Digital kiosks go mainstream, transforming food business

The use of digital kiosks is spreading to smaller business districts in Korea, offering cost efficiency. The number of kiosks installed in food service establishments has increased dramatically from 5,479 units in 2019 to 87,341 units in 2022.

Customers place their orders at kiosks installed at a fast-food restaurant in Seoul. [YONHAP]

The growing use of digital kiosks is no longer confined to busy city centers in Korea — they have extended their reach to business districts in smaller neighborhoods thanks to their cost efficiency.

Jeong Wook, a 42-year-old office worker, frequently visits a local Chinese restaurant but doesn't know the faces of the restaurant staff. This is because he places orders through kiosks available at each table. These automated terminals enable customers to order and receive notifications when their food is ready, and customers pick up the food at the counter themselves.

The Chinese restaurant owner, surnamed Park, installed the kiosks in June 2021. Situated in an area heavily populated with office buildings, the restaurant faced an abrupt decline in customer numbers during the Covid-19 pandemic, making it difficult to sustain the cost of two hall staff. After careful consideration, the 48-year-old owner opted to remodel the establishment, equipping each table with kiosks while retaining the two chefs but reducing the hall staff count to one.

"In hindsight, it's surprising how we managed with two hall staff all these years," Park said reflecting on this change. "Introducing kiosks has been one of the best decisions I've made during my nearly two decades in the restaurant business."

The kiosk phenomenon isn't limited to busy city centers favored by office-goers and young urban dwellers. Instead, it is making inroads into franchise outlets and smaller business districts, reshaping the dining and retail landscape across Korea.

The number of kiosks installed in food service establishments surged from 5,479 units in 2019 to 87,341 units in 2022, marking a 15-fold increase in just three years, according to the Ministry of Science and ICT data submitted to Rep. So Byung-hoon of the Democratic Party.

The "2022 Survey of Food Service Establishments" conducted by the Korea Rural Economic Institute showed that the percentage of food service establishments using kiosks and other unmanned ordering systems grew from 1.5 percent in 2019 to 6.1 percent in 2022.

Furthermore, larger downtown areas and well-known brands have adopted kiosks at even higher rates. Big burger franchises such as McDonald's, Burger King, and Lotteria embraced digital kiosks as early as 2015, with adoption rates exceeding 70 percent.

Kiosks have become an appealing option for small business owners facing financial challenges. The installation cost for a single kiosk can range from 2 million won ($1,506) to over 12 million won. With the minimum wage set at 9,860 won per hour in 2024, and monthly salaries averaging around 2.06 million won, the financial benefits for restaurant owners are evident. In simple terms, installing two 3-million-won kiosks would recoup the investment within three months, equivalent to the salary of one employee. Renting kiosks offers a more financially feasible option, with monthly fees ranging from 50,000 to 300,000 won over a 36-month installment plan.

While cost savings are a significant factor, kiosks also "streamline employee training, alleviate concerns about employee retention, and reduce potential interpersonal conflicts," says the report "Impact of Kiosk Expansion on Restaurant Employment" by Economics Prof. Cho Joon-mo at Sungkyunkwan University.

The surge in kiosk adoption corresponds with a broader trend: the increase in solo restaurants, or owners who run restaurants without employees, amid economic challenges. Statistics Korea's data for July 2023 showed that the number of such restaurants increased by 44,000 compared to the previous year, reaching 4,383,000 as of July -– the highest level in 15 years since the global financial crisis. This brings the proportion of such restaurants to 75.8 percent, approaching levels last seen in 1999 at 76.3 percent, just after the IMF foreign exchange crisis.

"The rise in kiosk adoption is attributed to various factors, including rising rent costs, minimum wage hikes during the Moon Jae-in administration, economic downturns due to Covid-19, and the growth of platform-based workers," said Business Administration Prof. Suh Yong-gu from Sookmyung Women's University, "but technically, it led to the increase in solo restaurants."

However, concerns have emerged regarding the widespread use of kiosks. Rep. Seo proposed an amendment to the Elderly Welfare Act in April, aiming to ensure that elderly individuals unfamiliar with IT devices can use kiosks with ease.

"Kiosks have brought concerns over potential discrimination against digitally inexperienced individuals and the displacement of low-wage, low-skilled workers in the labor market," said Prof. Lee Eun-hee from Inha University's Department of Consumer Science.

BY KIM KI-HWAN [seo.jieun1@joongang.co.kr]