Five years ago, Burger King released a new prototype that was designed to make its restaurants more digitally focused. That prototype featured kiosks inside the restaurant where customers would put in their order. It went nowhere.
But things have changed since then. Kiosks have become much more common in restaurants around the U.S., and the benefits are getting difficult to ignore. So, the Miami-based burger chain is trying it again.
“We’re spending a bit more time on kiosks,” CEO Josh Kobza told analysts earlier this week. “We’ve done a pretty big test in our company restaurants. And we’re seeing a much better guest reception to the kiosks than we might have seen, say, five to seven years ago in the U.S.”
Kiosks are rapidly growing in popularity at U.S. restaurants, as more operators see the devices’ potential benefits for increasing sales and cutting costs, while digital ordering becomes a key goal. Several chains, including Burger King, El Pollo Loco and Shake Shack, are either testing or adding them. Taco Bell now has them in all 7,000 of its U.S. restaurants. Its sister chain Habit Burger, also owned by Yum Brands, is aggressively adding them to its restaurants.
“Average kiosk sales see 10% higher checks than front counter sales and excellent profit flow-through,” Yum Brands CEO David Gibbs told investors last week. Sixty percent of Habit restaurants have kiosks. And customers, likewise, appear more willing to use them.
These chains can largely thank two big concepts for blazing the trail: Panera Bread and McDonald’s. Panera largely ushered in the kiosk era when it began converting its restaurants to digitally focused facilities with its “Panera 2.0” strategy nearly a decade ago.
McDonald’s three years later began adding them to its restaurants three years later with its “Experience of the Future” interior remodels.
But for the most part, other chains were slow to adopt kiosks because of expense or concern over slow customer adoption.
Yet kiosks have taken hold in international markets, where their use is commonplace. “If you go to some of our restaurants, whether in Asia or Europe or increasingly in Latin America, they’re much more digital, especially the in-restaurant transactions, which are almost entirely run through kiosks,” Kobza said.
The pandemic, and particularly the post-pandemic inflationary environment, changed things. Soaring labor costs led many operators to consider options to increase sales and, potentially, decrease the labor inside the restaurant. And kiosks became an attractive option.
Kiosks can build sales through average check because customers can take their time making an order without worrying about someone behind them. It’s also easier to select an item on a screen. Kiosks also never forget to suggestive sell an item.
There are also potential labor savings because, well, a machine is taking the order.
“I think there’s a big ability there to both drive check and reduce labor hours in the restaurant,” El Pollo Loco CEO Larry Roberts told investors last week, according to a transcript on the financial services site Sentieo/AlphaSense.
The Costa Mesa, Calif.-based chain has kiosks in 11 locations. Roberts said that, when the kiosks take cash, up to 80% of customers use the devices. Once more than 50% of customers use the kiosks, “you can start looking at labor hours,” he said. He said usage also picks up when the kiosks take EBT.
The company is now rolling out kiosks to 10 more company restaurants. And the company is considering a location where it’s only kiosks, “and see what that does.”
Kiosk orders are also digital, meaning companies have more information on their customers who order that way. Several restaurant chains want to make digital the primary method for ordering. Kiosks are one way to do that. Digital orders through the kiosk enable more one-to-one marketing possibilities, including more tailored suggestive selling. They also provide the company with increasingly valuable customer data.
That’s a key element for Shake Shack, which expects to have kiosks in nearly all its restaurants at the end of this quarter. That’s three months ahead of schedule. Kiosk sales doubled during the period as customers that returned to the locations preferred them.
There’s good reason the chain likes kiosks: It’s the company’s most profitable channel. And it’s not just due to the higher average check and lower labor hours. Because most of the orders are for inside the restaurant, the company doesn’t have to provide as much packaging.
“We’ve only begun to explore the potential full capabilities of kiosks, such as upselling and connecting personalized marketing across channels,” Shake Shack CEO Randy Garutti said. The company plans to focus more on this channel next year, he said.
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