Dive Brief:

• A recent test of McDonald's self-order kiosk revealed that they might need modification, or replacement, to accommodate cash-paying customers, according to Bloomberg.
• The company has been testing kiosks that can accept cash in a handful of stores.
• Worldwide, 40% to 60% of McDonald's customers pay with cash.

Dive Insight:

McDonald's is not the only chain adding self-order kiosks to its systems; Taco Bell, Wendy's and Burger King have also added a handful. The self-order kiosk market is expected to reach $30.8 billion by 2024, and 30% of customers would prefer to order from kiosks.

But for McDonald's, this tech could quickly become a major headache for franchise operators, since they could be responsible for any kiosk changes or replacements, according to Bloomberg.

Over 9,000 operators have already shelled out $750,000 for McDonald's Experience of the Future remodels, which includes kiosks, digital menu boards and other improvements, according to Bloomberg. McDonald's also has invested over $6 billion toward these projects.

These redesigns have been a largely contentious issue among franchise operators who felt that the high remodel costs weren't an immediate benefit to operations, and was part of the reason operators formed the National Owners Association to better represent their interests to management.

Last fall, the NOA called for operators to halt redesigns until management finished negotiating some sticking points related to the remodels. McDonald's has had to extend the deadlines for these remodels by two years following franchise pushback, but operators would have to accept a lower reimbursement rate.

Outside of additional costs, not being able to offer cash-only customers a way to pay via kiosks could be problematic as well, especially if the customer doesn’t have time to wait in line. John Gordon, Pacific Management Consulting Group principal, told Bloomberg that about 30% of U.S. fast food customers pay with cash. That is a huge chunk of customers McDonald’s, and other brands, could miss out on. McDonald’s is already struggling with declining traffic in the U.S.

Cashless concepts, such as Sweetgreen, have also been under pressure to start accepting cash payments to accommodate customers that don’t have a bank account — roughly 6% to 7% of Americans. Sweetgreen reversed its cash-only policy following Philadelphia's ban on cashless stores. Given the pushback some restaurants have experienced over cashless payment systems, McDonald’s will have to move quickly to try and address this issue with its kiosks.