Digital Menu Boards and ROI - Moxy Restaurant Solutionsmoxyrestaurantsolutions.com/.../Digital-Menuboards... · 2013 Networld edia Group | Digital enu oards and ROI 4 Neither of those

Digital Menu Boards and ROIFinding the break-even point for digital signage in foodservice.

2© 2013 Networld Media Group | Digital Menu Boards and ROI

Page 3 Introduction | Digital menu boards: The promise and the reality By Christopher Hall, editor, DigitalSignageToday.com

Page 5 Chapter 1 | Sales uplift versus margin per transaction

Page 9 Chapter 2 | Keeping up with the Joneses, and other soft ROIs

Page 12 Chapter 3 | Nobody’s climbing a greasy ladder to change the price of a cheeseburger

Page 15 Chapter 4 | Agility

Page 17 Chapter 5 | Promotional boards or order- confirmation displays

Page 19 Chapter 6 | Content

Page 21 Conclusion | The final word

CONTENTS

Outdoor Digital LCD Displays

Digital Menu Boards and ROI © 2013 NetWorld Media Group LLC13100 Eastpoint Park Blvd., Louisville KY 40223. (502) 241-7545. All rights reserved. No part of this publication may be reproduced without the express written approval of the publisher. Viewpoints of the contributors and editors are their own and do not necessarilyrepresent the viewpoints of the publisher.

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Christopher Hall, editor, Digital Signage [email protected]

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Alan Fryrear, [email protected]

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Digital menu boards: The promise and the realityBefore you can figure out how long it takes to get a decent return on investment, or ROI, first you have to figure out what kind of ROI you’re looking to achieve.

And for QSRs and other restaurants deploying digital menu boards, the ROI could be any number of things, from branding a chain wants to achieve to hard number sales uplifts that others are looking for.

Depending on who’s doing the talking, those different kinds of ROI could be called hard and soft ROI, or tangible and intangible ROI, but the point is the same either way: Some kinds of ROI are achieved and shown by cold, hard numerical truths, and some are achieved and shown in harder to measure or quantify ways.

This guide will take a look at some of the benefits achieved by restaurants deploying digital menu boards or DMBs; some of the different ways those operators are determining their ROI; and the varying times it takes to attain a return on their initial investment from this burgeoning technology solution.

Some big numbers have been thrown around in trade publications and press releases, but as the head of one large QSR chain told Andrew Hoffman of DMB provider Noventri, in response to claims of 20 percent sales uplift: “If that 20 percent sales lift was real, then they would have people lined up around their building multiple times.”

Or, as Rich Ventura of NEC Display Solutions puts it: “If you can go to a res-taurant and say that I can get you 320 percent uplift there’d be digital menu boards in every single restaurant in North America right now.”

INTRODUCTION

Digital Menu Boards and ROI

By Christopher Hall, editor, DigitalSignageToday.com

“If you can go to a restaurant and say that I can get you 320 percent uplift there’d be digital menu boards in every single restaurant in North America right now.” — Rich Ventura, vice president of product marketing and solutions, NEC Display Solutions


Neither of those things, fairly obviously, is the case right now.

(*Industry experts will say that 20 percent or 320 percent uplifts are possible with digital menu boards or their accompaniment, digital promotional boards or order confirmation displays, but generally only on one or two selected items, as opposed to across the board uplift.)

A perhaps more accurate number, gleaned from talking to a variety of sources on both sides of the DMB divide — both providers and end-users — is about 3 to 5 percent. For indoor DMBs, a sales uplift of about five percent seems to be the mean.

But there are some significant fluctuations, dependent on any number of variables, from how effective the content is at attracting attention without dis-tracting, to something as simple as whether the DMBs are deployed in a food court location or in a standalone restaurant.

“It’s interesting,” Ventura said, “because the ROI numbers are all over the place; a lot of it’s going to depend on what they’re doing and what the config-uration is looking like and what they’re doing with it. Establishing objectives and how you measure success against them are key to establishing ROI.”

