Restaurant Technology:
The Ultimate Guide to the Restaurant of the Future

Restaurant technology and operations were not greatly impacted by the Second and Third Industrial Revolutions (when consumer and electronics products led growth). The sector is now in a prime position to make modernization efforts and — in doing so — becomes a target for investment.

The foodservice technology industry currently represents close to $500 million in revenue. However, this figure does not include cutting-edge new technologies that can be applied to the restaurant space.

We estimate technologies that could be applied to restaurants have a global TAM of $3 trillion (counting categories as diverse as POS Restaurant Management Systems to Automation & Robotics to 5G and ERP Systems, across industries).

restaurant technology TAM

  • Automation can help solve the #1 pain point in the restaurant industry: labor costs.
  • Foodservice equipment is a $37B segment where innovation can help obsolete entrenched players with “new category” type of products (especially focusing on labor automation and alternative formats).
  • Foodservice technology is an arms race. The speed at which the big guys (the McDonald’s and Panera’s of the world) are building digital moats is creating an even broader divide between the haves and the have nots.
  • Middle market restaurant chains can’t compete effectively. Few foodservice SaaS providers are in a position to help fill in this gap and put the tech of “the haves” into the hands of the “have nots”.
  • Repetitive and standardize tasks give automation an edge in QSR (allowing for investments that can be harder to justify in full-service).
  • The impact from COVID-19 presents an opportunity for accelerated growth in alternative formats and innovative solutions (prioritizing safety, sanitation, smaller footprints, labor efficacy, etc.).
  • Even the most cutting-edge foodservice startups often lack access to know-how to tweak their product so that it satisfies the most salient pain points restaurants have and may also fail to communicate effectively a technology’s advantage.

Restaurants have been historically slow to adopt technologies (we’re looking at you, state-of-the-art-2002 legacy point of sale systems), but increasing cost pressures across all major line items are going to force operators to make upgrades or be left behind by both their competition and their consumers.

We’ve all seen the headlines about robots, digital ordering kiosks, and drones. But few restaurant operators are actually doing anything about it or taking the time to educate themselves about advances that will completely change the way they do business.

In many ways, the food and hospitality industries are playing catch up to recent technological advancements. The next five years will be a turning point for the industry — which means making investments today.

Table of Contents

What’s Driving Technology in Restaurants (and What Are the Risks)?

Technology in restaurants presents a tremendous opportunity for investors, technologists, and future-looking operators focusing on bold bets to transform adversity into advantage. These are some of the drivers fostering changes to technology in restaurants.

Rising Cost of Labor

Higher labor costs is, arguably,  a good thing for foodservice in the longer term. The result will be not only greater emphasis on training, engineering more efficient unit economic models, labor models, and productivity improvements — these efforts will also be benefited by a wide variety of exciting new tools that have not yet been adapted to or adopted by the industry.

Restaurant Delivery

Unlike in restaurants — where, in the U.S. and other mature markets, the industry has reached a point of saturation such that any one company’s growth is coming at the expense of another — the delivery sector has not been a zero-sum growth game over the last few years. In the United States and Europe, delivery companies are reaching growth rates that are ten times the growth of the restaurant industry.

restaurant technology food delivery

The entire segment is accelerating, and many restaurant operators are still battling with both the ups and downs of delivery. On the one hand, there’s the low-hanging fruit of incremental sales (particularly for the casual dining sector, which has net neutral on same-store sales growth over the last decade). On the other, there are the added operational logistics that many operators feel underprepared or ill-equipped for.

Availability of Funds

VCs are backing foodservice technology and seeing a variety of returns. Companies also invest in tech via CVC. The right CVC investment can unlock new layers of growth, open channel expansion opportunities, or drive improved systemwide efficiencies through new technologies. Several foodservice companies have pursued CVC programs because of this, including Starbucks, Chipotle, and Yum Brands.

For those who have really good forecasts about where the market is headed — and are looking for more than just quarter-to-quarter returns — now is the best time to leapfrog forward and ahead of competitors of today and tomorrow.

Examples of Innovative Technology in Restaurants

Who have been the leaders in restaurant modernization? What has worked (or failed) in the past? While innovation — by definition — does not come from a case study, it can still be helpful to study past performance to inform future strategies. 

