stores simply walk up to a self-service kiosk that guides them through the sandwich-ordering process. Customers not only like the system, they’ve come to associate Sheetz with self-service, according to John Moulton, director of store systems. “We did surveys, and the common response was, ‘You’re the touch-screen guys.’ Or they’d point their finger in the air and say, ‘doot doot doot doot,’” Moulton says.

Sheetz is among a handful of chains that has implemented self-service ordering technology systemwide. Bigger players, among them McDonald’s and Burger King, are testing the kiosks in some stores. Other chains, namely Cosi, plan to test kiosks this year.

The testing process might be in its early stages, but kiosks are here to stay, says Kate Delhagen, a retail analyst at Forrester Research in Boston. “The technology works in [a quick-service] setting,” she says.

The pilots come at a time when customers are used to serving themselves, Delhagen adds. “Millions of people are getting conditioned to use kiosks for movie tickets and airline tickets,” she says, not to mention getting cash from ATMs and scanning their own groceries at supermarkets.

Saves Time, Not Labor
The self-service kiosks use basically the same technology as the point-of-sale systems behind the counter. Makers of the equipment typically partner with a software company. The vendor or a chain’s IT department handles service issues such as changing menu items or prices.

Most restaurants opt for several kiosks rather than one. And most have an employee ready to assist customers at the kiosk or take orders from those uncomfortable with the technology.

Providing a human touch is important, Delhagen says. “You can’t force customers to use the technology and not give them the option,” she says. Yet she sees such a misstep as probable in the kiosk learning curve. “I wouldn’t be surprised to see someone push the envelope and go fully automated, and that would be a mistake,” Delhagen says.

Kiosk manufacturers, noting that the cost to install the systems can run to thousands of dollars per store, say that their customers expect, and generally receive, a one-year return on investment for the kiosks.

Surprisingly, the quick return comes not from labor savings but from increased sales. According to Pete Snyder, senior enterprise manager at Louisville, Colo.-based Kiosk Information Systems, a major chain, which he won’t identify, tested the kiosks to reduce the number of employees per shift. But because the kiosks increased sales by 24 percent, managers had to send counter people to the kitchen in order to keep up with production, Snyder says.

Automatic Upselling
The increase in sales stemmed from what experts call the kiosks’ most attractive benefits: their ability to relay a consistent message and to upsell to customers.

“It doesn’t hit [the customer] with attitude on a bad day; it doesn’t come in late,” says Snyder.

“The kiosk always remembers to suggestive-sell,” adds Clyde Dishman, director of hospitality industry marketing at Dayton, Ohio-based NCR. NCR clients, he adds, have seen increases in average checks ranging from 20 percent to 200 percent.

Royal Farms Stores, an Owings Mills, Md.-based chain of 110 convenience store/filling stations, has seen foodservice sales rise 20 percent since it finished a systemwide rollout of kiosks three months ago, says John Kemp, executive vice president. Each store has two to four kiosks, which give information in both English and Spanish.

Kemp, however, won’t attribute the increase to the kiosks alone. The new technology in combination with the company’s upgraded pay systems and foodservice offerings helped improve sales, he says.

In addition to higher sales, Royal Farms’ food costs have dropped 5 percent to 10 percent. “The system prints out instructions on how to prepare the order, so there are some cost controls there,” he says. Plus, orders are more accurate. “If we had 90 percent accuracy before, orders are 99 percent accurate now,” Kemp says.

The kiosks will be installed in the 10 to 15 new stores that Royal Farms plans to open this year. The chain is also exploring ways to use them for human-resources purposes, such as filling out employment applications, and is considering placing a kiosk at the gas pump.

Executives at Sheetz say that the kiosks, three or four of which are in place in all its stores, have resulted in higher sales and check averages, though they decline to give specific figures. Like Kemp, however, they won’t credit just the kiosks with the bump in sales.

“I hope sales are increasing because of the quality of the food, not the order process,” says Moulton. “At the same time, I know we get a lot out of the order process, and I know people are very excited about the kiosks.”

Moulton admits that they are more expensive than the golf pencils and paper pads of yore. “But by the same token,” he says, “you get a lot for what you’re putting into it.”

The kiosks make the kitchen more efficient and the production line faster, and streamline the menu-changing process, according to Moulton. “Before, we had to print new pads and throw out the old ones. Now we simply download more graphics,” he says. Another benefit: Orders are more accurate because employees no longer have to decipher customers’ check marks.

The Simpler, the Better
Sheetz plans to install kiosks in the 30 new stores it will open this year, but it has resisted the temptation to make the kiosks all-purpose Internet sites. Adding HR and e-mail functions would only slow down the ordering process, Moulton says.

While Internet access for customers might not be one future use for ordering kiosks, some see possibilities beyond fast-food ordering counters. Dishman predicts that full-service chains might use kiosks for takeout orders.

Whatever the use, the key is not to complicate the ordering system for the customer, says Lee Peterson, executive director of the design group at WD Partners, a Columbus, Ohio-based restaurant design consultancy.

“Customers say when you add an extra step, even if it’s pushing one button, it’s an immediate negative,” he says. “But it works as long as you keep it simple and not add anything.”