Article
Is QSR digital signage finally at the penetration point?
Despite the technology's benefits, the price point has held many operators back — until now.
November 24, 2009
Digital signage and digital menu boards have shown plenty of promise for quick-service chains, especially their ability to offer centralized control over promotions, price changes and menu rollouts. But the commercial-grade screens' cost and limited warranties led brands to take a wait-and-see stance. Despite multiple tests of the technology, large-scale deployments seemed far off.
The wait may be over.
In the last year, the price of indoor commercial-grade LCD screens has dropped significantly — 23 percent according to a pricing study by self-service and digital signage software provider WireSpring Technologies Inc. And longer warranties are becoming more common.
"It's helped that the hardware has come down," said Scott Koller, executive vice president and chief operating officer for Wireless Ronin Technologies Inc., a turnkeyprovider of digital signage and interactive kiosk solutions. "A four (screen)-by-one (panel menu board system) four years ago would have cost $40,000. Now we're seeing them at $12,000 to $15,000."
Bill Gerba, WireSpring CEO, said some digital signage systems can be fully installed for as low as $4,200, including a three-year warranty and maintenance plan.
Koller said it's also significant that five-year warranties are now available, up from the one- to three-year plans in the past. Now, operators are seeing the return on investment as more achievable.
With prices that low, operators will soon be able to achieve the ROI of replacing printed point-of-purchase materials with promotional digital signage boards and digital menu boards. Those boards can promote by daypart and push limited-time offerings in a moveable, eye-catching manner printed materials could never achieve.
Even with prices coming down, operators, especially franchisees, haven't been convinced that digital boards are more cost effective than the traditional printed promotional materials, despite the length of time to print, ship and post them, Gerba said. Convincing franchisees to make the investment has been part of the struggle along.
"Cost is the driver, and as much as everyone would like to see (digital signage) both improve sales and reduce costs right now, it's still a one or the other game," Gerba said. "As soon as those two things coincide, we're going to see a much faster uptake and a lot less resistance on the part of franchisees."
Achieving an ROI
Koller said he expects the market to break open soon. Operator need, technological advancements and price point are finally at a meeting point, making large-scale rollouts in the near future likely.
The economy has slowed the deployment process down some, but QSRs have been waiting not only for the price to come down but for longer warranties. With five-year warranties now available, he said he's seeing a "tremendous amount of activity," including more requests for proposal and requests for information.
"It's all finally coming together," Koller said.
Koller predicts three of the top five QSR brands will likely announce "some type of real rollout in the next six to 18 months." If national menu labeling requirements become law as part of U.S. health-care reform legislation, the deployments may come even sooner as operators look for more efficient ways to update information.
Koller said QSRs are particularly motivated by the opportunity to solve the "operational nightmare" of ensuring all their stores are in compliance with current promotions, from printed POP materials to up-to-date pricing on menu boards. Digital promotional boards and menu boards can be centrally controlled, but they also speed up the delivery of materials because they can be uploaded across many stores at one time.
QSRs also are coming to accept that investing in digital menu boards will likely become an operational cost, especially as menus become more complicated, he said. The key is to optimize the board's potential, using it as a marketing tool.
Operators are tired of the clutter from the amount of printed POP in their stores, but that material also has lost its effectiveness as consumers tune it out. Complying with two to three price changes and menu rollouts a year is another challenge.
"It's not only one thing tipping the bucket" leading to the likelihood of large-scale deployments," he said. "All of the above and a healthy dose of each that I have to do this in a digital format."
The future of digital in QSR
Even at the right price, a system-wide deployment for a large chain may be far off. Digital signage experts said operators tend to be more open to installing digital boards in new or remodeled stores rather than replacing fully functional backlit boards or retrofitting existing locations.
WireSpring's Gerba takes Burger King's new 20/20 store model as a sign that chain's are accepting digital signage. The new contemporary design, which the company said is its new prototype going forward, incorporates digital panels, including menu boards. Many McDonald's modern store designs also feature the technology.
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Other chains, such as Tim Hortons, have segued into digital signage by starting with promotional panels, a less significant investment. More than 2,100 Tim Hortons stores in Canada have installed the LCD screens.
WireSpring has seen success with its Digital Signage Easy Start, a turnkey player introduced this spring. Small chains and franchisees with five to 10 stores have been deploying the player as a single digital menu board, a promotional panel or a greeting panel in entry ways. Once set up, the player requires little maintenance.
Harvey Friedman, founder and president of digital menu board solutions provider Epicure Digital Systems, said large chains, especially those with a franchise system, seem more open to rolling out such promotional panels before they would digital menu boards because of the panels' greater return on investment.
The promotional panels allow operators to forego printed material and to use the panels to
upsell, daypart and promote brand awareness. With enterprise level controls, brands can develop and schedule the deployment of their marketing calendar based on instant uptake. The digital panels also allow brands to be more nimble, whether shifting a promotion to a particular region or responding to a competitor's challenge.
upsell, daypart and promote brand awareness. With enterprise level controls, brands can develop and schedule the deployment of their marketing calendar based on instant uptake. The digital panels also allow brands to be more nimble, whether shifting a promotion to a particular region or responding to a competitor's challenge."So you'll see that being deployed before you'll see a full-scale 15-foot menu board," he said.
The area of greatest need for digital signage may be at the drive-thru, allowing operators to change their screens with a push of the button from inside rather than manually turning panels by daypart outside. But even though a number of outdoor boards have been tested, including digital presell boards at 60 Minnesota Wendy's franchised stores, the price is still too high for large-scale outdoor rollouts to come any time soon.
"It's a matter of hardware," said Wireless Ronin's Koller. "The software can handle outdoor, no problem. The hardware for five-year (warranties) doesn't exist."
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