Some, though, don’t look as much at overall sales lift as they do at average margin per transaction, or getting customers to buy menu items with a higher profit margin for the end-user.

Then there are other variables in addition to sales lift or margin per transac-tion that can save or add costs — reduced labor costs, lowered liability for potential injury, etc. — that add layers of complexity to any simple analysis.

And finally there’s the variance in costs — with ballpark costs ranging from as little as $10,000, all included, up to as much as $65,000 or so — that change the timeline for even a more direct sales lift/ROI examination.

“There are so many multiple aspects when it comes to talking about this subject,” Hoffman said.

“Early on in the game, we thought it was as simple as, ‘Okay, we’re getting x amount in sales. If we install this technology we’re going to get this amount in sales.’ But it’s actually a little bit more intricate than that.”

INTRODUCTION Digital menu boards: The promise and the reality

Measuring ROI

Knowing what ROI you want to achieve is crucial for determining the success of a digital menu board deployment. And ROI is more than just sales uplift (although that’s important). Some companies also include the following in their ROI analysis:

Average margin per transaction

Increased sales of higher profit-margin items

Reduced labor costs


CHAPTER 1


“From the very beginning, when they first started looking at it, the objec-tive was they had to get 5 percent before they’d consider rolling it out,” said DMB pioneer Scott Sharon, president of Vertigo Group USA, and, by his own admission, a somewhat-controversial-to-some figure who’s been involved with DMBs for years.

About eight or so years ago, three major chains all tested digital menu boards and saw sales uplifts over the 5 percent mark, according to Sharon, although the exact figures were kept confidential.

“I have heard recently of returns up to 20 percent, but there’s so many fac-tors that that’s depending on, and it also depends on how well they keep the records,” he said.

With promotional offer panels highlighting one or a few items, though, sales lifts of 20 percent or more aren’t unheard of for those items, he said:

“But I’ve always contended that doesn’t mean anything; what does it do to your overall sales?”

Sales uplift versus margin per transaction

“But I’ve always contended that doesn’t mean anything; it’s what does it do to your overall sales.”— Scott Sharon, president of Vertigo Group USA.

36 months

27 months

18 months

9 months

0 months$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000

Average time to recoup investment in DMBs

= break-even point. Typically, it takes a deployer between nine and 18 months to recoup the initial investment in a digital menu board system.


But the question of sales lift figures haven’t been at the root of the delay in widespread adoption of DMBs, according to Sharon; rather, it’s been the equipment.

At first the software was too complicated, and the hardware simply didn’t live up to its billing or last long enough, he said. But those problems appear to be solved now; although some of the larger chains are still waiting to see if the cost on components for DMBs, like displays for drive-thru menu boards, continues its downward trend — and if their long-term reliability continues trending upward.

“I think everybody will agree that it’s 5 percent, or more, and that’s why everybody wants to do it. They’re just trying to get a decent cost and some-thing that’s going to last for a long time,” he said.

Others have put the sales lift number at closer to 2 or 3 percent, but the numbers gathered from a variety of sources average out at closer to 5 per-cent. Of course, even those reporting a 2-3 percent sales lift also have said that’s a number they’re comfortable with as far as getting them a decent hard ROI in a reasonable amount of time.

But what is that time frame?

For some brands the time frame or timeline for getting a good, hard ROI and recouping the cost of deploying DMBs can be as short as nine to10 months, Ventura said, while others say it takes between 18 to 20 months.

“What a lot of it depends upon is, what the system looks like, how complex the system is,” he said. “What kind of recurring costs are playing into this? And not only what kinds but how are they handling the recurring costs? If you’re dealing with an organization that is very heavily franchise-driven, can they take those recurring costs out of the franchise fees, or are they having to add on additional costs to the franchisees in order to have digital menu boards?” Also focusing on creating an objectives document and how those objectives are being met and measured is key.

