Kiosks eliminate the need to roster more staff or hire temp workers during rush hours. With kiosks, QSRs will see a sizable contraction in labor costs.

July 21, 2022 | by Dinesh Saparamadu — CEO, Applova Inc.

Inflation is defined as an increase in prices and a decrease in the purchasing value of money. Any economist will confirm that steady and predictable inflation is necessary for an economy to grow. According to the Federal Reserve, a healthy rate of inflation ranges between 1.5% and 2% year-over-year. At this ideal pace, costs go up gradually making it easier for businesses to deal with incremental changes in pricing.

Over the last year, inflation in the US has skyrocketed, hitting a 41-year high of 8.5% in March. Although the rate dropped to 8.3% in April, according to Trading Economics, inflation is unlikely to fall to pre-pandemic levels any time soon and will remain well above the Federal Reserve's ideal of 2% for a long time to come.

This is not good news for businesses as costs will keep rising. QSRs have already taken quite a pummeling thanks to inflation, with food prices soaring even beyond inflation levels. In April, the price of food jumped 9.1% - the highest increase since 1981. Add to that the increase in costs of electricity, natural gas, rent, transportation, maintenance, and repairs, and QSR operators are looking at consistently escalating expenses.

Inflation has also taken its toll on labor costs. Following the Great Resignation brought about by the COVID-19 pandemic, workers, especially those in the restaurant sector, are no longer satisfied with a minimum wage. They are now looking for a livable wage and this figure has gone up significantly thanks to inflation. QSRs were already short-staffed pre-pandemic and finding suitable employees has become a bigger challenge because of the demand for higher pay.

The grim reality is that running a QSR is extremely expensive. One way to counter this would be to increase the prices of food and drinks, but this will have dire consequences. When customers walk into a QSR, they expect to get a reasonably priced meal and so there is only so much of a price hike that they will be willing to put up with. Anything beyond that and patronage is sure to drop. A more rational approach would be to cut costs.

Some costs — particularly ingredients, electricity, transport, and the like — are beyond the control of restaurant operators. While it may be possible to substitute ingredients and switch to power-saving equipment, the reduction in spending will be marginal. In order to see a substantive shrinking in expenses, QSRs need to automate.

Digitization makes a restaurant more efficient by streamlining operations. By taking on the work of several people, technology can scale down staff requirements and enable the allocation of more meaningful and valuable duties to staff. Labor costs will drop leading to a plunge in a QSR's overall expenditure.

Automation comes in many different forms and can fulfill a range of needs. For a QSR, one of the easiest ways to go about introducing technology is to start with front-of-house operations. QSRs need a large number of people to accept orders and process payments. The self-ordering kiosk can carry out these tasks with no human intervention needed.

Whether it is free-standing, wall-mounted, or table-top, all self-ordering kiosks accept orders and process payments. A QSR will not need to assign staff to attend to customer orders and can instead allocate other duties to them. By automating two key front-of-house tasks (ordering and payment) the number of staff needed per shift will be reduced. Kiosks are also a lot faster than a human being, facilitating higher turnover. This is very handy during peak times when there is a sudden influx of customers. Kiosks eliminate the need to roster more staff or hire temp workers during rush hours. With kiosks, QSRs will see a sizable contraction in labor costs.

Machines do not get tired or fall sick. They will not ask for a pay increase or leave. They will not quit suddenly. On the contrary, they will function without a break without complaint or fuss. They are reliable and stable. Requiring just a one-time investment, kiosks remove all ongoing and steep labor costs like salaries, paid leave, perks and incentives.

A kiosk's data analytics function paves the way for more sound decisions and sensible spending. By identifying customer demand and preferences, QSR operators can populate their menus with items that are guaranteed to sell. Purchase patterns based on time of day, week, month, or season, can reveal peaks and drops in demand, allowing for proper inventory planning: anticipating the changes in take-up of certain menu items allows QSR operators to order appropriately, preventing wastage. In this way, restaurants can manage their spending and reduce costs by buying more prudently.

Above and beyond bringing down labor-related costs, kiosks can actually help QSRs make more money. Kiosk orders are on average 15-20% higher in value than orders placed with a cashier. Attractive pictures, automated cross-sell and upsell options, and customer comfort are some of the key factors contributing to the higher spending. Whatever the reason may be, kiosks bring in more revenue, helping to boost QSRs profits.

Because reducing costs is the ultimate goal, choosing the right type of kiosk is paramount. Spending big bucks to be able to install kiosks is not sensible. If the QSR's entire set-up needs to be overhauled the expense will not make sense. To be economical, a QSR needs a standalone model that can easily integrate with their existing POS.

QSR operators should also do due diligence on kiosk vendors and find a company that is reliable and has a proven track record. Testimonials, reviews and references are good indicators. Customer support beyond the initial set-up is another crucial feature to look for in a kiosk vendor. A company that provides a dedicated support team that is on call 24/7 would be a perfect choice.

While it is a fact that the current rate of inflation is hurting business, it is a reality that QSR operators must grapple with. The best response is to take steps to reduce a restaurant's costs. There are myriad variables that are completely beyond the control of any restaurateur and trying to change these would be futile. Instead, effort should be expended on factors that are within the control of a QSR and this is why a kiosk becomes one of the most effective weapons to combat inflation.

Dinesh Saparamadu is CEO and founder of Applova Inc., a company focused on delivering innovative kiosks and mobile app-building platform technology. Saparamadu is also CEO and founder of hSenid Group of companies and is chairman of the board of PeoplesHR.

Subscribe now to the Restaurant Operator Daily, which brings you the top stories from Fast Casual, Pizza Marketplace, and QSR Web.

Already a member? Sign in below.

sign in  or register now

You may sign into this site using your login credentials from any of these Networld Media Group sites: