Are Self-Service Kiosks Right for You?

Tal VinnikDigital Transformation, Ordering & Point of Sale

“Are fast food workers becoming obsolete?” “Are self-service kiosks changing customer behavior?” “Are self-service kiosks isolating us from human interaction?” Self-service kiosks have prompted many broad questions about the industry, the economics of the retail and restaurant industries, and even human behavior—but for restauranteurs, they care about this specific question: are they right for me, my workers and my customers?

We’ve come up with four questions to help you answer whether they’re right for you, regardless of whether you’re a 1000 location chain or a single restaurant. As with many technologies, it’s not about size—Bypass, PYMNTS and Bank of America Merchant Services found that QSRs with more than 1000 locations only had a kiosk adoption rate of 33 percent, while 50 percent of those with less than 50 locations offered kiosks. Here’s how to decide whether to add them to your technology stack.

Are you solving a problem or hopping on a trend?

There are a number of good reasons to deploy kiosks at your restaurant or cafe. But there’s one really bad one: because others are doing it. Go in too early, and you might end up alienating customers and lengthen lines. Your implementation might be so flawed that you have to remove the technology entirely, and create more work and expense in trying to get rid of a technology.

That said, here are a few reasons that a kiosk might be the right fit:

  • Order Customization: Kiosks can allow customers to select a number of customizations to their order (e.g., sandwich toppings) where nothing gets lost in translation to the order taker, and the customer isn’t squinting at a menu behind the cashier to figure out what they want.
  • Promote limited time offers and upsells: Kiosks offer another place to promote a new or limited offering with a bright splash screen or emphasis on the menu. Kiosks will never forget to ask if someone wants fries with that.
  • Shorter lines: Since kiosks take up a small footprint, you can have more people moving through (especially if you offer multiple places to order like the counter, drive through or mobile ordering). At peak periods, people then are only waiting for their order, not waiting to order.
  • Reduced labor costs: Yes, kiosks typically mean less cashiers; that can be a huge benefit to small businesses operating in expensive cities like San Francisco or New York. Employees who pulled double duty can focus more on creating and expediting food, getting customers served even faster.

Will you offset the price?

Of course, while you might reduce labor costs, you need to make sure that your investment in a self-service kiosk will pay returns. Based on the reasons you would invest in self-service, here are the situations the initial and ongoing investment would be offset (and when it wouldn’t):

  • Order customization and upsells: McDonald’s found that customers tended to “linger longer” at kiosks instead of feeling rushed at the counter, selecting more items that ticked up their total purchase price. Customers spend 15-20 percent more at kiosks because of the lingering effect, but also because of personalized upsells. This wouldn’t benefit your business if you have a limited, static menu with limited add-ons or customizations.
  • Shorter lines: If you’re increasing speed at peak periods, you can increase the total revenue since you can serve more people that might be on a time crunch (e.g., halftime at a football game, coffee before the workday, salad for a lunch break). When wouldn’t you benefit financially? If you never have long lines to take peoples’ orders in the first place.
  • Reduced labor costs: This one is pretty straightforward. Even if you don’t have long lines for order-taking, you could have long lines for people waiting to pick up their orders, which you could cut down by reallocating resources to order fulfillment. But if you’re not spending much on labor, for example if you live in an area with a low cost of living or you’re both the business owner and the cashier, this may not be a major incentive.

How will customers feel?

Depending on the survey you read, customers either prefer self-service kiosks to cashiers or would even avoid a restaurant if it had a kiosk. That sort of variation shouldn’t be surprising, given how different age groups and demographics perceive technology. After all, some are still against cashless payments.

Ask yourself who your customer base is, and whether they’re averse to change and new technologies. Are they already using tap-to-pay at your store? Do they order online? These might be a signal that customers would adopt self-service, but consider just asking. If you have a loyalty program where customers opt in to your emails, you can survey them for what technology they’d be interested in.

You might also want to do a phased approach to get customer buy-in. Shake Shack’s initial pass at kiosks ended up with a lot of frustrated customers. Switching entirely to kiosks made the wait longer than with cashiers and shut out cash users, and they abandoned it after a few months.

Their second run is a hybrid model, offering both cashiers and kiosks (and accepting cash). They’re running in five locations, and plan to expand into areas with high labor costs like San Francisco and Seattle.

How are you doing on the basics?

Finally, self-service might be one of the sexier parts of the restaurant business, but you might be putting the cart ahead of the horse. In an interview with PYMNTS, Bypass Chief Innovation Officer Geoff Johnson said, “But merchants, even the big ones, have to think in terms of the basics first: Can they take payments quickly in any scenario — on or offline — and can they do that securely? If they can’t do those things, then they’re building everything you want to do on a shaky base.”

Whether you’re looking to implement self-service kiosks, a new loyalty program or online ordering, it comes down to your point-of-sale solution. If you want to implement one of these, or something more basic like NFC payments, you’ll have to invest in new hardware (as many have recently to be EMV-ready) or bring in another solutions to make up for those gaps.

Start by ensuring that your base is rock-solid, not only in terms of payments and security, but also in back-office functionality so that you can add or remove other technologies as consumer preferences evolve.

And don’t forget about the data.  When an order comes in through a kiosk or online, you need to be able to track those metrics and learn from them just as if they came in at the register at the counter. That way, you’ll be armed with insights to apply to the next big technology you want to bring into your restaurant.