While retail, hospitality and travel have been the primary beneficiaries of self-service (excepting, of course, the customers themselves), restaurants have been slow to react. The quick-serve segment has made baby steps with touchscreen ordering; chains like Subway and Arby's are experimenting with the technology, while others like McDonald's have publicly stated their indifference, at least for the time being. 

In the fast-casual segment, adoption of self-service has been even slower. 

"We track our competitors pretty closely, and I'm not aware of anyone doing (self-service ordering) right now," said Lindsey Boyd, marketing specialist for Texas-based Café Express, which operates 19 soup-and-sandwich locations. 

"The restaurant industry in general is slow to adopt new technologies," said Clyde Dishman, director of hospitality industry marketing for NCR's Retail Solutions division. "Fast-casual and quick-service industries are no different."

An impending ‘tipping point'

All that could change as the marketplace becomes more competitive, operational costs rise and technology costs continue to plummet. 

"The industry is reaching a tipping point where restaurants will have to deploy more self-service to survive, remain competitive and grow," said Kent Schrock, spokesman for Fujitsu, which announced its foray into self-ordering in May 2006. 

The first-generation of touchscreen ordering in restaurants (five to seven years ago) was a flop, Schrock said, because the machines were standalone and didn't interface with the store's POS. Today's self-ordering systems are built as extensions of the POS, rather than a new phalanx of devices to manage and keep running.

There are two larger forces at work that will drive the adoption of restaurant self-service: the benefit to the restaurant and the benefit to the customer. Behind the counter, self-service brings a host of operational and cost-related benefits, but at a cost of its own. 

The changes happening on the customer side of things, however, might just be the bigger factor. 

"I believe that as ‘self-service everywhere' permeates our society, consumers will demand better service, and the option of self-service provides better service," Dishman said. "As we have seen in the hotel industry, competition will drive the adoption of self-service in the restaurant industry."

If the old adage that "happy customers spend more money" is true, then self-service ordering is already validated: Study after study shows that touchscreen ordering increases the average foodservice order as much as 30 percent. While the "newness" of self-service certainly plays a part in that, the much larger factor is undoubtedly the machine's uncanny ability to upsell every time, and do so based on context-sensitive data (suggesting appropriate side dishes and accompaniments, for instance). 

Transitioning the order process from a person-to-person transaction to a digital one also brings a host of benefits to the consumer, such as the ability to easily use loyalty, gift card and prepaid card products. Smart operators will take this opportunity to create a new branding point, a priceless moment when a customer is uniquely identified — and can be communicated with — just prior to the purchase. 

Anecdotally, sandwich shops and other "one-line" workflows have had the most success with touchscreen ordering, often reporting gleeful operators and customers alike.  

"The response has been very positive," a spokesman for Subway said. "The customers used it once and then used it again when they came back in, with no assistance. One customer in particular used the kiosk the first day and then went back to his office and told everyone about this new ordering option. The next day, he was back with a bunch of his co-workers and he was actually showing them how to use the kiosk, proud that he discovered this new technology."

Behind the counter

Even if a business has established that its customers would prefer a self-service ordering option, the monetary considerations — those forces at work behind the counter — still have to be factored in. Kevin Moll, president of Restaurant Startup Consultants Inc., said the value proposition for a fast-casual restaurateur skyrockets for organizations of 10 or more units. 

"Users with 10 or fewer units eventually see reduced labor cost at the line-employee level, but this savings is usually offset by the additional ‘techies' that are brought on board to implement and service the systems," he said.  

Moll pointed out that even if self-service eliminated the need for six service-level positions, the cost savings would be immediately wiped out by the addition of a full-time IT person. 

"Now, take this exercise and eliminate 60 or 600 jobs and bring on one techie, and the numbers scream cost savings, making immediate implementation the logical choice for operators with many units," he said. 

The franchise relationship of many fast-casual operations presents yet another problem. It can be argued that conventional ordering isn't broken and doesn't need fixing; this case could certainly be made by the franchisee, who would be expected to foot the bill for a self-service ordering system. 

Both Moll and Schrock acknowledge this issue, and agree that vendors need to provide affordable leasing programs with easy terms. Moll said restaurants should demand a low down payment, desirable terms and extensive technical support (to alleviate the need to hire that techie). 

"Franchisees tend to be (more) open to new ideas that increase revenues and control costs than their corporate counterparts," Dishman said. "For the most part, they operate in more of a ‘hands-on' mode and have less of the absentee management issues of corporate. Most of the installed self-service sites today are in the franchisee community." 

Ultimately, cost is a factor, but it is certainly not the only one. 

"It's not what you make, it's what you keep that counts," Moll said. "Once operators can clearly see that they'll keep more, they'll accept the changes." 

©2006 NetWorld Alliance LLC. All rights reserved. jamesb@networldalliance.com

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