McDonald’s Technology

With more than 70% of its U.S. transactions coming at the drive-thru, it’s not surprising that much of McDonald’s technological innovations have focused on this important sales channel. McDonald’s purchased Dynamic Yield in 2019 for $300 million, with the goal of using its personalization and decision logic capabilities to improve the customer experience and efficiency of its drive-thru lanes.

The company also acquired Apprente in 2019 to automate the voice ordering process, with the Apprente team also becoming the founding members of McD Tech Labs to further expand McDonald’s technology infrastructure and digital capabilities.

Starbucks Technology

Starbucks was one of the early restaurant industry leaders with respect to mobile ordering and payments (including an early partnership with Stripe). Following an initial test in 2014 Starbucks expanded its mobile order and pay platform nationwide in 2015 and to other countries like China and the United Kingdom in subsequent years. In many ways, the introduction of Starbucks mobile order was an acknowledgment that some consumers had evolved past the “third-place experience” on which Starbucks built its brand and were looking for more convenience.

More recently, Starbucks has been using technology to better consumers’ different need states within its global store base, including digital-order focused Pickup stores and a partnership with Brightloom to make cloud-based solutions available for its license partners globally.

Domino’s Pizza Technology

Domino’s has become one the restaurant chains most synonymous with technology in the past decade and closest to the “restaurant of the future”. In 2015, Domino’s Pizza USA President Russell Weiner famously declared that “[Domino’s is] more than a pizza company, we’re a technology company.”

Since 2010, the company began turning to technology to streamline the delivery process, seeing a nearly 17% year-on-year growth in revenues as a result. Over five years (2011-2016), Domino’s unveiled ordering via Twitter, Slackbot, Facebook, Amazon Echo, and Apple Watch — and the chain’s delivery market share increased 24% (and its stock prices soared 880%) in the same time period. Between 2010-2017 Domino’s stock performance was 3x the return of Amazon, Apple, and Google.

Domino’s was one of the pioneers with its digital ordering app (one of the first that allowed customers to “build and order their own pizza”, but has since become a leader in restaurant technologies through innovations like order tracking, delivery through autonomous vehicle or electric bikes, and delivery capabilities at non-traditional “hot spots” like parks and schools.

Panera Bread Technology

Struggling to reduce friction for to-go customers, Panera launched its “Panera 2.0” platform in 2011 to better integrate its digital ordering, payment, and operations technologies. Beyond increasing convenience — no small goal in the era of the time-constrained consumer — these innovations are improving customer satisfaction, increasing order size, and making operations more efficient.

In 2017, the company was acquired by JAB Holdings for $7.7B after it hit $1B in digital revenue, 6.67x the $150M technology investment the company made in 2014 with the launch of Panera 2.0.

Eventually, the technology expanded to include order-ahead kiosk and delivery capabilities, resulting in one of the most comprehensive and dynamic technology stacks in the restaurant industry, even when measured by today’s standards.

Dodo Pizza Technology

Russian-based Dodo Pizza has prided itself on being one of the fastest-growing restaurant chains in the world for the past several years. However, none of this growth would’ve been possible with its proprietary “Dodo IS” cloud-based ERP system, which provides the data for its mobile app, website, and contact center while also offering tools for kitchen workflow, delivery, and sales analytics.

Backed by a team of over 100 software engineers, Dodo will likely remain one of the leaders when it comes to applying tech to foodservice, including Internet of things, voice ordering, AI, and robotics. 

Jollibee Technology

In what once was a liability for the company, Jollibee’s tech stack has been a major factor behind the company’s growth from a regional powerhouse to global player with more than 5,800 locations across 34 countries Jollibee’s earlier technology focused on more traditional restaurant ERP functional areas like restaurant waste and productivity, back-end services, and procurement system.

In more recent years, however, Jollibee has become a global leader with respect to cloud kitchens and a hub-spoke delivery model (using in-house and third-party delivery services).

