In tech news that’s interesting to me, Wendy’s recently announced the intention to roll out the robots—or, in this case, 1,000 self-ordering kiosks—in high volume locations during the course of 2017. Even more interesting, David Trim, the company’s Chief Information Officer, reports that the company expects to see a return on investment in robot tech within two years or less of deployment. Two years or less—that’s pretty impressive. Robots, in the form of self-service kiosks, at your favorite fast food restaurant will likely be commonplace before you know it.
Let’s reflect on the fast food ecosystem for a minute—here are some fast food facts. Generating in excess of $570 billion globally, the fast food industry is a gigantic one. In the U.S. alone, revenue from fast food restaurants was $200 billion in 2015. To show you how we’ve evolved as a society and our increasing reliance on fast food meals, fast food industry revenue in 1970 was at about $6 billion.
To put that into digestible numbers—pun intended—in the U.S. alone we have over 200,000 fast food restaurants and some 50 million Americans eat at them. Every single day. We eat fast food—a lot. Why? Research indicates that consumers opt for fast food for three reasons, in this order: taste, price, and quality, and we don’t care that the food is highly processed, especially if it tastes good. Related: No wonder so many Americans are fat.
As a result of what consumers care about, the fast food industry’s focus is on three things: providing a consistent experience, affordability, and speed to process orders and deliver food. The more quickly orders can be processed and delivered, the happier the customers are—and of course, the more profitable the business. Have you ever pulled up at your fast food restaurant of choice and seen an impossibly long line in the drive thru (which of course we lazy Americans prefer), then opted to park and run inside to order? Ever been frustrated at how stinking long that process can often take, because it seems as if all efforts are focused on fulfilling drive-thru orders rather than taking orders from customers standing right in front of your face? Crazy, isn’t it? That’s where technology comes in.
The fast food industry is a big employer in the U.S., responsible for employing some 4 million plus people, and labor costs are one of the industry’s biggest challenges. Fast food restaurants generally have high labor costs, which include staffing both the kitchen and the front lines, as well as cleaning crews. With trends in the last few years of fast food workers lobbying for (and in some instances getting) higher wages, especially in larger cities, that has an inevitable impact on profitability.
The hamburger business dominates the lion’s share of the fast food category, with some 30+ percentage of the total market share. To illustrate that, here’s the the top 10 brands dominating the fast food and fast casual landscape from QSR’s August 2016 report:
You’ll notice that McDonald’s, Burger King, and Wendy’s combine to represent a whopping $54+ million in U.S. systemwide sales for 2015 (and I can’t find where 2016 has yet been reported, but you can rest assured that I looked).
This is what sets the stage for disruption of the fast food industry in the way of technology—and robots. These fast food giants (and their fast-casual counterparts, I’m looking at you, Panera), need to do all they can to continue to maintain quality, keep prices as low as possible, and process and deliver orders quickly.
Wendy’s bet on robots inside high traffic restaurants makes sense. Trim reports that the self-ordering kiosks are intended to both help reduce labor costs as well as appeal to a younger customer base. Customers will continue to be able to order at the counter, but in a relatively short period of time, expect that to be supplanted by mobile ordering and payment.
For those of you who are like me—not young by a long shot, but incredibly tech savvy and always eager for a more rapid, more efficient way to do things—this makes a lot of sense. So, for the restaurant industry, whether your customer base is young or not-so-young, embracing technology, using robots and self-ordering kiosks to enhance the in-store customer experience, and adding mobile ordering and mobile payment gets customers what they really want—a food experience they can count on time and time again, at a price point they are comfortable with, without the frustration of waiting in a long drive-thru lane or in a never-ending queue inside.
Robots. Soon they’ll be everywhere.
Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging development, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”