AI Fireside Chat Recap: How AI is Transforming Restaurant Operations
By Like many industries, AI is making a big impact in restaurants. Already many restaurant chains have used AI to transform operations, decision-making, and the customer experience. It is rapidly becoming easier and less costly to manage restaurant inventory, set schedules, recruit, and forecast demand. AI is empowering managers with better information and advanced automation to do their best work.
In October, we hosted a fireside chat between Fourth’s CEO, Clinton Anderson, and Bar Louie’s SVP of Technology, Roberta Frierson. The conversation titled, AI Fireside Chat: Profits, Efficiency, and Hospitality, centered on the ways AI is creating value today, the ways in which it is being used, and the opportunities it presents for restaurants. Frierson brings over 25 years of experience maximizing the value of technology in restaurants. In her current role, she’s responsible for technology investments across 70 locations and 5,000 employees.
Discussions like this are critical for the restaurant industry as owners, operators, and technologists explore AI. In this blog, we’ll review some of the most important takeaways from the chat and how you can leverage these insights in your own restaurant.
Role of AI Today in Restaurants
Restaurant operators and corporate chains are using AI in a variety of ways. Generally speaking, it allows for better automation and faster analysis of data. For example, Chili’s is using AI forecasting, which factors in historical data, seasonal events, weather forecasts, and more to give informed recommendations on staff needs for a given shift. They improved forecasting accuracy by 20%, preventing overstaffed or understaffed shifts. AI now saves them 600 labor hours a week across the chain. Noodles & Company is doing the same and reduced labor spend by $4 million annually.
Getting Started with AI
The fireside chat begins with the fundamental question, “how should we get involved in AI.” But before answering the how, they discussed the why.
Anderson explained it clearly when he said, “The challenge we’re facing right now as an industry is that it’s harder than ever to run restaurants.” It’s difficult to create top line growth, attractive profit margins, and prevent manager turnover. Meanwhile, labor costs continue to rise with a tight labor market inflating recruitment costs. Anderson goes on to say that “being a restaurant manager is one of the hardest jobs in America.”
In this challenging situation, AI can lighten the pressure. The best place to get started with AI is to integrate it into an existing process. Rather than trying to transform the entire dining experience, use it to make a component of the operation cheaper and faster. Look at your processes from inventory, scheduling, or order intake for example, and find AI solutions designed to improve the profitability or efficiency of those processes. That is the fastest route to a positive impact and a return on your investment.
Where is the Value in AI?
There are four key areas of restaurant operations where AI can provide value today. Those areas include:
- Forecasting: AI platforms can analyze much larger sets of data for trends and insights than a human analyst. This allows an AI platform to make more accurate and informed demand forecasts, thereby enabling management to staff the precise number of staff to meet demand.
- Inventory Management and Waste Reduction: AI can leverage usage data to determine when ingredients in your inventory need replenishment. More, the AI platform can source the ingredients at the best price on the market and submit orders to restock inventory automatically. This helps limit waste and prevents food items from spoiling due to overstocking.
- Enhancing Customer Experience through Personalization: AI can be used to create personalized menus or special offers for customers based off their order history. Favorite dishes can be displayed at the top of the menu or personalized recommendations for beverages and sides can increase sales and conversion in app.
- Streamlining Order Processing and Delivery Systems: AI-powered voice recognition enables patrons to make orders at self-serve kiosks and drive-through menus. More, AI can prioritize orders in the kitchen based on cook times or ingredients.
Empowering Managers with AI
One of the key capabilities of AI is that it can improve the real-time decision-making of management. It does this by delivering data-driven insights in real-time. In addition, AI can also automate more sophisticated tasks than once capable by digital processes. This empowers managers to do more with less and lead their restaurant to success. Here’s a few examples of how it could help:
- Improve Hiring Efficiency: AI can automatically place job openings on top boards and boost those posts with marketing dollars. AI will identify the best keywords to advertise for and shift spending as prices fluctuate, so you always have the best value.
- Streamline Scheduling: We have already discussed how labor forecasting can be improved with AI, but the scheduling process itself can also be expedited and automated. AI can help management ensure compliance while spending less time building schedules. Receive alerts and notifications if a schedule is non-compliant with local, state, or federal labor laws and get recommendations for adjustments to bring the schedule into compliance.
- Drive Profitability across Every Dish: AI can help engineer a menu that ensures profitability. Sourcing ingredients at optimal prices, planning portion sizes, and establishing plating guidelines can drive greater profit and less waste for the restaurant.
Addressing Concerns and Challenges in AI
For all the excitement AI is generating, there are concerns as well. Some are practical, such as will the AI tool be compliant with industry regulations? Will it cost too much? Are we safe from data breaches? Other concerns are higher level and forward looking. What does this mean for my position? Will this eliminate roles on my team?
These questions are understandable concerns when faced with a transformative technology. It’s difficult to get buy-in from stakeholders when there are so many unknowns. Frierson offered great advice to help get past these barriers to adoption,
“Don’t try to conquer the world with AI in every part of your restaurant. You don’t need to do something new. Start small. Prove it works. And then those people who are skeptical start to say, ‘hey, this isn’t changing my life.’”
AI’s purpose is not to wholly replace positions within the restaurant. It’s not suitable for that task. Instead, AI is much better used to enhance the performance of the team you already have. When it comes to inventory management, demand forecasting, and scheduling, AI is there to provide greater insight for better human decision-making or automation to make important tasks simpler. By starting small, you can demonstrate value while reassuring the team that AI is a benefit, rather than a threat.
Buy vs Building AI
Though the value of AI is clear, the question remains. Should a restaurant chain, even a large corporation, choose to build their AI solution themselves or partner with an established vendor? There are advantages and disadvantages to each approach. Let’s review:
BUILD
Pros:
- Customization
Cons:
- Resource intensive
- Requires a team with highly specialized development skills
- Takes years to develop, test, and implement
- Requires further investment to scale and maintain
BUY
Pros:
- Agility
- Faster deployment
- Ongoing improvements
- Support resources
Cons:
- Limited customization
If your organization decides to partner with a vendor, there are several important considerations to make. Not all AI solutions are made equally, so use these best practices to guide your evaluation:
- Industry Fit: Find a vendor specializing in your industry. They will have a better understanding of the challenges you face and functionality in the app to address those challenges.
- Ease of Integration: A new AI platform could touch all corners of your technology environment. Look into the integration capabilities of the platform to ensure it will complement your existing technology investments.
- Cost and ROI: The goal of AI is to improve efficiency and reduce costs. Compare upfront and ongoing costs of using the solution against the potential ROI. Make sure it’s a sound investment.
- Vendor Support and Reputation: New technology attracts startup companies and entrepreneurs. These organizations may be strong in innovation, but the often lack the resources for sufficient training and support.
Conclusion
The restaurant industry continues to face pressure from tight labor markets, higher food costs, and lower profitability. Restaurant managers can’t reshape the labor pool or change global food markets, but they can make better decisions within that environment. They can reduce food waste. They can improve demand forecasting. They can make their operation more orderly and smooth to grow profitability.
AI is the tool available today to achieve that. As Frierson explained, by starting small you can address your most glaring pain point and grow from there.
Interested in AI? Learn more about Fourth iQ, the AI platform made for restaurants.