When speaking about the complexity of the system, deployers have to take into account issues like how many boards to deploy, he said. Will two indoor boards do it, or do I need three? And then how is the drive-thru being handled? Since the majority of a QSR’s business usually goes out the drive-thru window, are the drive-thru menu boards incorporating promo-tions or sales uplift programs?

CHAPTER 1 Sales uplift versus margin per transaction

Considerations when calculating ROI

Average sales lift for digital menu boards

Recurring costs

Number of boards to deploy

Indoor versus outdoor boards

The average restaurant can expect to see between a 3 percent and 5 percent sales lift after installing DMBs. Given that:


“If they don’t … then it could take them a lot longer than 18 to 20 months to recoup those costs,” he said.

It’s developed into a very interesting dynamic in the QSR industry, Ventura said, because so far the industry hasn’t developed the kind of “this is how we’re going to do it, and everyone follows that rule” dynamic that tends to emerge in most markets. Further, the multitude of different offerings contin-ues to keep the standardization at a standstill.

“Everyone is trying to find out how do they make it fit into their environment and the way they do business,” he said.

As expected, the QSR franchises tend to be very tight-lipped about their sales lift numbers, but Ernesto Smith, Burger King’s senior director of U.S. merchandising and calendar planning, did talk about other facets of BK’s menu board deployments. The timelines for recouping initial costs for BK have wide variations, he said, because of the factors that have to be taken into account.

“I can’t comment on that specifically,” he said. “But from the examinations that we’ve done in restaurant we’ve seen varying results, anywhere from nine months to 18 months, so I can’t necessarily give a definitive time horizon.

“It depends on a lot of variables, in terms of what was going on in the market before; the state of operations; what the economic situation is in that specific area of the country,” he said. “We have a wide range, and it typically falls within a nine to 18 month period.”

One of the largest DMB providers, WAND Corp., though, looks at a different number entirely to derive ROI, according to Gary Hoover, Product Manager for WAND.

The big thing WAND tries to watch is margin-per-transaction, he said.

“In a lot of cases we’re seeing no actual change in average ticket or total sales, but what we are seeing is that the clients, the customers, are being pushed toward more profitable purchases,” he said. “The average of the studies we’ve done is right around 2 1/2 to 3 percent increase in margin per transaction, so we’re getting more combos and fewer value menu items.”

How does that affect ROI? It seems that looking at DMB ROI that way pretty closely mirrors the view from the sales uplift perspective: getting a monetary return on initial investment within about a year and a half.


“From the examinations that we’ve done in restaurant we’ve seen varying results, anywhere from nine months to 18 months, so I can’t necessarily give a definitive time horizon.” — Ernesto Smith, senior director of U.S. merchandising and calendar planning at Burger King


“If you figure an average QSR restaurant is about $1.2 million a year in gross revenue,” Hoover said, “and you figure for example on digital menu boards indoors, let’s say 40 percent of their business is indoors, so that’s about $500,000 a year indoors in sales at about 70 percent margin, a 3 percent boost is worth about $10,000 a year to their bottom line, and so the payoff on that would be somewhere between … maybe 18 months would be about right, just on sales.”

In some particular cases, though, DMBs have sparked radical sales lifts, according to Hoover. Some of the biggest benefits from DMBs are seen in food court or promenade locations, where the dynamic imagery on the boards acts as advertising to attract passersby to the restaurant.

With some of those deployments, he said, DMBs and improved content have resulted in 20 percent increases in sales “more or less overnight.”

“Again that’s only in those places where you have a lot of foot traffic nearby where you can actually use the boards as advertisements,” he said. “Whereas with a standalone restaurant the best money we’re getting out of those is from shifts in customer behavior as far as buying higher-margin items, influencing customer decision into buying more profitable items.”

Burger King is seeing some similar results, Smith said. With the dynamic imagery of DMBs, restaurants are able to almost guide customers through a series of ordering steps, potentially moving them from an entrée sandwich to a value meal, suggestively up-selling desserts or side items or additional beverages, he said.

