New Restaurant Technology: Trends to Stay Ahead

Knowing that new restaurant technologies matter is less useful than knowing which ones can improve customer experience and loyalty while also increasing efficiency and building up the bottom line.

Most of the best new restaurant technology success stories started out as turnaround stories, championed by leaders that had the guts and gusto to go big or go home. The technological answers they found to their challenges focused around improving the guest experience rather than enacting change for its own sake.

As a result, they increased market share, restored or reinforced relevance, and built incredible value for their organizations.

On the other hand, new restaurant technology offers operators novel techniques for growing margins. New ways to carry out training, to engineer more efficient unit economic models, labor models, and productivity improvements will benefit from a wide variety of exciting new tools that have hardly been adapted to or adopted by the industry. It presents tremendous opportunity for investors, technologists, and future-looking operators focusing on bold bets to transform adversity into advantage.

While some hold their breath waiting for others to take the first leap, others are out-performing by out-working and out-investing their competition.

Here we present a brief overview of some of the new restaurant technology trends that are transforming the restaurant industry.

Artificial Intelligence in Restaurant Chains

Artificial Intelligence (AI) refers to computer systems’ ability to interact with the environment in a way that would normally require human intelligence. Understanding speech, playing games (AlphaGo), autonomous vehicles, language translation are some examples.

In the restaurant industry, artificial intelligence is being employed in very diverse applications, from quality control to upselling, intelligent menu boards, license plate recognition, and loyalty programs.

  • Restaurant AI helping with QA/QC: Back in 2016, we wrote about how tech is killing off independent pizzerias. Domino’s innovation has a lot to do with that – and the company is not slowing down. In 2019 Domino’s launched DOM Pizza Checker in Australia and New Zealand. This consists of an application of Artificial Intelligence with the purpose to ensure each pizza has the right toppings, the right amount of cheese, and is at the right temperature. Upside: 15% increment in pizza quality – improving customer satisfaction, reduction in labor.
  • Restaurant AI in Suggesting Selling: After the acquisition of Dynamic Yield (a personalization technology company), McDonald’s deployed the technology in 11 thousand drive-thru menu boards (as of FY 2019). Add-on suggestions, item options that change by the hour and weather are some of the applications. Upside: increment in average transaction value.
  • AI supporting Phone Ordering: Back in 2018, chain restaurant Chipotle started testing a voice assistant that is powered by Artificial Intelligence to take phone orders. Upside: savings in labor costs, improving speed of service and convenience.

Artificial Intelligence in Restaurants

 

How Restaurants Are Incorporating Voice Ordering

Though voice-ordering it’s not a new restaurant technology trend, it hasn’t been fully leveraged yet. The costs of dismissing new technologies are often underestimated, and businesses can never make it too easy for people to buy from them. With voice ordering, customers can place an order via Alexa, Google Home, or Siri in just a few seconds and all via voice commands. The use of voice assistants (including those in smartphones) is projected to triple in five years.

  • Voice Ordering for Food Delivery: Starbucks is offering voice ordering and delivery through Alibaba smart speakers in China. Upside: improve customer experience, speed of service
  • Voice Ordering in Recruiting: McDonald’s “Apply Thru” program allows job seekers in nine countries to apply for a job using Alexa or Google Assistant. This application is functional for restaurant jobs, and the process is completed online. Upside: Access to a wider pool of talent (encouraging tech-savvy individuals to apply for jobs).
  • Voice Ordering in Drive-Thrus: In 2019, the QSR chain Sonic Drive-in started testing menu boards that employ a voice assistant to take customer orders. The technology uses AI to make suggestions as well. Upside: increases in customer loyalty, average transaction, and speed of service.

Restaurant Advanced Analytics

Companies and executives are being flooded with data but are starving for insights. While many organizations think they are doing analytics — and they are, to some degree — it is mostly still characterized by emailing Excel spreadsheets back and forth.

From outside-the business insights to shape corporate strategy, to inside-the-business analytics to improve efficiency and efficacy of effort and resource allocation, applying advanced restaurant analytics can be leveraged to improve top and bottom line.

  • Advanced Analytics in Restaurant Delivery Software: UK delivery leader Deliveroo employs real-time analytics to identify bottlenecks and optimize food preparation time, as well as reduce food waste by means of purchasing ingredients based on predictive analytics. Upside: faster speed of service, multiply by 2x the number of meals produced by restaurants.
  • Advanced Analytics in Ordering: several foodservice operators collect data when customers order via an app. For instance, Luckin Coffee success is partially attributed to the analytics it obtains from customer data in their app – the company operates mostly via delivery and takeout using its own app, rather than third-party platforms. With close to 12.5 million orders in 2018, the potential for data mining is invaluable. Upside: customer loyalty, traffic, and average check growth.

