Order Up: How Digital Ordering is Driving Increased Throughput & Profitability

Posted by Bobbie Cummins on May 14, 2018 9:55:40 AM

The allure of new technology is often reported in the context of attracting younger customers or keeping up with trends, but one of the best business cases for implementing new digital technology in the quick service restaurant space is the ability to increase throughput and drive profitability.

Lowering operational costs is perhaps the primary reason behind driving quick service restaurant operators to switch from traditional print menu signage to digital displays, especially in the drive-thru. With goals of boosting sales, reducing order time, and driving increased sales of items, the cynic might wonder if digital menu boards (DMB) can really deliver. But, now, research and real-world experience show that digital boards reduce time spent by employees updating menus, saving on printing costs, speeding up the process, and reducing food waste by improving order accuracy.

This all adds up to getting more customers through the drive-thru, which can represent as much as 70 percent of a quick service restaurant's day-to-day business, according to a recent QSR magazine article. But, what does that mean in real financial terms?

A December 2016 study conducted by Forrester Consulting on behalf of Samsung entitled, "The Total Economic Impact of Samsung Outdoor Digital Menu Boards," built a financial model based on a survey of 150 QSR operators and in-depth interviews with several customers. The survey of customers revealed overlapping ongoing challenges with their print-based menus including:

  • high variable costs of static menu signage
  • concern over keeping up with competitors' technological innovations
  • difficulty in making changes quickly to product, pricing, and promotional content
  • no ability to capture customer data or develop analytics on customer behavior.

Through the process of customer interviews, data aggregation, and financial modeling, Forrester reported that digital menu boards could increase drive through volume by 9.1%, increase average order value by 2.5%, and lead to a 2% increase in conversion for promotions over a 5-year period. The study also found a decrease in food waste, reductions in wait time, reduction in labor time spent updating and auditing menus, and an annual savings of $30,000 per location in printing costs.

Research aside, fast food giants like McDonald's and Wendy's, among others, are already serving as case studies of how initiatives that may have started in an effort to appeal to younger generations also bring additional benefits to the business.

After McDonald's began to roll out digital ordering in August 2017, the chain's market grew 5 percent and it reported stronger than predicted Q2 sales, according to a Fast Casual report. Wendy's, Chief Information Officer, David Trimm, told the Associated Press in February that its installation of digital kiosks was intended to attract younger customers, but would also reduce labor costs and wait times with an estimate of seeing return on investment in less than two years.

Similarly, for Arby's, "technology is moving at the speed of light and presents new opportunities to improve every aspect of the drive-thru experience" from merchandising to menu boards, payment systems, and more. Chief Operating Officer John Bowie told QSR Magazine in October of 2017 that the company is particularly excited about "the potential to speed up drive thru" experiences for its customers by leveraging new technology.

Finding the right solutions for your business is important. A Deloitte report exploring the restaurant of the future, smartly reminds businesses to use their own knowledge about its next-generation customer as it selects the right technology solutions. "Who are you – as a brand, as a host, as an employer? And what experience are you delivering?" The investments you make as a company must reflect your customer base and your own company identity, rather than just be a reflection of keeping up with competitors.

Whatever direction the new frontier of restaurants takes you, Bailiwick knows upgrading technology can help you differentiate your restaurant and reach desired business goals in the areas of profit, growth, and process efficiencies. Bailiwick specializes in working with quick-service and fast-casual restaurants in the design and deployment of IT solutions, including digital menu boards and touch-screen ordering technology, customized to help you meet your business goals.

Tags: IT Infrastructure, Fast Casual, Technology, QSR, Digital Menu Boards