“Actual menu board navigation is another huge benefit,” he said. “You can really help your overall profitability by helping them through that ordering process and reminding them of things that they might not have thought of.”



CHAPTER 2


Some DMB solution providers recount hearing from their customers that installing the new digital technology is more about keeping up with the times. According to some, one of the benefits derived from deploying the menu boards is harder to quantify, because it’s mainly a matter of percep-tion and image.

When talking about image and where the chain wants to go forward in terms of crafting its image, DMBs are “definitely a part of that,” said Burger King’s Smith.

“There are some static technologies that we can give the option to our fran-chisees to purchase, but when you’re trying to make sure that your image is one that’s relevant to your customer base, that it speaks to them in medi-ums that they’re used to, digital has to be a component of that,” he said.

“So that’s why I think you’ve seen some of our franchises who are very forward looking adopting the technology before even a hard ROI is able to be established for them, because they see the intangible benefits and the natural relationship with where we’re trying to go in terms of our image.”

NEC’s work with the digital McDonald’s McCafé displays, deployed to a little more than 10,000 locations, provides an ideal example. McDonald’s wasn’t concerned with how the displays would affect sales lift, according to NEC’s Ventura, but with how they would affect perception.

“They didn’t look at the financial ROI for making the decision,” he said. “What they looked at was the branding ROI: How are they going to grow as a brand, how are they going to increase their brand perception, specifically in the coffee and drink space, when you’re going against the Starbucks of the world and the Dunkin’ Donuts, and so on and so forth …So there’s that type of ROI that we see from our customers; they’re looking at how much

Keeping up with the Joneses, and other soft ROIs

“When you’re trying to make sure that your image is one that’s relevant to your customer base, that it speaks to them in mediums that they’re used to, digital has to be a component of that.” —Ernesto Smith, senior director of U.S. merchandising and calendar planning at Burger King


CHAPTER 2 Keeping up with the Joneses, and other soft ROIs

market share can they capture, and will this product help them capture that market share?”

So the spectrum for ROI for restaurants that have deployed DMBS is “huge,” Ventura said, and all comes down to how the end-user justifies the expense.

A side benefit to some of the soft, or intangible, ROIs is how much more quickly they can manifest. Return on a better customer experience can start happening effectively immediately, and then propagate forward as percep-tions of the venue are modified.

But even in those cases there can be obvious fiscal benefits.

“It really comes down to customer experience,” said Noventri’s Hoffman. “With the speed of specials, are you wasting employees’ time by having a menu item up on the menu that you’re actually out of inventory?

“So I’m out of burritos, so why have the burritos up on the screen and waste everybody’s time in line? You can get a faster turnover in the line by having that burrito off the menu board altogether because it’s not in inven-tory. It’s not even there; you can’t even offer it for sale; so integration with your POS system offers you that type of automation, and that is a way to enhance your soft ROI.”

Of course, if a restaurant operator is getting a faster line turnover, it can have obvious benefits to the bottom line.

WAND is in a test with one concept that is “sort of a non-traditional QSR” with a very complicated menu for the sector, Hoover said. And what his company is hearing from that concept indicates another potential benefit to deploying DMBs, especially for any restaurant with a large or complex menu offering.


CHAPTER 2 Keeping up with the Joneses, and other soft ROIs

“They have told us …that the customers are having an easier time reading the boards and making their decisions,” he said. “Now obviously there’s no way for me to measure that, and being an analyst I’m used to being able to … We get anecdotal news about that kind of thing, but it’s hard for me to quantify it.”

DMBs also offer the ability to employ new technologies like QR codes, or quick recall codes, that can be used to offer promotional or nutrition information to customers or to get customers involved with the restaurant in the social media sphere. These added technological capabilities of digital versus static menu boards offer operators an opportunity to get customers more emotionally tied to or involved with the brand, Hoffman said.

