Samsung commissioned Forrester Consulting to conduct a Total Economic Impact (TEI) study to examine the potential return on investment (ROI) quick-service restaurants may realize by deploying outdoor digital menu-board displays in their drive-thru locations. Read the entire study here.
The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of outdoor digital menu boards on their restaurant’s business outcomes. To better understand the benefits, costs, and risks associated with deploying outdoor digital menu boards, Forrester interviewed several existing Samsung customers with multiple years of experience using outdoor digital menu boards. Forrester also conducted an online survey of 150 restaurant professionals involved in selecting outdoor menu signage solutions for their organization, to gain a better understanding of the current market impact, attitudes, and behaviors with regards to menu signage solutions.
With Samsung’s ruggedized outdoor digital menu boards, restaurants are able to dynamically change outdoor menu-board content based on sales, customer, and contextual data, without the cost and resource constraints imposed by traditional printed menus.
Prior to adopting Samsung outdoor digital menu boards, quick serves typically used static, printed menu signage in their drive-thrus, inhibiting each restaurant’s flexibility to change menu items, prices, or promotions based on market conditions, and forcing the organizations to incur costly printing expenses each month. Using Samsung outdoor digital menu boards to digitally transform their drive-thrus, organizations were able to reduce their operating costs, improve their operational performance, and deliver a better customer experience through more relevant and targeted digital content, increasing sales and profitability.
The results came from interviews with two existing customers, an online survey of 150 outdoor digital- and print-menu stakeholders, and subsequent financial analysis.
Benefits
The composite organization experienced $2,492,738 risk- and present value-adjusted quantified benefits over the five-year forecast period, comprising the following benefit categories:
Increased restaurant profit by $693,201 by increasing the volume of drive-thru customers served weekly. Use of Samsung’s outdoor digital menu boards in its pilot drive-thru locations resulted in improved customer throughput and a 5.75 percent decrease in average drive-thru wait times. As a result, the composite organization was able to increase drive-thru customer traffic volume by 9.1 percent since deploying outdoor digital drive-thru menu boards, positively impacting store profitability.
Increased restaurant profit by $578,297 by improving the conversion rate on promotional items. By using outdoor digital menu boards in its drive-thrus to increase the effectiveness of its promotional campaigns, the organization was able to increase the conversion rate on promotional items by 2 percent, resulting in an uplift in profitability for its pilot store locations.
Increased restaurant profit by $161,442 due to an increase in average order values. By leveraging dynamic digital content and augmenting its upselling capabilities, the composite organization saw the average order value of purchases made in its pilot location drive-thrus increase by 2.5 percent since deploying outdoor digital menu boards, resulting in an uplift in profitability across its pilot restaurants. For instance, customers were more likely to add additional items to their orders, such as fries and beverages, when ordering at drive-thrus with digital menu displays.
Reduced restaurant labor, administration, and printing expenses by $1,047,504. By digitally transforming its outdoor menu boards, the composite organization eliminated the printing costs associated with its legacy drive-thru menu solutions while reducing its labor costs through more-efficient and less labor-intensive menu board datachange management, and centralized menu board auditing capabilities. As a result, the organization was able to significantly improve its cost structure and reduce its ongoing operational expenses.
Reduced restaurant food waste costs by $12,295. Using Samsung’s outdoor digital menu-board displays, the organization was able to improve drive-thru menu board visibility and increase order accuracy, reducing food waste costs by 5 percent in each of its pilot drive-thru locations.
Costs
The composite organization experienced $841,432 in risk- and present value-adjusted costs over the five-year forecast period, comprising the following cost categories:
Outdoor digital menu display hardware and software costs of $455,697. These costs include upfront expenditures for outdoor digital display hardware, media player, warranty, enclosures, mounts, cables, and other network connectivity hardware and equipment. In addition, this cost category includes the annual expense of a content management software subscription, along with an associated maintenance and support contract, needed to run and manage digital menu content.