Augmented Reality and Virtual Reality

Augmented Reality (AR) consists of laying a computer-generated image over the user’s view or environment, resulting in a composite. Additional senses can be also leveraged, besides eyesight, including auditory, olfactory, or haptic features.

Virtual Reality (VR) also uses an interactive computer-generated image but doesn’t incorporate the user view. Sensory stimuli for sound are often employed as well.

  • Augmented Reality for restaurant marketing: Panera has implemented several tech initiatives. In 2019, the company developed an AR application allowing customers to see nutritional facts and ingredients when placing their phones in front of a breakfast wrap; and allowing to share in social media. Upside: in less than three months the campaign reached 9.3m users at a cost of 1 cent per user.
  • Virtual Reality for employee training: Fast-casual honeygrow is one of the foodservice chains using VR training for crew employees. The program immerses the trainee in Back-of-House and Front-of-House protocols and best-practices and uses gamification to test learning. Upside: faster and more effective training, improvement in the employee experience
  • Augmented Reality for menu merchandizing: Back in 2018, Bareburger was one of the first restaurants to enable a 3D AR menu. Using Snapchat Lenses customers could see the dish in their table from any angle. Upside: the potential to increase check average by customizing menu merchandising based on customers’ characteristics, weather, time of day, season, etc.

Restaurant AR and VR

Facial Recognition, a Promising New Technology in Restaurants

Facial recognition is a technology that allows identifying faces from images or video. It’s usually developed via neural networks (training algorithms). In real-time video it works detecting faces, determining face vectors, and checking those against a list (for example, a customer loyalty database).

The restaurant of the future will likely leverage this technology. A recent survey showed that 46% of restaurant owners expect facial recognition and 3-D will be used in most restaurants by the end of 2025 — for things like portion control, measuring guest sentiment, and checking food quality. Over 53% believe technology will increase restaurant flow; 53% think it will benefit design optimization, 51% see it aiding staff training, and 50% feel it will provide better entertainment for guests.

  • Facial Recognition for ordering: In China, KFC smart restaurant started using facial recognition to remember people’s food choices and predict orders. Recommendations for items are done based on estimated age and mood. Upside: faster ordering, increases in average check by suggestive selling.
  • Facial Recognition for paying: Fast food restaurant chain CaliBurger also uses facial recognition in kiosks, allowing to “pay with your face”. Upside: labor cost reduction, speed of service

3D and facial recognition restaurant industry

Use of Geolocation and Geofencing in Restaurants

Geolocation consists of determining the location (geographical coordinates) of a device often to help locate human users. The process usually employs GPS, IP addresses, radiofrequency, or MAC addresses.

Geofencing also uses GPS technology to create a virtual fence that allows software to respond when a device (often cell phones) access or move around a location.

  • Geolocation to track delivery orders: In 2019, Domino’s launched GPS tracking for delivery drivers in the U.S. Customers can follow the exact location of their order in a map and receive alerts when it’s two minutes away. Upside: improved customer experience, labor optimization (better estimations of delivery time, possibility to troubleshoot problems in real-time).
  • Geofencing to increase restaurant traffic: In 2018, Burger King’s Whopper Detour Campaign would offer customers one-cent burgers (via an app) when they were within 600 feet of a McDonald’s. Upside: increased traffic, earned media and improved consumer data. 
  • Geofencing to support marketing efforts: On National Donut Day, Dunkin’ created a personalized geofilter in Snapchat that would allow customers to “Snap” as a giant donut head when they were in a company store. Upside: increment in Snapchat followers 10x the monthly average.

Restaurant Geolocation and Geofencing

How Foodservice Can Benefit from Machine Learning

Machine Learning is the application of artificial intelligence that develops programs that allow computers to access data and learn automatically. The objective is to identify patterns in large datasets. Predicting customers preferences, virtual assistants, supply chain opportunities, improving the online ordering experience, and social media insights are some of the applications.

  • AI and Machine Learning to Improve Digital Menus: In 2019 McDonald’s acquired Dynamic Yield – an AI firm that employs machine learning algorithms to adapt digital menus in real time based on weather, restaurant traffic patterns, hour of the day, and popular items. Customers buying behavior can be studied to optimize the back-of-house, predict and tackle bottlenecks before they happen, and reduce labor costs by optimizing shifts and assignments.
  • Machine Learning to Supercharge Food Delivery: British delivery company Deliveroo uses big data and machine learning to achieve efficiency in its system. The analysis is used to adjust performance based on trends, monitoring operations in real-time, and calculate the perfect consumer-to-rider match. Upside: performance optimization (reduction in food costs, inventory management and inventory control, reduction in labor costs, improved digital ordering experience).