Combining those kinds of soft ROIs with cost savings from reduced printing and labor expenses, and from finding the most economically-sound display solution, can make DMBs a much more attractive proposition, he said.

Fast casual chain Salsarita’s, for example, rolled out a WAND digital menu board solution in 46 stores. Salsarita’s operates more than 80 franchised lo-cations in 19 states and has significant growth plans for 2014. All new stores will also be using the WAND Digital solution. The system allows new content, pricing and caloric information to be uploaded and deployed instantly by store, market or chain-wide, through a single, cloud-based platform.

“When it comes to a cost-to-profit ratio, if you keep your costs down, then it’s just a much more viable option, especially if you’re looking at ROI as ...a soft ROI,” he said. “If people have a pleasurable experience in the restau-rants and they’re able to find their food on the menu very easily and it has a little bit of a coolness factor and it just feels modern and it overall enhances their experience, then they’re able to go back and are more willing to refer the QSR to their friends and things like that, then they’re able to get an uplift that way.”

Finally, with LCD screens and digital displays, the colors are just more vivid; the menus just look better; and for members of the younger generations, if it’s on a screen they just look at it more often, Hoffman said.

“Overall it’s keeping up with the times, and just staying modern,” he said. “Restaurants upgrade their POS systems all the time, why not their menu boards?”

Soft ROI benefits of DMBs

Increase brand perception

Capture more market share

Faster customer turnover

Encourage customers to become more emotionally involved with brand

Attract younger generation

Brighter, better looking boards that are easier to read


CHAPTER 3


There are graphs and charts that show – roughly speaking – how long get-ting a decent hard ROI should take, depending on the initial investment.

But even the best of charts and analysts would be hard-pressed to chart out and quantify in those same graphs the ancillary benefits that also accrue to DMB deployers – which is not to say that some analysts aren’t trying.

In fact, for some of the biggest QSR chains, the hard ROI from direct sales lift doesn’t even top the discussion when it comes to the biggest benefit from DMBs.

At Burger King, Smith said that one of if not the biggest benefits he sees is that DMBs simply make the menu items more appetizing. In 2012 the company rolled out digital menu boards to nearly all of its U.S. locations as part of a major rebranding initiative, installing the digital signage solutions in more than 6,500 stores.

“I think one of the biggest benefits is the imagery of the actual food and products that we’re merchandising,” he said. “With conventional, static menu boards, one, the image isn’t as crisp to begin with, and, two, over time a lot of those materials tend to fade or break, and it doesn’t really do a lot of good for the showcasing of your product.

“With digital, from the get go it’s just a much better image of the product; (there’s) much more appetite appeal; and I think that is the No. 1 benefit that we see from a consumer standpoint where we’re showcasing our food in the best light….That’s the No. 1 benefit we see, because of appetite appeal.”

There are obvious cost savings that can be taken into account as well. While some, if not most, restaurants will continue to accentuate their digital

Static menu boards are more expensive and time-consuming to change than digital menu

boards, as well as less visually appealing.

Nobody’s climbing a greasy ladder to change the price of a cheeseburger


offerings with static promotional advertising, reducing their reliance on print can offer substantial cost savings.

WAND is starting to look at more thoroughly analyzing or quantifying the reduced printing and labor costs that come with switching from using static menu boards, Hoover said, but there are numerous variables that vary significantly from location to location.

One of the big expenses associated with static boards, according to Hoover, is actually one of the more simple ones: the cost of menu strips, generally magnet backed, and surprisingly expensive.

One WAND client talked to the company about getting one or two ship-ments of the magnet-backed menu strips a month – at $4 or $5 a strip, in addition to the shipping charges for the heavy boxes – and then having to spend a day or two driving around to deliver the strips to the 30 different restaurant locations.

“That’s some of the stuff we’re going to look into as far as that,” Hoover said. “And then of course the cost of large poster print and whatnot as well, and the labor costs associated with making price changes … and making sure that everyone is compliant at that point then too.”

