January 12, 2004

Computerized kiosks let C-store customers help themselves

Convenience stores tap self-serve terminals to improve accuracy, efficiency of foodservice

By Alan J. Liddle

(Jan. 12) - Even as national quick-service restaurant chains garner trade and consumer media attention for tests of computerized customer-activated order terminals, or kiosks, three foodservice-focused convenience-store groups are operating daily with such technology at more than 900 locations.

Kiosk pilot tests and the potential uses for such self-service systems in the restaurant business were hot topics at the recent International Foodservice Technology Exposition, or FS/TEC, in Long Beach, Calif. At that show, which is co-produced by Nation's Restaurant News and Robert Grimes of Accuvia, information systems executives for some of the nation's largest quick-service companies, including McDonald's and Hardee's, urged foodservice technology vendors to accelerate development schedules for some systems by borrowing ideas from other industries.

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To some people at FS/TEC, the convenience store industry came to mind as one of the potential sources of outside inspiration for kiosk development.

Among the leading users of personal-computer-based kiosk technology in C-store circles are 290-plus-store Sheetz Inc. of Altoona, Pa., and 540-plus-location Wawa Inc. of Wawa, Pa. Sheetz, which helped pioneer the technology beginning in the mid-1990s, and Wawa both use customer self-service kiosk products from Atlanta-based Radiant Systems.

Another player in the C-store arena, 100-plus-unit Royal Farms of Baltimore, uses technology from InterMedia Kiosks of Owing Mills, Md.

All three of those convenience-store chains have significant made-to-order foodservice operations selling a wide variety of goods, including deli-style sandwiches, soups, salads, bakery items and coffee and fountain drinks.

John Cunningham, director of store operations technology for Wawa, said that while foodservice is not the greatest sales generator for the chain, "it accounts for two-thirds of our gross profit." Royal Farms' executive vice president, John Kemp, explained that foodservice does not yet contribute more sales than fuel, tobacco or traditional grocery items do, but "it will shortly." And according to Sheetz executives, that organization rang up foodservice-only sales of $199.3 million for the fiscal year ended in September 2002.

Speaking of the rollout of customer-activated order kiosks, Wawa's Cunningham remarked, "It's done a ton of things for us." His company completed the conversion to kiosk-only foodservice ordering in late 2002.

Cunningham, Sheetz's director of store operations, John Moulton, and Royal Farms' Kemp all indicated that their kiosk systems do the following:
# Increase order accuracy and otherwise enhance customer satisfaction by giving guests more control over the order process.
# Improve the efficiency of kitchen operations by electronically routing order components to the appropriate preparation stations and by permitting foodservice workers to focus on order fulfillment rather than splitting their time between order taking and making.
# Boost sales through more consistent application of upselling techniques and through the use of multimedia marketing materials to hawk combo meals or new or promotional items convincingly.

Royal Farms' Kemp confirmed reports and vendor statements that the installation of the kiosk system, which was completed in 2003, has contributed to a 20-percent increase in foodservice sales. Also true, he indicated, is that the system has cut food costs by between 5 percent and 10 percent because it has lowered waste by improving order accuracy. He added that the suggestive selling programmed into the interface has tripled the number of combo meals sold by the chain.

"Lots of restaurant companies have experimented and piloted with this [technology], but it has not been embraced by them as it has in C-stores, grocery stores, department stores, movie theaters, at gas pumps and at airports," Radiant Systems' vice president, Scott Kingsfield, said. "We believe one of the next big waves will be self-service technology."

Kingsfield said his company actually developed the systems now used by Sheetz and Wawa for the restaurant market, but the C-store chains "just happened to roll it first."

Paul Knight is president of InfoAmerica Inc. of Fort Collins, Colo., the company behind the software used by McDonald's in some recent and highly publicized tests of order kiosks. Among other foodservice installations, his company was involved in extensive tests of customer self-service by Taco Bell in the mid-1990s that ultimately was shelved, reportedly because of kitchen throughput issues and a reorganization of the chain's top management.

Knight said the difference in focus between restaurants and C-stores might account for the difference, to date, in the two industries' adoption rate of customer self-service technology. "Foodservice is only a piece of what C-stores do," Knight noted. "but if you install this technology in a quick-service restaurant, it totally changes the operation," because "you can't control the volume of orders to the kitchen."

The bottom line, Knight contended, is that restaurateurs who want to enjoy "the big benefits" of order kiosks need to "re-engineer" their facilities and operational procedures. Radiant's Kingsfield agrees that when it comes to a self-service system, "The challenge is less technology related and has more to do with operations: You need to train the customers to use it and then reconfigure operations to deliver the food."

Both Kingsfield and Knight reported that restaurant companies are showing "a great deal of interest" in kiosk technology. "We came out of FS/TEC with a big pipeline [of customer leads]," Kingsfield said. He added, "There are three or four [vendors] pitching this stuff, and it's my guess that they came away with a big pipeline, too."

