Ziosk: Digitalizing the Fast-Casual Restaurant Experience
Digital transformation has created a revolution of change in fast-casual dining and Ziosk is at the heart of it all. Ziosk has taken advantage of an inherent problem: in a dining sector where speed and efficiency is key, the process of checking out can be onerous. For an industry that is widely known to be a late-comer to the technology revolution, the Ziosk implementation numbers are staggering: Ziosk’s 170,000 deployed tablets represents 95% of the tabletop tablets space as the company’s tablets are now used in 3,000 restaurants across all 50 states. The company has estimated that in 2016, there will be 750 million Ziosk users and an estimated $8 billion worth of transactions. [1] What started out as a check-out improvement product has grown into a hub for several massive restaurant chains (Chili’s, Applebee’s, Olive Garden, Friendly’s, Red Robin, Uno Pizzeria) to optimize a multitude of business problems.
Ziosk’s underlying technology supports a business model helps restaurants:
- Improve Check-out Time – Ziosk tablets eliminate the wait for a human server and thus shave roughly 5 minutes off each meal. Diners don’t have to ask for the bill or wait for change. [2] Quicker meals results in more satisfied customers as well as the ability for restaurants to turn more tables.
- Increase Loyalty – Restaurants have found Ziosk tablet users are 10x more likely to enroll in a restaurant’s loyalty club. [3]
- Collect More Accurate Guest Satisfaction Surveys – Before Chili’s introduced Ziosk tablets in 2014, they received ~1% response rate from customer surveys (customers were directed to the Chili’s website on their paper receipts). However, Ziosk has increased the response rate to 25% which has allowed for a bigger set of feedback data as well as a more evenly skewed dataset rather than extremes. [4] Furthermore, Ziosk provides their restaurant chain customers with reports that analyzes the data.
- Increase Ticket Sizes – Chili’s (which only uses Ziosk for drink and dessert orders) has found that Ziosk has led to a 20% increase in dessert sales, as the screen continuously entices the customers with pictures of featured desserts. [5]
- Increase Tips – Ziosk tablets have a default suggested tip amount of 20% (a strategy widely used by NYC taxis) which has led to a 15% increase in tip amounts, despite less interaction with and less reliance on the waiter. [5]
- Increase Security – According to Verizon’s 2014 Data Breach Investigation Report, restaurants contribute greatly to point of sale fraud in the US. With the Ziosk tablet, the credit card never leaves the hand of customer and the account information is instantly encrypted once it is swiped. [6]
Ziosk is also taking advantage of technology to drive its operating model:
- Revenue-Share Gaming – Ziosk is connected to Android’s app store where it has a selection of kid-friendly games for $0.99 for unlimited use. All revenue which is generated from the games is shared with the restaurant. With a high percentage of Ziosk tablet users playing games, restaurants have the ability for earn back a significant portion of Ziosk’s monthly service fee. Games also drive business to the restaurants as children often request to return to restaurants that have Ziosks. [1]
- Partnerships – Besides partnering with restaurants, Ziosk has also partnered with several technology companies to drive business. Ziosk negotiated a partnership between Chili’s and Uber where diners get a $20 credit for transportation. [7] Likewise, Ziosk has partnered with Samsung Pay to give the diner $5 off their bill of $10+ if they use Samsung Pay. [8]
While Ziosk was founded to decrease wait time and improve the check-out experience, I believe the company has taken the right approach by not trying to eliminate the server. Eliminating the server would be met with high resistance and adoption would be less likely. Instead, Ziosk has created a value-add for restaurants in trying to solve other business problems such as loyalty, satisfaction surveys, ticket sizes & tips, and security. Going forward, I believe Ziosk should further invest in their data collection and analyzation capabilities. On Ziosk’s website, the company states, “Through another proprietary tool, zData™, Ziosk provides daily, weekly and monthly reports on sales, server performance and guest satisfaction to help you run your business.” [8] The restaurant industry is becoming more and more interested in big data analytics, and Ziosk’s ticket size and customer satisfaction data is extremely valuable to its clients.
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Resources
[1] “Tabletop Tech Helps Diners Pass, Save Time”, Anne Reed, www.news-press.com – Part of the USA Today Nework, January 7, 2016.
[2] “Chili’s Has Installed More Than 45,000 Tablets in Its Restaurants”, Megan Garber, The Atlantic, June 16, 2014.
