While Intel's (NASDAQ:INTC) push into consumer tablets gets most of the attention, the company is starting to gain ground in other areas as well. Earlier this month, the casual dining chain Applebee's, which is operated by DineEquity (NYSE:DIN), announced that it would be installing 100,000 tablets onto tabletops within its restaurants. These tablets are powered by Intel, marking both a big win for the company and a big shift for the restaurant industry. While this isn't the first deal of its type, with Brinker International's (NYSE:EAT) Chili's announcing a similar plan a few months ago, it is the largest tablet rollout so far.
A look at the deal
After years of testing, Applebee's finally chose E la Carte as the provider of its tabletop tablets, a company which Intel's venture arm led a $13.5 million round of fundraising for earlier this year. The tablets will be placed on each table and bar in more than 1,800 Applebee's locations next year, making Applebee's the largest chain to adopt such a deal so far. The Presto tablet is designed specifically for restaurants, featuring a rugged exterior, smooth surfaces for quick cleaning, and an easy-to-use credit card reader.
One of the benefits for Applebee's is that these tablets come with no upfront costs, with E la Carte instead charging a subscription fee per device. This removes a big barrier for adoption for these types of devices, as 100,000 tablets would likely cost in the tens of millions of dollars for Applebee's to install if bought directly.
What this means for Applebee's
For dine-in restaurants like Applebee's, time is of the essence. The faster that guests leave after they're done eating, the more guests can be served. E la Carte claims that its Presto tablets remove seven minutes on average from the table turn, a significant improvement for most restaurants. The tablets achieve this by removing much of the time guests typically spend waiting for servers to visit the table to order food, request a refill, or ask for the check. Time that guests spend waiting at the table is money down the drain for restaurants.
E la Carte also claims that the Presto tablet produces an average 10% sales boost. The ability of the tablet to up-sell on every order and take advantage of impulse purchases should produce a sizable sales boost.
For DineEquity, which franchises the Applebee's concept, higher sales means higher franchise fees. At the restaurant level, these tablets should make the operation more efficient in addition to improving sales. Servers will be able to handle more tables per shift, possibly resulting in fewer servers being needed and lowering labor costs.
The tablets will also offer music and games to play while waiting for food to arrive. The hope is that people will pay a small fee to use these services. With the proliferation of smartphones, this seems like it won't be a huge source of revenue; being able to distract kids with a game on the device may end up being a godsend for parents, however.
Chili's announced a very similar initiative a few months ago, although parent company Brinker went with a different tablet company called Ziosk. During six months of testing, Chili's saw both an increase in check size and an increase in guests filling out surveys and having their email addresses captured. With the success so far at Chili's and the big roll out at Applebee's, it's only a matter of time before tablets become commonplace in restaurants.
What this means for Intel
Intel is investing heavily in getting its chips into tablets, with a big push that includes subsidies and discounts. With the goal of quadrupling sales in 2014 to 40 million tablet chips, the Applebee's deal is really just a drop in the bucket for Intel. It does represent Intel's desire to get its chips into any and every type of device, however, and it's a good first step. With PC sales declining, Intel is looking to broaden it business to make up for it.
Another initiative being taken by Intel along those same lines is the Quark processor. This processor is an extremely low-powered processor aimed at things like smart watches and heart monitors. Intel recently announced the Galileo development board, built with the Quark processor, which is a credit card-sized computer in the same vein as the ARM-based Raspberry Pi. It's aimed at hobbyists, and Intel hopes that people use the platform to create projects which show the potential of the Quark processor.
With the goal of putting Intel inside of everything, the Presto tablet is step forward for a company that is known mainly for powering PCs.
The bottom line
Applebee's should see increased sales and greater efficiency in its restaurants once the Presto tablets are installed. This deal is likely the first of many for the restaurant industry. For Intel, this small step toward its tablet sales goal is an important one, and it shows that consumer tablets are only a part of the overall market. With only a tiny percentage of restaurants using tablets today, the market is wide open, and Intel is in position to claim a big piece of it.
Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.