Technology and the Fast Food Industry

Nov 21, 2016 • By • 409 Views

By Tricia Drevets

Just as it has with everything else in our culture, technology is changing the fast food industry.

Last week, McDonald's announced that is adding self-service ordering, "smart" menu boards and mobile payment options for its U.S. locations.

McDonald’s has tested the new order system in 500 remodeled restaurants that now feature what it calls a “just-for-you experience” in Florida, New York and California and is now rolling them out in Washington, D.C., Boston, Chicago, San Francisco and Seattle.

The new system already is in place in 2,600 McDonald’s restaurants around the world. So far, in the U.S., families and large groups are the biggest users of the kiosks, since the technology makes it easier to customize orders.

Customers can place their orders at sleek, vertical touchscreens, pick up a number with a digital locator, and then take a seat. When their order is ready, servers bring their food to their table.

The new self-order system will augment, not replace the traditional counter order system in an effort to speed up the whole ordering and food delivery process for customers. The theory is that people are more comfortable waiting at their table for their food than waiting in line to place an order.

McDonald's also will pilot mobile ordering early next year. At a recent press event, Chris Kempczinski, who will take over as McDonald's USA president on Jan. 1, said ordering and payment will be added to the McDonald's app, which more than 16 million people already have downloaded.

Industry experts predict that smartphone orders will comprise more than 10 percent of all fast service restaurant sales by 2020. The pizza industry, which relies heavily on delivery service, is at the forefront of mobile ordering innovations.

With its new motto "easy beats better," Pizza Hut has even introduced a way for customers to track where their pizza is in the preparation and delivery process.

In this year’s first quarter, nearly one-fourth of Starbucks' orders were paid via the company's app. Mobile customers van order, pay and link into the coffee purveyor’s rewards program all at the same time.

Taco Bell reports that mobile phone order orders for the first quarter of 2016 were on average 30 percent greater than in-store orders.

The Panera Bread chain already has ordering kiosks for customers in place in about 500 of its restaurants, with plans for all of their nearly 2,000 units to have them by the end of the decade.

Is the new technology replacing employees? With labor costs rising, the possibility of saving money with apps and kiosks is certainly there.

At the recent press event, McDonald’s CEO Steve Easterbrook said the new kiosks, which cost between $50,000 and $60,000 to install, are not expected to reduce the number of restaurant workers. Traditional order takers will help customers operate the kiosks and deliver food to tables, he said.

“We’ve not cutting crew; we’re redeploying them,” Easterbrook said.

Restaurants in the United Kingdom, Australia and Canada have already tested the self-ordering kiosks, and one McDonald’s executive said sales at a downtown London location rose 8 percent after kiosks were installed there.

Technology is not the only way McDonald’s – and the entire fast food industry -- is changing. Responding to consumer demand for fresher, more natural ingredients, McDonald's USA has switched from margarine to butter in its Egg McMuffin sandwiches. It has stopped using buns that contain high-fructose corn syrup and has stopped using chickens raised with antibiotics.

The chain also has pledged to transition to using only cage-free eggs over the next 10 years in the U.S. and Canada.

Wendy’s, Chick-fil-A and Dairy Queen are other examples of chains that are switching over to cage-free eggs.

Similar examples of fast food chains responding to customer demand for healthier menu choices are

  • Hardee’s and Carl’s Jr. recently became the first fast-food chains to sell all-natural chicken and beef.
  • Locally sourced ingredients are on the rise.
  • More restaurants are offering vegetables as a main course or as a side.

In other words, the fast food industry is attesting to listen more to what customers want.

At the press conference announcing the kiosk expansion, Easterbrook said, “For the best part of our 60 years, we’ve asked customers to fit around our business model ... (Now) we are putting more choice and control in the hands of customers.”

Whether the new changes will result in more sales remains to be seen. McDonald’s sales have slumped in recent years, and the chain closed more stores then it opened in 2015. Part of its attempts to turn things around included a much-ballyhooed introduction of an all-day breakfast menu last year.

Technology combined with a quicker experience for customers could help drive increased traffic, according to David Henkes, of the Chicago-based restaurant research firm Technomic, in a September interview with Crain’s Chicago Business.

 “There's no question that in the long term, technology is going to be a driver of productivity in some way.”

About the Author

Tricia Drevets Tricia Drevets

Tricia Drevets is a freelance writer and educator who specializes in business and communication topics.

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