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McDonald's Kiosk Rollout Is Accelerating Across the U.S.

The Motley Fool logo The Motley Fool 6/8/2018 Daniel B. Kline

In the near future, you will be able to order two all-beef patties, special sauce, lettuce, cheese, pickles, onions, on a sesame seed bun without interacting with a human being. In fact, you'll be able to easily customize your Big Mac -- perhaps skipping the special sauce and doubling up on the pickles -- by using a McDonald's (NYSE: MCD) "Create Your Taste" kiosk.

Part of the company's "Experience of the Future" plans, the kiosks have been in testing since 2015 in the United States, and have already been deployed widely in other parts of the world.

Originally, the kiosks were part of a test to allow consumers to opt for high-end burger toppings like guacamole or a variety of sauces. That effort to make the chain's burgers more customizable and upscale was abandoned a year later. The technology, however, remains part of the company's long-term plan, and CEO Steve Easterbook explained its future role at the burger chain in a recent appearance on CNBC.

McDonald's plans to add kiosks at 1,000 U.S. locations per quarter for at least two years.© McDonald's McDonald's plans to add kiosks at 1,000 U.S. locations per quarter for at least two years.

What did the CEO say?

Easterbrook sees the kiosks as a key component in McDonald's strategy to give customers more ordering options. Other updates on that score include the ability to orders through the chain's app, and adding curbside pickup and delivery.

The kiosks allow customers to more easily see McDonald's entire menu, and customize their orders. And after paying for their meal (via credit or debit card), diners can take a Bluetooth-enabled tent card to a table, sit down, and their food will be brought to them. It's a system built around simplicity, and it leads to customers spending more, according to Easterbrook.

"What we are finding is that when people dwell more, they tend to select more," he told CNBC. "There is a little bit of an average check boost."

The CEO noted that McDonald's is a bit behind the curve when it comes to adding kiosks to its U.S. restaurants -- in some of its foreign markets, all of its sites have them. To catch up, the chain plans to add the devices -- and other Experience of the Future features -- to 1,000 U.S. locations per quarter for at least the next two years.

While kiosk-based ordering has led to higher sales in international markets where implementation is further along, Easterbook would not offer details about how much of a bump he expects from them domestically. He did, however, express confidence that they will drive increased sales.

"We do know it helps grow the business," he said. "Customers come back more often, they stay a little longer, and they're just more engaged with the brand. ... We can't get there quick enough in the U.S."

Will this work?

Having more choices is something that consumers generally enjoy. In this case, the easy-to-use kiosks offer a couple of other benefits to McDonald's. (And we're not talking about lower labor costs -- the company has said the kiosks won't lead to reduced restaurant staffing.)

First, they take a significant proportion of human error out of the equation. A tired or disinterested order-taking human can easily mishear "hold the mayo," or forget to make that notation on the order. Kiosk ordering removes that potential pain point, which should lead to increased customer satisfaction.

The second upside is one the company isn't talking about. It's possible that consumers place larger orders at kiosks because they remove a certain level of shame from the process. When ordering face-to-face with another person, a customer might, for example, refrain from adding a 20-piece McNuggets box to their meal, or instead go for the 10-piece option, because they subconsciously worry about being judged by the cashier. Not having to speak with a person may make it a touch easier for people to indulge themselves.

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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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