Restaurant Self Order & POS Adopted at Glacial Rate
We enjoy hearing all point of views. ReformingRetail consistently berates retail and restaurants for ignoring solutions as long as they can. Latest article by Jordan Thaeler on adoption rates. Interesting to hear the historical talk and we’ll add some too.
- According to restaurant kiosk vendors, only 10% of QSR restaurants have kiosks. — we have no idea who those vendors are.
- Grocery stores introduced self-checkout in the late 1990’s/early 2000’s (although technically Kroger offered the first self-checkout machine in Georgia in 1986), and reported great success. — Yes, NCR went live at Balls Hen House (nice name) supermarket in 1998.
- Kiosk industry really started in 1986 for reference in earnest. Minitel was 1981
- In 1974 first UPC scanner in supermarket by NCR at Marsh’s supermarket
- ATMs invented in 1967
- Telejuke kiosk in 1955 technically
Here are the key points from Thaeler article:
- Retail and Restaurant Self-Order: The article discusses the adoption rate of new technologies by retailers and restaurants and highlights that only 10% of quick-service restaurants (QSRs) use kiosks despite their documented upsell benefits.
- Historical Context: It mentions the early adoption of self-checkout systems in grocery stores and kiosks in McDonald’s (erroneously 2003 instead of 2001), noting their success in increasing sales and reducing wait times.
- Olo: The article details the progress of Olo, a company providing online ordering solutions for restaurants, and its struggle to penetrate the market despite the widespread use of smartphones.
- Industry Comparison: It compares technology adoption in the restaurant industry to other sectors like healthcare, emphasizing the lag in its technological advancement. Telemedicine is a prime comparison example, and some nice graphs are included.
Excerpt
Using Kiosks, Olo As Barometer for Restaurant’s Glacial Adoption of Anything Sensical
Much has been written about the diffusion of innovation, and Clayton Christensen (RIP) brought its dynamics to the masses.
Below is an image popularized by Clayton (source here) that we’ll reference for this article.
Adding quantitative values to this graphic, the Innovators are 2.5%, the Early Adopters are 5%, the Early Majority are 34%, the Late Majority are 34%, and the Laggards are 16%.
Without question, retailers are at the very, very far right of the Laggard pool.
Only treading water because there’s an offchance a visitor mistakes the locale for a nude beach and the retailer glimpses side boob.
Score.
To put teeth to this argument we’re going to quantify the torpidity of retail – and in particular, restaurants – using kiosk and online ordering.
Too many newbie founders look at retail and salivate over the size of the market.
If I can only get 1% of retailers to pay for my solution I’ll be rich!
What they fail to realize is that it will take acts of God to reach 1% penetration in any meaningful amount of time, and retailers won’t pay anything worthwhile for your solution.
In fact, when you multiply the paltry amount a retailer will pay for your solution by the number of retailers that will pay in a given year, you are staring at a charity engagement:
If your time is worth more than $0 you are going to be disappointed.
It might surprise you to learn that kiosks were first used at McDonald’s in 2003. Go grok this early CNN webpage to prove it.
Grocery stores introduced self-checkout in the late 1990’s/early 2000’s (although technically Kroger offered the first self-checkout machine in Georgia in 1986), and reported great success.
From the same CNN article:
The self-checkout has reduced length of lines by a third and the time spent in lines by a third. We estimate that 30 percent of all sales are made through self-checkout at stores equipped with them.
John Simley, spokesman for Home Depot.
~25 years later, studies show that nearly half of all grocery transactions occur at self-checkout, accounting for 55% of transactions and 48% of all registers.
In fact, according to the Food Industry Association, 96% of grocery stores offer self-checkout.
But guess whatttttttt?
According to restaurant kiosk vendors, only 10% of QSR restaurants have kiosks.
Cuz, you know, why do math when you can nibble your own turds?
McDonald’s and countless other retailers proved that consumers who use kiosk spent 10-30% more. Link is incorrect — here is data https://www.pymnts.com/restaurant-technology/2018/mcdonalds-kiosk-strategy/ — However, perhaps the most important number for McDonald’s is this: One study showed that fast food customers spend an average of 30 percent more when they place their own orders at a self-service kiosk station. In the face of flagging foot traffic, McDonald’s could definitely use the sales and revenue boosts from larger tickets.
In a 2022 earnings call, Shake Shack CFO said that kiosks are the chain’s most profitable channel, and Panera experienced an 11.5% increase in sales after implementing kiosks.
And this is our point: if your solution requires a functioning brain from your restaurant customer, you’re hosed.
They just will not – and can not – muster pre-school level thinking.
It’s hard to explain just how crazy this is.
But let us try.
Read rest of the article at Reforming Retail
Related Restaurant Self Order Posts
- Payment Processing TOASTTAB Surcharging Costs Ouch
- Olo Restaurant – Reforming Retail – Retail Systems
- Toast POS Pricing – Legacy POS Comparison – Kiosk Industry
- OLO Part 3 – Failed Acquisition – Retail Systems
- Olo Restaurant News – Wisely Acquisition – Kiosk Industry