Implementation and system integration costs of $68,200. These costs include initial outsource fees paid to a system integrator for site surveying, installation, testing, and integration with other store systems. Additionally, this cost category includes internal deployment team expenses, which accounts for the internal project management, IT, marketing, and operational resources required to plan, design, deploy, and manage the composite organization’s outdoor digital menu-board pilot program.
Ongoing outdoor digital menu board management and maintenance expenses of $317,535. These costs include internal ongoing resource costs associated with running, maintaining, and managing each restaurant’s outdoor digital menu-board displays, along with external costs for bandwidth, hardware maintenance and support contracts, and incremental creative content costs.
In addition, the analysis found that as the representative quick service organization scaled the size of its deployment, it was able to grow the ROI and Net Present Value from its investment, while concurrently reducing its payback period.
In order to better understand the current state of menu signage, Forrester conducted an online survey of 150 U.S. respondents to evaluate their attitudes and feelings related to print and digital menu signage. The study focused on organizations’ behavior and their attitudes toward the use of menu signage alternatives. From the survey, they uncovered the following key demographics:
The majority of respondents surveyed had 20 or more drive-thru locations, with an average of 54% of their revenue being generated from their drive-thrus.
The majority of respondents served around 800 drive-thru customers each week, and lunch (11 a.m. to 2 p.m.) was the most common timeframe the drive-thru was visited, followed by dinner (5 p.m. to 8 p.m.).
Eighty-nine percent of these restaurants are changing their menu board one to three times daily, and they are running an average of 3.7 promotions each month.
Of the 150 respondents surveyed by Forrester, 136 respondents use print menu signage solutions in their drive-thru locations. From the survey, they discovered that:
Print menu users are concerned about the costs of print signage and keeping up with the competition. When they asked print menu users about their pain points or issues associated with their current print drive-thru menus, 51 percent of respondents said they were equally concerned with the high variable costs associated with static menu signage and the difficulty of keeping up with their competitors’ technological innovations. Print menu respondents were also very concerned about the difficulty of making changes quickly to their product, pricing, and promotional content, with 50 percent of responses noting this as a current pain point. In addition, respondents were concerned about ensuring menu pricing and promotional consistency across location (46 percent) and their inability to capture real-time customer data in order to create more extensive analytics on customer behavior (45 percent). Lastly, since the FDA will require all restaurants to provide visible nutritional information on their menu boards by December 2016, 44 percent of print menu respondents indicated that they were concerned about their ability to comply with this rule.
A similar question was asked of respondents who had already implemented digital menu boards in their drive-thru locations. The survey found a similar response, with all 17 of outdoor digital menu-board respondents indicating that they moved to outdoor digital menu boards to expedite the process of making menu-board price and product changes, as well as providing a better customer experience. Fifteen of the 17 survey respondents identified the desire to improve sales and upselling capabilities as a pain point that served as the catalyst for switching from static drive-thru menus to outdoor digital menu displays.
The majority of respondents currently using print menus plan to implement digital menus within their restaurants. When asked if they were planning to use digital display menus within their restaurant, 87 percent of respondents said they planned to implement digital menus inside their restaurant, and an overwhelming 95 percent of respondents said they planned on implementing outdoor digital drive-thru menu displays. Looking at the time frame, the majority of respondents noted they planned to replace their print drive-thru menus with digital displays within the next two years.
Print menu users see digital menus as a way to increase sales and improve profitability in their drive-thrus. When they asked respondents to select areas in which they felt outdoor digital drive-thru menu displays would impact their organization, 62 percent cited increased sales and improved probability as a top three expected benefit. In fact, 46 percent ranked this as their No. 1 expected benefit. Print menu respondents also expected that, with the implementation of outdoor digital drive-thru menu displays, they would see a more efficient drive-thru process. Respondents also expected to see an increase in customer satisfaction and an improvement in their overall customer experience with digital menu displays. Forrester found that these expected benefits line up closely with the benefits they heard during our conversations with restaurants currently using Samsung outdoor digital menu boards in their drive-thrus, highlighted later on in the case study.
