Omnichannel Service Operations with Online and Offline Self-Order Technologies

Many restaurants have recently implemented self-order technologies across both online and offline channels. Online technology, through websites and mobile apps, allows customers to order and pay before coming to the store; offline technology, such as self-service kiosks, allows store customers to place orders without interacting with a human employee. In this paper, we develop a stylized theoretical model to study the impact of self-order technologies on customer demand, employment levels, and restaurant profits. Our main results follow. First, customers using self-order technologies experience reduced waiting cost and increased demand, and moreover, these benefits may even carry over to customers who do not use these technologies. Second, although public opinion suggests that self-order technologies facilitate job cuts, we find instead that some firms should increase employment levels, and, paradoxically, this recommendation holds for firms with high labor costs. Finally, we find that firms should implement online (offline) self-order technology when customers have high (low) wait sensitivity. The supplementary appendix is available at https://doi.org/10.1287/mnsc.2017.2787 . This paper was accepted by Serguei Netessine, operations management.