CHAPTER 3 Nobody’s climbing a greasy ladder to change the price of a cheeseburger


The changes that will come to QSR menu boards as a result of the new FDA nutrition labeling laws are still shaking out, according to industry ob-servers and insiders – but the ability to instantly, and remotely, change the information displayed on menu boards to comply will offer another poten-tially significant cost savings.

One Noventri client talked to Hoffman about how something as simple as changing the brand of mayonnaise used in their restaurants would change the calorie count and nutrition information for every single item on the menu that uses mayonnaise as an ingredient. That client has been using clear sticker labels to affix to their static boards, an expensive and time-consum-ing process.

“It adds a new challenge to things; it’s actually a very good thing for us in the digital signage industry,” he said. “Now we have a way for somebody in corporate to be able to just punch a couple of buttons, design the menu board once and then publish it out to all the many hundreds of stores, and now you can be compliant and not use up a lot of resources, no more re-sources than just doing a price update or a promotional update.”

And then there’s a consideration that might not spring immediately to mind when considering DMBs, but does occur to some QSR operators according to Hoover:

“Somebody had brought up the issue of liability on static media, and I don’t know if there’s any way you could possibly quantify it or not,” he said. “But they were talking about how much they hated the idea that their store man-agers were climbing up greasy ladders to swap out pictures on the indoor menu boards, which is something we no longer have to deal with…But it scares people, so…”

“With conventional, static menu boards, one, the image isn’t as crisp to begin with, and, two, over time a lot of those materials tend to fade or break, and it doesn’t really do a lot of good for the showcasing of your product.”— Ernesto Smith, senior director of U.S. merchandising and calendar planning at Burger King

CHAPTER 3 Nobody’s climbing a greasy ladder to change the price of a cheeseburger


CHAPTER 4


In talking with digital menu boarders about their benefits, one word kept coming up: agility.

“As far as feedback from our clients, they’ve really appreciated being able to not have to wait weeks to have a new printout done or to wait to have somebody go out and punch letters into it,” Hoffman said. “And with that said it just has a much better look than those solutions … They’re just more agile when it comes to their promotions.”

One of the few ways in which Burger King will definitively attribute some positive sales results to the use of dynamic media, is being able to mes-sage specific items at specific times during the day, Smith said.

“So for instance, if we’re in the middle of the day at 3 o’clock, we can mes-sage those products that consumers are more likely to purchase at that time than if we had a static menu board,” he said.

“The problem with a static menu board is, obviously, the messaging is not changing; it’s not dynamic at all; you’ve got a big piece of real estate where you need to communicate everything on your menu, despite the fact that cer-tain things on your menu are just not going to be appetizing at a given time.”

Agility also comes into play when considering the differences that come into play from one location to another, Smith said.

“Demographics are different, obviously, from location to location, so there’s the opportunity to heavy up on a specific promotion that speaks more aptly to the demographic that you have,” he said. “Then you can cycle that mes-sage much more frequently than you would in maybe an area where it’s very family-focused and you want to speak to moms and showcase some of our more healthy items to them.”

That nimbleness is something WAND sees as well. One of the big benefits of DMBs, and something that WAND tries internally to push, is the agil-ity the digital boards give operators, allowing them to test out content and push it everywhere if it works or pull it if it isn’t working, Hoover said.

Agility


CHAPTER 4 Agility

“For example I was analyzing a client out east’s boards, and they had put up some new content at one of their sites, and I watched their sales, and I could see immediately that it wasn’t having a very good impact on their sales,” he said. “So I called them up the next day and said, ‘Listen, I’m sorry; this is a beautiful-looking piece of content, but it’s hurting you. I think you should pull it and go back to the old content.’ That’s actually a pretty nice thing with digital menu boards that obviously is very hard to do with static.”

