Calculating Payback Periods of Technology Investments in Your QSR
In the fast-paced world of Quick-Service Restaurants (QSRs), strategic investments can pave the way for enhanced efficiency and profitability. Among the myriad options available, the integration of self-service kiosks emerges as a promising avenue for QSR owners seeking to revolutionize their operations.
We’ll delve into the payback period associated with investing in self-service kiosks, exploring different scenarios to assess the potential return on investment.
Setting the Stage:
Let’s start by examining your QSR’s current performance without self-service kiosks. For this analysis, we’ll consider the following assumptions:
- 60 orders daily with an average order value of $12
- Operating for 50 weeks (6 days a week)
- Profit margins on food sales at an industry average of 7.5%
Investment in Self-Service Kiosks:
Now, let’s introduce the investment in self-service kiosks. For conversation sake (this is an average of industry Kiosk costs) let’s assume a one-time investment of $2500 for the kiosk and yearly software costs, we’ll analyze the payback period under different scenarios.
Caution: A lot of kiosk companies are currently running the ‘FREE’ campaign, but will get you in high fees and software costs, so be careful.
1. Payback Period with Stable Performance (operations remain the same):
First, let’s calculate the payback period assuming that all factors remain constant – no changes in average order value or order volume.
| Investment: | $2,500 |
| Annual Profit (7.5% of $12 * 60 orders/day * 6 days/week * 50 weeks): | $8,100 |
| Payback Period: $2500 / $8,100 | 0.308 years |
| Payback Period: | Approximately 12 weeks |
2. Payback Period with 15% Increase in Average Order Value:
Next, let’s consider the scenario where the average order value increases by 15% annually due to upselling and cross-selling capabilities of the kiosk.
| Investment: | $2,500 |
| Annual Profit Increase (15% of $12 60 orders/day 6 days/week * 50 weeks): | $9,270 |
| Payback Period: $2500 / $9,270 | 0.269 years |
| Payback Period: | Approximately 10 weeks |
3. Payback Period with 15% Increase in Both Order Volume and Average Order Value Annually:
Finally, let’s explore the scenario where both the order volume and average order value increase by 15% annually, attributed to the efficiency and effectiveness of the self-service kiosks.
Annual Profit Increase (15% increase in both order volume and average order value):
| Investment: | $2,500 |
| New Annual Profit: (7.5% of $13.80 69 orders/day 6 days/week * 50 weeks) | $11,076 |
| Payback Period: $2500 / $11,076 | 0.226 years |
| Payback Period: | Approximately 9 weeks |
The big takeaway here is that it’s going to take between 9-12 weeks to pay off your first year investment in a kiosk. You’ll be back in the green (and beyond) in 3 months. And from there, this small investment will help scale profitability for the longer term.
Investing in self-service kiosks offers a compelling opportunity for QSR owners to achieve a rapid payback period and unlock sustained profitability. Whether through stable performance, increased average order value, or a combination of both, the potential return on investment is substantial. By embracing innovation and leveraging technology, QSRs can position themselves for success and thrive in today’s competitive market landscape.
Ready to elevate your QSR experience? Contact us today to explore how self-service kiosks can transform your business and drive tangible results.
