McDonald's Shuts Automated C-Stores

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McDonald's Shuts Automated C-Stores

WASHINGTON, D.C. -- McDonald's Corp. is walking away from its Redbox automated convenience stores here, saying the concept does not fit its long-term growth strategy, according to a report in The Washington Post.

The 24-hour, self-serve kiosks, named one of Time magazine's "Best New Inventions of 2002," stocked 130 items, including groceries and fresh foods. Customers selected their products via touchscreen.

McDonald's, in the midst of restructuring management and considering the future of its partner brands, such as Donato's pizza and Pret A Manger, removed the content of its Redbox machines in the Adams Morgan neighborhood, Bethesda, Md., and the Baltimore-Washington airport.

McDonald's would not comment on the performance of coin-, cash- and credit-card-accepting machines. "We are focused on bringing more customers to our 30,000 restaurants around the world," a spokesperson told the newspaper.

However, the hamburger giant is continuing to operate 12 DVD-dispensing vending machines in the Washington-Baltimore region.

Initially launched as Tiktok Easyshops, using U.S.-built technology, the kiosks were rebranded and revamped with help from Belgian firm New Distribution Systems (NDS).

Vending machines can be expensive to operate, noted Richard Geerdes, president of the National Automatic Merchandising Association. Profit margins operate near 5 percent. "The technology to vend a gallon of milk is not cost-effective right now," Geerdes told The Washington Post.

But the machines proved more expensive to run than some had anticipated, particularly because of the sort of sophisticated technology needed to keep perishable produce fresh.
And, some experts say, American consumers were wary of the vending-machine concept, preferring the personal service available in traditional stores, according to a report on the BBC's Web site.

This is a sharp contrast with Continental Europe and Japan, where lack of space, business overheads and limited operating hours have long fostered a vending-machine culture, the BBC report said.

In Europe, for example, NDS has already installed 160 fully automated shops -- for clients other than McDonald's -- and has plans for another 400, according to the BBC.