Knight suggested that a number of factors might be behind foodservice operators' interest in kiosks. Among them are the growing number of entry-level workers with limited English-speaking skills; the general public's increasing comfort with computers facilitated by bank ATM machines and the growth in popularity of the Internet; and rising credit and debit card acceptance among quick-service restaurant chains.

Greater credit acceptance, along with a new generation of automated cash-handling machines, now makes it feasible to complete self-service transactions without intervention by restaurant cashiers, Knight and other technology experts have pointed out.

The Jack In The Box quick-service chain is among the foodservice parties interested in kiosks. A recent report by technology vendor NCR Corp. said the restaurant chain had ordered $14 million in kiosk components. JIB officials could not be reached for comment about the order and how the chain will use the technology.

Sheetz turned to kiosk technology nearly a decade ago because of shortcomings in the paper-based, self-service order system in place at the time as part of the chain's made-to-order or "MTO" food program.

Customers at Sheetz Inc. convenience store chain use Radiant Systems' kiosk to order prepared foods. Latest-generation kiosk technology features a touch-screen interface, multimedia content playback capabilities and support for remote content management.

Moulton explained that order errors resulted then because guests were not always precise about where they placed check marks on preprinted order pads or because Sheetz employees made mistakes reading the orders. What's more, he indicated, the chain had to reprint order pads whenever there was a new product rollout or adjustment to the menu.

"Customer acceptance is always something we have to be diligent about," Moulton said of the challenges inherent in using a self-service system. To nip potential customer comfort issues in the bud, he said, the chain trains employees to "watch for folks who don't understand the concept" and to "walk around the counter to help them."

"Once you help them do it once, the fear goes away," Moulton said.

Wawa's Cunningham said the Radiant kiosk and kitchen production system used by his chain on average "took eight hours of labor out of the store" weekly. He said the system enables the chain to take multiple orders simultaneously during rushes, which reduces lines and contributes to greater customer satisfaction and overall efficiency.

"The important thing is that the order is right, and [customers] don't get an unpleasant surprise when they get back to their car or office," Cunningham said. Kiosk-related questions on customer satisfaction surveys indicated that a full 97 percent of Wawa's guests approve of the arrangement, he added.

Along with touchscreens and graphical user interfaces, the latest generation kiosks include audio prompts for users as well as multimedia-rich marketing content. Some systems, including those by Radiant and InterMedia Kiosks, support centralized management of menu and pricing data, which is pushed down to the store level from headquarters across dial-up connections or wide-area networks. Kiosk hardware and software that facilitates credit or debit card payment as well as some cash-handling systems also are offered by some vendors.

The degree of integration between kiosks and point-of-sale systems varies among C-store users.

At Sheetz, which also uses Radiant Systems POS technology, foodservice-order details are transferred to the POS terminal after the counter clerk enters the order number provided to the customer on a receipt printed out at the kiosk. Systems that permit the clerk merely to scan a bar code version of the foodservice order number to speed transaction processing at the POS terminal are in test or being rolled out at both Sheetz and Wawa, officials of those chains said. However, Royal Farms counter clerks must key in foodservice order details at the POS terminal to complete the transaction, pending integration of the chain's order and transaction systems, which reportedly is now under way.

Royal Farms' Kemp confirmed that the InterMedia Kiosks system used by his company, including management applications, costs about $20,000 for a two-kiosk configuration. That system can be upgraded to three order points for an additional $8,000.

Kingsfield of Radiant Systems said that while there are "lots of variables involved," including the number of kiosks ordered and the degree of integration with POS or kitchen production systems, a two- to three-kiosk configuration can be had for between $10,000 and $12,000. He added that the return on investment for self-service technology can be as short as 12 months, but "certainly no longer than 18."

Wawa has tested self-order from the gas pumps outside its stores, and "we think there is an upside" in terms of increased frequency of foodservice purchases, Cunningham said. Nevertheless, he added, the chain is taking a "wait-and-see" approach, with no immediate plans to expand the trial.

To further facilitate line busting, Cunningham said, Wawa also "is working with Radiant to have a wireless kiosk that can be added during peak periods and removed at nonpeak times."

Moulton said Sheetz has the ability to accept credit card and stored-value card payments for foodservice orders at kiosks in two stores, but the chain still is analyzing the costs and benefits of the arrangement. Many foodservice customers buy products from other areas of the store, so accepting payment at the prepared-foods order kiosk won't always save people time and just might spur some to forgo the additional purchase in an effort to hasten their departure, he indicated.

According to Moulton, Sheetz's new, one-of-a-kind, prepared-foods-only, mall food court operation in Winston-Salem, N.C., is one place where it might make sense to feature pay-at-the-kiosk functionality.

Royal Farms' systemwide implementation of kiosks with both English and Spanish audio prompts is believed to be a first for the industry.


Posted by Craig at January 12, 2004 07:09 PM