“As far as feedback from our clients, they’ve really appreciated being able to not have to wait weeks to have a new printout done or to wait to have somebody go out and punch letters into it.” — Andrew Hoffman of DMB provider Noventri


CHAPTER 5


“Where restaurants are seeing the most potential for sales uplift isn’t even the digital menu board, it’s the promotional boards; that’s where they’re get-ting their opportunity for sales uplift,” said NEC’s Ventura.

A client of NEC has focused heavily on the use of promotional boards within their national restaurant locations. The use of promotional boards has been a huge benefit for their sales, Ventura said.

“They wanted something that’s going to help them up-sell product that is high margin, high profitability for them but they have low sales volume,” Ventura recalled.

Ventura said he was shocked to learn, when he first started working with the customer several years ago, that sodas — easily one of the highest-margin items in any QSR — were far and away their worst-selling item, with a less than 5 percent attachment of fountain drinks to food sales (in-store, not drive-through).

The reasons for the low soda sales were mixed, Ventura said, including their selling of Pepsi rather than Coke; the fact that their sodas were slightly more expensive than others QSRs’; and the fact that it did not at the time offer systems like the Coca Cola Freestyle drink machine.

Working with their creative team, the promo board was set up to display a larger ad in the top three-quarters of the screen, three smaller ads in the bottom quarter, and then to cycle the ads through the different ad slots.

“Once they started having sodas on there, they actually were seeing their sales increase to about 20 percent of sales; so now they were seeing 20 percent of their sales going out the door with a soda,” Ventura said. “Now that is a 300-some-odd percent increase, but that’s only one item; that’s not like their whole menu board.”

Sodas are high-profit items for restaurants, but can be low selling. Digital promotional

boards help change that trend.

Promotional boards or order-confirmation displays


CHAPTER 5 Promotional boards or order-confirmation displays

But given how profitable sodas are…the client quickly moved to add an-other low-selling menu category, desserts, and then when it launched new value products and even salads, up they went as well.

“Any product that they have put on that promotional board has almost risen to be gold status now in the restaurant,” he said. “As long as it’s on that pro-motional board, they’re selling more of it … That is their tool to really impact their sales.”

A similar sentiment about the customer-facing order confirmation displays at the point of sale was voiced by Hoover. WAND has found those displays to be very good at up-selling additional items, and the displays can be set up with simple logic systems to suggest certain items based on the particu-lar items being ordered by the customer as they face the display.

“The digital menu boards are pretty good at up-selling and especially get-ting people to try new things,” Hoover said. “The OCD boards, at least from the announcements I’ve seen around here, are the most powerful things at actually getting up-sells for additional units and add-on purchases.”

WAND had a Wendy’s client who ran a promotion offering a special Frosty, selling the special flavor at several sites, including two with digital menu boards installed.

“The special Frosty went through the roof at the digital menu board sites, and it was mediocre at the others,” he said. “One site was selling an ad-ditional 400-some Frostys in the first week of the promotion, which is worth about $550 in margin for the week. That was a nice promo.”

Best practices for digital promotional boards

Keep the design simple and clean — the message must be easy to read

Change the message frequently, to encourage people to look at the board more than once

Emphasize the points of difference of the product that are easier to read

“Once they started having sodas on there, they actually were seeing their sales increase to about 20 percent of sales; so now they were seeing 20 percent of their sales going out the door with a soda.” —Rich Ventura, vice president of product marketing and solutions, NEC Display Solutions


CHAPTER 6


And what about the content that goes on the DMBs? How does that figure in?

Some companies include content servicing in their upfront costs; with oth-ers it’s a subscription service; while with some QSRs the ongoing content production would likely be done in house.

But one thing appears to remain constant with content. Apparently it’s fairly expensive to make it super flashy – but apparently it shouldn’t be super flashy in the first place.

Most technology providers acknowledge that when it comes to content on DMBs, less is generally more.

What Noventri has found with many of its clients is that they’re able to get very good results without having too much going on in the digital displays, according to Hoffman.