Restaurant Technology US Top Ten

Autonomous Vehicles' Potential to Reduce Restaurant Costs

Autonomous or driverless vehicles drive themselves without human intervention, by means of their ability to detect the environment they are in. With the driver representing an estimated 22% of the average food delivery order cost, autonomous vehicles have the potential to reduce costs significantly. Similar cost reductions could be achieved on the supply and purchasing side.

  • Domino’s is the most prominent example of foodservice companies betting on technology. The company has been testing self-driving cars and autonomous rovers for some time. In 2017 it partnered with Ford to develop a self-driving car that would deliver pizza, and in 2019, a rover from Nuro was tested around Houston to address last-mile delivery.
  • In 2019, Pizza Hut entered a partnership with FedEx to test pizza delivery with an autonomous rover. Upside: experience design upgrades, faster speed of service, reduced labor costs.
  • Large restaurant chains are not the only ones making bold bets on technology. Startups are often making more progress than many tech departments in large corporations. Refraction, for instance, a startup related to the University of Michigan launched an autonomous delivery robot that works with independent restaurants. Upside: cost-effective last-mile delivery, reducing reliance on aggregators (possibility of improving margins on delivery orders).

Autonomous Vehicles Restaurant Labor Cost

Drone Delivery Applications to Foodservice

A delivery drone is an aerial vehicle often used to distribute packages and seen as a key solution to “last mile delivery” problems. While the technology is not mainstream commercially (and needs further regulation), it has the potential to be revolutionary for eCommerce.

  • Drone delivery key to improve speed of service: In 2013, a Domino’s franchise in the UK tested a drone to deliver pizza. Upside: labor cost reduction, increase in speed of service
  • Drone delivery from QSR to fine dining restaurants: Uber is working in San Diego on a pilot delivery program. Some of the restaurants involved were fast food McDonalds and Juniper & Ivy. Since the tests are being carried out in highly populated areas, landing takes place in safe locations and Uber drivers pick them up and carry to the final destination.

Food Delivery by Drone

Restaurant Automation

Automation is the use of technology so that processes can be completed with minimal human intervention. While restaurants haven’t made large gains in productivity since the Point of Sale System, the agricultural and manufacturing sectors improved productivity for decades with automation, setting a precedent for what could happen in the foodservice industry.

  • Automation helping delivery: In 2018 Pizza Hut unveiled a prototype for an automated kitchen operating on a Toyota truck. The concept, a “pizza factory on wheels” has a robotic arm, an oven, and a station to assemble boxes. Upside: Speed of service (pizzas take less than 7 minutes to be ready), labor cost reduction.
  • Robotics helping the restaurant FOH and BOH: a handful of companies have developed robots that cook or serve tables: Penny, Flippy, and Elf are a few examples of restaurant robots. The last one (Elf) takes orders and talks to diners. Upside: reduce labor costs, free waiters to take on other tasks.
  • Automation in restaurant Back-of-House: As of mid-2019, Quick Service McDonald’s was testing robot cooks that fry chicken and fish, toss fries, and serve beverages. The advanced kitchen equipment automates repetitive tasks. Upside: labor cost reduction, performance optimization.

Restaurant Automation

New Restaurant Technology Requires a Modernized Approach

Consumers, competitors, and the Fourth Industrial Revolution are greasing already slippery and fast-moving slopes. Consumers now expect retail and restaurant brands to provide them with same kind of experience and convenience that consumer technology companies do: annual (or faster) product introductions, digital improvements, self-order conveniences, and speed of service enhancements. We’re helping our clients modernize marketing approaches, improve analytic capabilities, and integrate new restaurant technology to optimize performance and make their businesses smarter, all in order to better serve guests and outmaneuver the competition.

We help both foodservice technology companies and leadership of emerging and established restaurant chains identify areas of opportunity and discover new approaches to anticipate and take action in the age of a rapid pace of change and disruption. If you’re interested in learning more about how we can help your business drive growth, optimize performance, and maximize value, contact us here.

Relevant NEW RESTAURANT TECHNOLOGY INSIGHTS

ABOUT AARON ALLEN & ASSOCIATES

Aaron Allen & Associates works alongside senior executives of the world’s leading foodservice and hospitality companies to help them solve their most complex challenges and achieve their most ambitious aims, specializing in brand strategy, turnarounds, commercial due diligence and value enhancement for leading hospitality companies and private equity firms.

Our clients span six continents and 100+ countries, collectively posting more than $200b in revenue. Across 2,000+ engagements, we’ve worked in nearly every geography, category, cuisine, segment, operating model, ownership type, and phase of the business life cycle.

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