[3] “Olive Garden to Introduce Ziosk Tabletop Tablets”, Olive Garden Press Release, www.prnewswire.com, April 14, 2015.
[4] “At Chili’s, Tablets Help Wait Staff Turn Over Tables, Mohana Ravindranath, The Washington Post, June 29, 2014.
[5] “That Table on the Restaurant Table Will Make You Spend More”, Vanessa Wong, www.bloomberg.com, September 17, 2013.
[6] “Tablets To Provide Secure Payments In US Restaurants”, Robert Vamosi, Forbes, February, February 19, 2015.
[7] “Eating at Chili’s Can Now Get You a Free Uber Ride Home”, Benjamin Snyder, Fortune, March 12, 2015.
[8] www.ziosk.com
[9] “Chili’s Tablets Dine on Data to Boost Service”, Clint Boulton, The Wall Street Journal, July 17, 2014.
[10] “Hi, I’m a Tablet. I’ll Be Your Waiter Tonight.”, Stephanie Strom, The New York Times, June 20, 2014.
Waiting for a check after a meal is frequently the worst part of dining out, so I love that Ziosk enables customers to pay without having to wait for a server. I was surprised to see how many benefits the app has for restaurants outside of customer satisfaction. The return on investment for restaurants must be very positive — seems like a real win-win situation!
I do worry about the long-term sustainability of a hardware-oriented solution; I think there is a chance that mobile applications that enable payments directly from a diner’s mobile phone could obviate the need for restaurants to purchase a tablet. There are already several solutions that allow diners to pay from their phone, including the popular reservations app OpenTable. [1] Restaurants might be attracted to the mobile phone-focused model as it would save costs related to purchasing and maintaining the tablets. If I were Ziosk, I would develop a mobile application solution to ensure long-term success in the restaurant payments space, even if it cannibalizes tablet sales in the short term.
[1] Want to pay without the wait?, OpenTable website, https://pay.opentable.com/
HC great article, I have only used a Ziosk tablet once or twice but it did make a big difference especially when the restaurant was busy. I also like the fact that they are purposely not eliminating the waiter or waitress, other restaurants that require you to order through the tablet can be incredibly frustrating. I wonder if restaurants that have implemented this system have seen any negative perceptions to their restaurant by being seen as cheap or as a slightly dressed up fast food chain? Based on your research and the information you have provided it has made positive impacts in specific areas for the restaurant.
Many restaurants for years have used a similar technology in Canada and Europe where they have a remote card reader, but it still requires a person to bring the device over to the table. I agree with the first comment, it seems like great value added in the near term, but I am also concerned about the longterm benefits of this technology, and perhaps they will evolve over time to accept payments from smart phones. This seems like the logical next step for Ziosk and the restaurants.
I very much enjoyed this post– it was interesting to see not only how Ziosk brings digital solutions to restaurants but also how Ziosk has leverage technology to improve its own business strategy and operating model. As Ziosk scales up to feature in more restaurants, its data will become increasingly valuable: they could implement and restaurant consultancy business line that offers best practices gleaned from all the restaurants it covers; more broadly and creatively, once they have scaled sufficiently, their data could serve as an excellent indicator of the financial health/growth of certain segments of the restaurant industry. They could conceivably license these findings to financial institutions.
I didn’t see it mentioned in the article, but I imagine this also cuts down on the waitstaff needed. Additionally, I imagine the cut the restaurant takes of the waiter/waitress’ tip also increases since the tablet is “helping” with the service. Also, I couldn’t help but notice that Ziosk is targeting large chains that don’t take reservations. I assume this is a tactic to gain traction with restaurants that aren’t using a potential competitive platform like OpenTable.
I share the same sentiments as abcedfg regarding the hardware focused long term solution. While I like Ziosk getting exposure and getting in with the tablets, I don’t think it’s sustainable. I think it will cost too much to consistently update your sites with new tablets when the old ones become obsolete or wear out. I also think the tablets limit the integration they can have with the business. I imagine the restaurants listed as partners for Ziosk would love to have somebody manage their online orders, pickups, deliveries, automatic payments when the meal is over, etc. I wonder if that is part of the long term vision once this initial phase of testing the customer’s willingness to interact with a digital platform as opposed to a human is over.