“Also, the cost of content goes way down if you don’t do a whole lot with it, as far as animations and things like that are concerned,” he said.

WAND has had similar findings, Hoover said.

“This is again a bit anecdotal … (but) we have done studies, and we have found that too much motion and too much action on a board actually de-tracts and has a negative impact on sales,” he said. “In fact it’s the subtle motion that draws your eye to an area without being obnoxious that actually gets us the best results.”

For example, Hoover said, WAND will set up a section of the DMB in the upper left hand corner to display all combo sandwiches. That section of the board will have a picture of the sandwich, and maybe every 5-10 seconds that image will shift with a slight motion, he said. That draws the customer’s attention to that section of the board, and away from the cheaper or lower-margin items on other parts of the DMB, he said:

Content


CHAPTER 6

“It’s not obnoxious, and it’s not huge, and it’s just one of the sandwiches, but it pulls your eye up and to the left to see what’s moving up there - and away from the value area over to the right.”

QSR operators and DMB deployers have to be careful to resist the tempta-tions inherent in using LCD screens, Hoffman said. It’s tempting to do too much on the screens, he said, which can cause problems. Anecdotally, Hoffman recalled his grandmother going into a QSR with a busy digital dis-play and being simply unable to process all the information flashing across the screen.

“Older people are having a harder time being able to process menu boards that have a lot of movement on them,” he said. “That’s been a problem. We have to make sure that we’re not abusing what we have; even though we can do it doesn’t mean that we should.”

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“We have found that too much motion and too much action on a board actually detracts and has a negative impact on sales.” — Gary Hoover, Product Manager for WAND


CONCLUSION


The final word on the subject, of course, will go to the QSR operators themselves. They will be the final decision makers who push forward the adoption of digital menu boards – or not.

But DMBs are proliferating in the QSR space, and the indications suggest that trend will only continue gaining strength.

So why are they pushing forward with these menu board initiatives?

“It’s everything that we’ve talked about,” Burger King’s Smith said. “I think if you break it down into buckets, it has to do with, from a strategic stand-point and looking at where we’re going with our image in some of our newer restaurants, it’s a logical implementation of the technology.”

From the intangible, or soft, ROI perspective, Smith said, the technology makes sense in terms of showcasing the food in the best light; in terms of being more appealing from an appetite perspective; and also in terms of the ability to adapt the QSR’s message to certain dayparts and to the certain types of consumer that might frequent one location versus another location.

And then from a tangible, or hard ROI, perspective, it makes sense, he said. Even though it’s difficult from an analytical perspective to isolate just the impact of the menu board on sales – because there are so many other factors to take into account – there are more easily-tracked ways in which deploying makes hard-numbers sense, according to Smith.

“When you’re able to see the increase in some of your ancillary products, like French fries or onion rings, and you can attribute that to the ability to showcase those items more, that’s where we feel comfortable saying from a numbers standpoint that there is a true benefit,” he said.

And as the costs for DMB components continue their trend downward and as their reliability and sophistication continue to trend upward, expect the DMB arms race to be on and escalating quickly.

The final word“When you’re able to see the increase in some of your ancillary products, like French fries or onion rings, and you can attribute that to the ability to showcase those items more, that’s where we feel comfortable saying from a numbers standpoint that there is a true benefit.” —Ernesto Smith, senior director of U.S. merchandising and calendar planning at Burger King


“From our perspective, we definitely see the benefits in it,” he said. “It’s something that – from my perspective from a cost standpoint – as the technology advances and the costs come down, it’s even easier to prove the business case at that point … I believe in the very near future a lot of competitors within the QSR space are going to be adopting the technology much more rapidly.”

CONCLUSION The future of outdoor digital signage

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Digital Menu Boards and ROI - Moxy Restaurant Solutionsmoxyrestaurantsolutions.com/.../Digital-Menuboards... · 2013 Networld edia Group | Digital enu oards and ROI 4 Neither of those