Of the 136 print menu respondents the company spoke with, only five of those stated they were not considering digital menu displays. The most common reason cited for not considering digital menu displays was the inability for current technology to meet their needs. Some were also concerned about high investment costs. When asked why these individuals felt that the current technology could not meet their needs, the most common reason cited was durability concerns, followed by the risk of system downtime.
Digital menu respondents report higher customer satisfaction, less food waste, and lower labor expenses than print menu respondents. Forrester asked survey respondents using both print and digital menu displays about their customer satisfaction scores. Respondents most commonly used Net Promotor Score. Since switching from print menus, those with outdoor digital menu boards for their drive-thrus noted a 21-point increase on a 100-point scale. Digital menu display respondents also indicated a reduction in monthly food waste, cutting the monthly cost of wasted food caused by poor menu-board visibility and order inaccuracy. Deployment and support labor resources for outdoor digital menu boards were lower; digital menu respondents required 1.7 fewer FTEs per property for planning and deployment of their outdoor digital drive-thru menus, compared with print menu users, and 2.21 fewer FTEs per property for ongoing support of those menu boards. Finally, digital menu respondents also noted they required 1.3 fewer FTEs for content management, auditing, and menu-board maintenance relative to their print menu counterparts.
Forrester conducted a total of two interviews with representatives from the following companies, who are current Samsung customers:
A US-based portfolio of quick-service restaurant chains, serving lunch and dinner to customers in over 300 restaurants located across eight states, with 7,500 employees and average unit volumes of approximately $1 million. Prior to piloting Samsung’s outdoor digital menu boards, the company struggled to control, manage, and ensure the consistency of its outdoor menu displays across its highly distributed restaurant footprint. To ensure a positive, consistent guest experience across the chain’s footprint in a cost-effective way, the company needed to find a way to achieve economies of scale by allowing its field marketing team to verify the accuracy and consistency of the products, pricing, and promotional content on its outdoor menu boards across the store’s footprint, from a single point of control.
A global chain of quick-service restaurants serving breakfast, lunch, and dinner to customers across tens of thousands of restaurants globally, with average unit volumes of approximately $2.5 million. The technological and cost constraints of its static outdoor menu signage prevented the organization from changing the content on its outdoor menus more frequently and intelligently. The organization was moving toward outdoor digital menu boards as a way to be more dynamic with its content and to better target its drive-thru customers with relevant and personalized offerings. Doing so was intended to improve restaurant sales and profitability, while also augmenting the customer experience and brand loyalty.
The interviews revealed that:
Samsung outdoor digital menu boards enable organizations to digitally transform their menu content to drive increased sales and profitability. Leveraging the inherent flexibility of digital menus to deliver dynamic and captivating digital menu content to drive-thru customers, interviewed organizations and online survey respondents reported an increase in drive-thru customer traffic, average transaction sizes, and promotional item conversions.
Organizations needed a way to improve their cost structures by lowering their operating costs and by achieving economies of scale. Using Samsung outdoor digital menu boards, organizations were able to achieve economies of scale from an augmented ability to control and validate menu-board data electronically from a single point of control, significantly reducing the labor burden on restaurant management and field marketing resources. Additionally, interviewees noted a significant reduction in recurring printing costs through the adoption of Samsung outdoor digital menu boards.
Samsung outdoor digital menu boards improved organizations’ flexibility to rapidly react to changing market conditions, improving speed-to-market and the customer experience. In addition to avoiding the high printing costs associated with static menu boards, interviewed organizations needed a way to increase their calendar of offerings and better respond to market conditions. One interviewed organization noted that, “if we have a really good promotion period and we’re selling through our inventory quickly, we may want to adjust our menus to promote these items even more to drive increased sales. Using print menu signage, we have no ability to do this today, but with the digital menu boards, we can make those changes.” In addition, interviewed organizations noted that Samsung outdoor digital menu boards enabled the organization to deliver more-dynamic and relevant digital content, promotions, and product recommendations to customers relative to their legacy static outdoor menu signage solution.
