McDonalds - Introduction of Self-Ordering Kiosks

When most people are looking to get fast food, they are looking for a simple to grab full meal on the go, with efficient service, low prices and casual atmosphere. According to an American Market Research survey 27 million people eat at McDonald's in the USA every day, while every year, this number grows by 1 million. Market researchers at NPD Group in Port Washington, N.Y. came to a conclusion that an average American tends to eat out up to five times a week when the dining room is likely to be a car seat in the family SUV. These may be the factors explaining why fast food restaurants represent one of the largest segments of the food industry with over 200,000 restaurants and $120B in sales in the U.S. alone. Even though as of 2009, McDonalds was still a leading fast food restaurant in its market, other competition is catching up fast (Exhibit 1 leading fast food industry chart). Restaurants such as Burger King, Wendy's, KFC and even Starbucks are all working hard to overthrow MacDonald's leading position. In order to keep the competitive advantage McDonalds Corporation is constantly in process of testing different systems, such as long distance call-centers, with goal to increase efficiency, cut costs as well as meet customer demand.

To meet customers' expectations, McDonalds's goal is to limit order time to about 1.5-3 minutes per item order. Our survey of number of busy highway rest stop locations revealed that it could take for up to 30 minutes for a customer to receive and order during pick hours including standing in line time, while an average traveler is willing to stop for less than 10 min due to schedule and time constrains. This leads to customer's decisions to divert to the pizza and pastry stand at the rest stop while, long lines and un-orderly hectic order process cause order mistakes and decline in customer satisfaction.

Our proposal is to pilot kiosks in one or two high traffic locations such as highway rest-stops. Within a 6-12 months period we would observe the performance and implement necessary changes. With perfection of the system in place we see this implementation as a necessary component for increased revenues, more efficient customer service and customer satisfaction. Taking the hard economic times in to consideration, our goal is not to cut jobs, but to increase revenues and customer service. Per our research, implementation of kiosks in similar markets like convenience stores, delis or supermarkets contributed to more than 600% increase in up-sells, 100% order accuracy with 66% improvement in sales of promotional items.

Self Service Kiosk History

Self-service ordering kiosks have been implemented in various locations around the world for more than four years. We see kiosks at movies, airports, restaurants, supermarkets and more. There are many reasons for their staying power, but the bottom-line is that kiosks please both business owners and their customers. Unlike previously, today kiosks are reliable to use and for the most part general population has long become accustomed to using them. See Exhibit 2 for kiosk usage increase over a 10 year period. The result is the overwhelming majority of customers considers kiosks and admits that they offer a superior ordering process compared to the old way. In addition to mutual satisfaction of owners and customers, self-service ordering kiosks enable efficiency while providing an attractive return on investment (ROI). Kiosks are also a great tool for collecting information. Surveys can be added to kiosks to enable them to gather market research about your customers, their spending habits and their needs. Kiosks can be built to any design with business specific style and design attributes to suit the premises of where the kiosk is to be installed. This means that the kiosk will only add to the aesthetics of its environment, and not detract from it. In short, a kiosk can increase order values, improve profitability, up-sell as well as cross sell, whilst improving staff productivity.

Potential Benefits to Customers

The very nature of self-service ordering kiosks compels them to meet specific consumer expectations:

1. Privacy - Consumers appreciate not having to shout their order out so everyone can hear. Kiosks remove their potential embarrassment.

2. Speed - Kiosks give consumers proactive confidence. Everyone has experienced the dreadful wait at a deli counter either trying to get the attention of someone behind a counter or waiting for a number to be called. Kiosks remove all that unnecessary anxiety.

3. Convenience - Consumers don't need to be computer savvy, because kiosks don't require any particular training or intelligence to use. In fact, many people are more comfortable interfacing with technology than they are talking face-to-face with an order clerk.

4. Communication - Whether the cause is a language barrier or the din in the store, kiosks can't misunderstand an order. This enhances the shopping experience for consumers because they never feel the frustration of not being able to communicate their needs.

5. Precision - The consumer gets exactly what they order. The touch pad all but ensures their needs will be met.

Potential Benefits to Storeowners

Store owners and managers enjoy two main benefits from kiosk deployments.-First, they can use kiosks as a tool to streamline their operation. Second, they realize an ROI in a reasonable period of time. Upon closer inspection, their benefits are many:

1. Productivity - Kiosks enable sandwich makers to maximize productivity by limiting time previously spent in conversation and data entry. Multiple kiosks can take orders simultaneously. From the store's point-of view, this is the most important reason to deploy the technology.

2. Ordering accuracy - The complaint, "This is not what I ordered," is virtually never heard. There is a small margin for human error, but it is dramatically diminished compared to the potential for error before kiosks.

3. Up-selling - The kiosk will offer up-sell choices to customers more frequently than the average counterperson. For the counterperson, up-selling is a learned behavior. For the computer it is automatic.

4. Inventory tracking - More advanced systems can provide the store with reports on inventory and worker productivity. Some systems can monitor individual employee performance.

5. Market Research - easy to ask for surveys as well as track consumer buying habits.

6. ROI - A typical ROI calculation is fairly simple: Ordering man-hours-saved (described in dollars per month), plus increase in sales