Technology can benefit your business in ways you may not have considered. Ask McDonalds.

One of my favourite topics is media, technology and retail convergence. We used to have catalogues and the post office. Now we have DHL and take a lot, and a website with interactive catalogues and electronic payment and delivery systems.

But that is not the only way technology is impacting retail. Supply chain and demand management dominate the purchasing and distribution cycles in all high-volume modern retailers.

The next wave is AI and the customer interface! This may not look like you expect it too. It began with interactive in store and on app ordering. Leading the way are the fast food restaurants and take aways. The ubiquitous “Can I Upsize you? “and “ do you want fries with that? “have been replaced by automated order taking with little or no prompts other than menu ideas. “Big Mac chips a drink and a Mc Flurry”

When McDonald’s rolled out electrified kiosks, there was a major uproar, as many employees felt their jobs were on the line. Surprisingly, this was not the case.

Never fear

The CNN article points out that, in one of the earliest mentions of kiosks in fast-food settings in 1999, now-defunct trade industry publication Business Information said that McDonald’s was working to “develop an electronic order-taking system that may eventually replace some of its human equivalents.”

Instead, touchscreen kiosks have added extra work for kitchen staff and pushed customers to order more food than they do at the cash register. The kiosks show the unintended consequences of technology in fast-food and retail settings, including self-checkout. Chains are now experimenting with artificial intelligence at drive-thru lanes, and the experience with kiosks holds lessons for them.

Today, instead of replacing workers, companies deploy kiosks to transfer labour to other tasks like handing off pickup orders, help increase sales, easily adjust prices, and speed up service. (Many chains, including Subway, Chick-fil-A and Starbucks, do not use them much or at all.)

The article adds that kiosks “guarantee that the upsell opportunities” like a milkshake or fries are suggested to customers when they order, Shake Shack CEO Robert Lynch said on an earnings call last month. “Sometimes that is not always a priority for employees when you have got 40 people in line. You are trying to get through it as quick as possible.” Kiosks also shift employees from behind the cash register to maintaining the dining area, delivering food to customers, or working in the kitchen, he said.

A mixed bag

The CNN article points out that some McDonald’s franchisees — which own and operate 95% of McDonald’s in the United States — are now rolling out kiosks that can take cash and accept change. But even in these locations, McDonald’s is reassigning cashiers to other roles, including new “guest experience lead” jobs that help customers use the kiosks and assist with any issues.

“In theory, kiosks should help save on labour, but in reality, restaurants have added complexity due to mobile ordering and delivery, and the labour saved from kiosks is often reallocated for these efforts,” said RJ Hottovy, an analyst who covers the restaurant and retail industries at data analytics firm Placer.ai. Kiosks “have created a restaurant within a restaurant.”

The article adds that, in some cases, kiosks have even been a flop. Bowling alley chain Bowlero added kiosks in lanes for customers to order food and drinks, but they went unused because staff and customers were not fully trained on using them.

“The unintended consequences have surprised a lot of people,” Hottovy said.

Upsell

The CNN article points out that even some of the benefits of kiosks touted by chains — they upsell customers by suggesting menu items and speed up orders — don’t always play out. A recent study from Temple University researchers found that, when a line forms behind customers using kiosks, they experience more stress when placing their orders and purchase less food. And some customers take longer to order tapping around on kiosks and paying than they do telling a cashier they’d like to order a burger and fries. Not to mention the kiosks can malfunction or break down.

“If kiosks really improved speed of service, order accuracy, and upsell, they’d be rolled out more extensively across the industry than they are today,” Hottovy said.

Self-service technology

The article adds that kiosks have also been threatened as a fast-food industry response to higher minimum wage laws.

“I told you so,” former McDonald’s CEO Ed Rensi said in 2016 after the company expanded kiosks. “I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives.”

California this year raised the minimum wage for the state’s fast food sector workers by $4 to $20. It raised a familiar refrain that those workers would be replaced by technology, such as self-service kiosks.

The CNN article points out that the quick-service and fast-casual segments of the restaurant industry continue to grow. Staffing levels were nearly 150,000 jobs, or 3%, above pre-pandemic levels, according to the latest Labor Department data.

Christopher Andrews, a sociologist at Drew University who studies the effects of technology on work, said the impacts of kiosks were similar to other self-service technology such as ATMs and self-checkout machines in supermarkets. Both technologies were predicted to cause job losses.

“The introduction of ATMs did not result in massive technological unemployment for bank tellers,” he said. “Instead, it freed them up from low-value tasks such as depositing and cashing checks to perform other tasks that created value.”

The article adds that self-checkout also has not caused retail job losses. In some cases, self-checkout backfired for chains because self-checkout leads to higher merchandise losses from customer errors and more intentional shoplifting than when human cashiers are ringing up customers.

Fast-food chains and retailers need to do a better job communicating what the potential benefits of kiosks and self-checkout are to consumers and employees, Andrews said.

“What I think will be central for customers is that they see how this technology is providing them with more or better service rather than more unpaid busywork,” he said. “Otherwise, the public is just likely to view it as yet another attempt to reduce labour costs via automation and self-service.”

Conclusion

During his last televised interview in 2018, Steven Hawking made the following statement: ever since the start of the Fourth Industrial Revolution, there have been fears of mass unemployment as machines replace humans. Instead, the demand for human-based goods and services has risen in line with the increased capabilities of machines.

Technology can benefit your business in ways you may not have considered. However, it needs to be implemented effectively, and it comes at a significant cost. Don’t let this scare you; the benefits will outweigh the initial capital commitment.