ROI analysis: Investing in self-service kiosks for UK restaurants

The evolution of technology has significantly impacted various sectors, including the restaurant industry. One technological advancement that has gained attention in recent years is the self-service kiosk. While many restaurants have adopted this technology, others remain skeptical, often questioning the return on investment (ROI). This comprehensive analysis aims to shed light on the ROI of investing in self-service kiosks for restaurants in the UK, considering various factors like customer experience, operational efficiency, and financial gains.

What are self-service kiosks?

Self-service kiosks are electronic devices that allow customers to perform tasks like ordering food and processing payments without human intervention. They are equipped with touchscreens and user-friendly software that make the process quick and efficient.

The evolution of self-service kiosks in the hospitality industry

The hospitality industry, including restaurants and takeaways, has been at the forefront of embracing self-service kiosks. The move towards automation is more than just a technological evolution; it’s a response to changing consumer behavior, market demands, and operational efficiencies. Initially, self-service kiosks were introduced to reduce overhead costs, primarily labour, and to accelerate the order process. However, they have evolved to become sophisticated tools that offer much more, including data analytics, inventory management, and marketing functionalities.

Kiosks are now ubiquitous in various formats and types, from simple ordering screens to intricate systems capable of managing loyalty programs and offering personalized recommendations. Their rapid adoption can be attributed to their flexibility; whether it’s a small local takeaway or a large restaurant chain, kiosks can be customized to meet specific business needs and consumer demands. In fast-food chains, kiosks have proven to be effective in reducing queue times during peak hours, while in more formal dining settings, they’ve been used to modernize the reservation and payment processes.

McDonald’s has been a pioneer in incorporating self-service kiosks into its operational model. Since testing the technology as early as 2003, the company has strategically used kiosks to meet the dual consumer expectations inherent in fast food: speed and customized nourishment. The stats support the efficacy of this approach, with 30% of customers preferring kiosk ordering over traditional cashier interactions when lines are of comparable length. These kiosks also result in increased order sizes, attributed to sensory marketing and the tactile effects of touchscreens, which evoke a more experiential thinking style in customers.

Apart from enhancing the speed and accuracy of orders, McDonald’s kiosks have subtly influenced customer behavior and broadened the restaurant’s appeal. The kiosks reduce social pressure, particularly for people who might be hesitant to order items with hard-to-pronounce names, boosting the market share of such products by 8.4%. The appeal is broad-based, popular among both young introverts and middle-aged extroverts. Such intuitive, customer-friendly features have not only contributed to McDonald’s exceeding its market goals but have also set a benchmark for technological adoption in the hospitality industry.

The trend among the new generation

For the new generation, particularly millennials and Gen Z, digital interaction is second nature. The affinity for technology among these age groups has made the adoption of self-service kiosks in restaurants increasingly seamless. This demographic not only expects but demands tech-savvy solutions for a more efficient, personalized dining experience. The convenience of customizing an order on a touch screen, the ease of mobile payment options, and the absence of having to wait in line appeals to their lifestyle of immediate gratification and digital interaction.

This trend isn’t just a superficial preference for technology; it reflects deeper values and expectations. Younger customers often seek more control over their experience, desiring options to customize orders or view nutritional information easily. They also value sustainability and social responsibility, aspects that can be communicated or acted upon via these kiosks (for instance, by offering a paperless receipt option).

Additionally, the concept of a self-service kiosk aligns well with the social dynamics of these younger generations. For example, group outings often involve collective decision-making, and a kiosk allows for a communal, interactive way to place an order.

For restaurants and takeaways, acknowledging this trend is crucial. Failing to adapt to these changing consumer behaviors could mean missing out on a significant portion of the market, which is increasingly influenced by the younger generation. Therefore, self-service kiosks are more than just a technological advancement; they are rapidly becoming an industry standard that resonates strongly with the upcoming, influential consumer base.

By understanding the expectations and behavior of the new generation, restaurants can better implement self-service kiosks to meet these demands, thereby ensuring not just a high ROI but also long-term customer loyalty and engagement.

Benefits of self-service kiosks

• Enhanced Customer Experience: Self-service kiosks can significantly improve the customer experience by reducing wait times and offering a more personalised service. Customers can browse the menu, customise their orders, and make payment, all without waiting in line.
• Operational Efficiency: Kiosks automate routine tasks, freeing up staff to focus on customer service and other value-added activities. They also help in reducing human errors, ensuring accurate orders and improving overall operational efficiency.
• Upselling and Cross-selling: Kiosks are programmed to suggest add-ons, upgrades, or related items, subtly encouraging customers to spend more than they initially intended, thereby increasing average transaction values.

Financial Investment

Hardware and Software

The initial investment for a self-service kiosk can vary significantly, depending on the type and features. A basic model can start from around £549, while high-end ones can go up to £5,000. Software licensing and maintenance can add another £200 to £500 per year.

Grafterr has a budget-friendly yet feature-rich solution for you!

Introducing Grafterr’s 15.6-inch Tabletop Self-service Kiosk + Payments Bundle. Not only does this compact, energy-efficient model save on floor space, it comes packed with all the POS features you’d find in larger, more expensive units. Priced competitively, this kiosk is a game-changer for hospitality venues with limited space.

What sets it apart? It’s powered by our award-winning hospitality software that enables seamless food and drink ordering, card payments, and instant syncing with your ePOS system. Plus, its smart upselling feature can boost your average order value by up to 30%.

Installation and Training

Installing a kiosk system involves not just the hardware but also integrating it into your existing POS system. This may require specialised labour and can cost anywhere from £500 to £2,000. Staff training is also crucial and might incur additional costs.

Calculating ROI

Increase in Sales

The first step in calculating ROI is to determine the increase in sales attributable to the kiosk. For example, if the average transaction value goes up by 10% and the kiosk handles 20% of all transactions, this results in a 2% increase in overall sales.

Labour Cost Savings

Calculate the labour costs saved by automating tasks. If a kiosk can handle tasks that would require one full-time employee, that’s a saving of approximately £20,000 per year in labour costs in the UK.

Total Costs

Add up all investment costs, including hardware, software, installation, and training to get the total expenditure.

ROI Formula

ROI = (Net Gain from Investment – Cost of Investment) / Cost of Investment * 100

By filling in these numbers, you can quickly gauge whether the kiosk investment makes financial sense for your restaurant.

Risks and challenges

Technical Glitches

Like any electronic device, kiosks are susceptible to malfunctions and require regular maintenance.

Customer Adaptability

Not all customers are comfortable using kiosks, especially the older generation. Therefore, some level of human interaction will always be necessary.

Initial Resistance

Employees may resist the change, fearing job loss. Proper training and positioning the kiosks as tools for enhancing customer service rather than as replacements can mitigate this.

Final thoughts

The adoption of self-service kiosks in restaurants has the potential for a significant ROI by improving customer experience, increasing sales, and reducing labour costs. However, the actual ROI will depend on various factors like the type of restaurant, the initial investment, and how well the technology is implemented and accepted by both staff and customers. With careful planning and execution, self-service kiosks can be a worthwhile investment for many restaurants in the UK.

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