CHAPTER 1

THE PROBLEM AND ITS SETTING

Introduction

Today's fast-paced world is increasingly becoming characterized by technology facilitated

transactions. Growing numbers of customers are interacting with technology to create service

outcomes instead of interacting with employees. The growing use of information and

communication technology (ICT) in services has revolutionized the interactions between

service providers and customers and has increased the standardization of many services. The

self-ordering kiosk is the latest innovative technology to be offered by restaurants to improve

customer experiences, especially in quick-service restaurants. A self-ordering kiosk offers

guests the power to order and pay through themselves – kind of like a sophisticated vending

machine, however for meals. These systems usually consist of a touchscreen often a tablet

prepared with an easy-to-use digital interface. This screen will display the restaurant’s menu

and guide customers through the ordering process – from building their meal, to payment, and

pickup. As the customer builds their order, the kiosk can also display prompts with exclusive

promotions or menu modifiers that guests would possibly have not recognized about otherwise

(Pendrill, 2020). Customers simply pick out what they want from the menu on the display

screen, then pay with a card, receive a printed order number and collect their meals from the

counter. The introduction of the kiosks turned into all part of a McDonald's brand revival to

increase efficiency, boost sales and provide extra control to customers.

The food service industry in the Philippines is growing at a phenomenal rate. Food

service defines those businesses, institutions, and companies responsible for any meal
prepared outside the home. The Philippines foodservice market is segmented by type and

structure. By type, the market is segmented into full-service restaurants, self-service

restaurants, quick-service restaurants, street stalls and kiosks, cafes and bars, and 100%

home delivery restaurants. The Philippines foodservice market is a highly competitive market.

The majority of the share is held by some of the leading players, including McDonald's,

Starbucks Corporation, and Jollibee Foods Corporation. By structure, the market is segmented

into independent and chained. For each segment, the market sizing and forecasts have been

done on the basis of value (in USD million). The food service industry is seen to expand in

tandem with the growing population and rising incomes. For the year 2020 and 2021, revenues

are seen to reach P637.3 billion and P656.5, respectively. In an industry where stiff inter-brand

competition exists and customer preferences regularly change, fast-food brands need to

monitor the preferences of their customers.

The kiosks are part of McDonald’s modernization program called NXTGEN, and are

designed to allow customers “a digitized alternative to order and pay for their McDonald’s

favorites” and “provides a more seamless transaction process. Orders are then processed, and

are claimed at the counter. There are some factors affecting the customers' acceptance of self-

ordering kiosk of McDonald and some of it are its excellent benefits and its advantages. The

most immediate benefits of adopting self-order kiosks are cost-related and consistent

interaction, some of the reasons why customers accept and prefer the new system now.

McDonald’s self-order kiosks don’t require management. They’re consistent in terms of

motivation and delivery can be updated effortlessly from a centralized location and might

provide immediately recognizable contact points from store to store. Customers who are used

to using kiosks will discover the exact same level of service in any McDonald’s the
world over. They’ll have set expectations which might be easier to meet; you won’t have to

worry about staff making mistakes when taking the order (Pendrill, 2020).

The biggest customer segment for fast-food brands now is Generation Z, and companies are
taking a closer look at their behavior in order to maintain their loyalty and acceptance. To
contribute to the understanding of the behavior of Generation Z customers in the fast-food
market, this paper explored the factors that these customers consider when developing
acceptance to a fast-food brand like MCDONALDS. According to a research, a recent survey
conducted on 2019 by the National Restaurant Association and Technomic Inc. revealed that
kiosks have been the largest customer order technology utilized in the past year. And in addition
research from Tillster discovered that line length can cause customers to walk away from their
favorite establishment in favor of a faster experience. However, if kiosk ordering is available,
many customers will stick around; more than 65% of customers said they would visit a
restaurant more often if self-service kiosks were offered, and 30% of customers choose to order
from a kiosk versus a cashier if the lines were of equal length.