Drive-Thru Technology

While restaurant delivery services grabbed many of the headlines during COVID-19, new drive-thru innovations like technology-enabled menu boards, AI-backed voice ordering, and separate drive-thru lanes dedicated for mobile orders and third-party aggregators may end up being one of the pandemic’s lasting legacies for restaurant technologies. With the QSR and fast-casual categories likely to hang on to some of the market share the past year, drive-thru technologies that help to maximize unit-level productivity are likely to gain more attention (and investment) in the years to come.

Restaurant Technology Frequently Asked Questions (FAQs)

Tech investments are usually categorized as CAPEX. A recent survey indicated that the average restaurant technology budget represents around 2.5% of revenue and future restaurants may increase that even more.

Artificial intelligence has a wide range of applications in the restaurant industry. For example, Domino’s is using it for quality control (together with computer vision), McDonald’s is leveraging AI for suggestive selling to increase the average check at kiosks and the drive-thru, and Chipotle is using it with a voice assistant to take phone orders.

We put our own list together and came up with 17 companies breaking the $1 billion mark and collectively worth more than $450 billion. They are concentrated on restaurant delivery, including: Meituan Waimai, DoorDash, Delivery Hero, Just Eat/Takeaway, Ele.me, Grubhub, Deliveroo, Zomato, Swiggy, Postmates, Freshly, Glovo and Olo. Others not in delivery that break the $1 billion mark are: POS company Toast, ghost kitchens companies CloudKitchens and Reef, and reservations company Open Table.

There are several sites publishing rankings of the best POS systems. We won’t overwhelm you with names — something that is more useful is what point-of-sale features are most useful to restaurant chains:

  • Scalability: does the POS enable the restaurant to grow traffic significantly? What about growing the footprint?
  • Enterprise focus: not all POS systems are build for enterprises (chain accounts), many cater independents (which may mean they are built with fewer integrations, or lack scalability, or a different fee structure).
  • Payment agnostic: restaurant chains like the freedom to select the banks they are working with and to get the best payment processing fees possible rather than these being imposed.
  • Cloud based: allows to connect operations, reduce data storage costs, improved collaboration and accessibility.
  • Integrations: restaurant chains require advanced analytics, KDS systems, loyalty programs, etc. These are applications that usually integrate to the POS. Sometimes, POS companies develop their own capabilities and restrict the possibility customers have to go with a different application.
  • Hardware: is the system hardware agnostic or does it require a significant CAPEX allocation going to new terminals, printers, and peripherals?

The restaurant technology landscape is complex, and while not all restaurants have to (or can) be on the cutting edge of tech applications, many are going to be left behind for not thinking strategically about how to use technology to address the most pressing pain points. Some of the key areas the restaurants of the future are considering include: 

  • Business Intelligence/Analytics
  • Accounting & Taxes
  • Purchasing & Inventory
  • Theft Prevention
  • Sustainability, Food Waste
  • Search & Reservations
  • Corporate Catering
  • Ordering & Payments
  • Delivery Aggregators
  • Menu Boards
  • Marketing, CRM & Loyalty
  • Guest Experience
  • POS Systems
  • KDS
  • Automated Kitchens & Robotics
  • Management/HR Systems
  • Labor Optimization, Scheduling, Training
  • Voice Tech

Leading Restaurant Technology Companies

The following doesn’t intend to be a comprehensive list, but rather to present some examples of types of companies competing in each category.

1. Restaurant POS Systems 

What most immediately think of when considering restaurant tech is the point of sale system, or POS. Companies catering in this category include Clover, Qu, Revel Systems, Oracle Micros, SpotOn, Toast, Lavu, Shift4, TouchBistro, Square, Lightspeed, NorthStar, Upserve, NCR, Salido, SpotOn, Shopkeep, OrderSnapp, Brink POS, and Maitre’D.

2. Restaurant Inventory Management Systems

Focused on the back of the house, leading inventory systems include Fourth, Bevspot, Restaurant365, Provi, Simple, SevenFifty, PlateIQ, Altametrics, MarketMan, XtraChef, FoodMaven, Sourcery, Lavu, BlueCart, BirchStreet, Compeat, Orca, SimpleOrder, Orderly, and CostBrain.

3. Restaurant Accounting Software

Helping to streamline accounting practices, companies include Sage, Wave, Procurify, NetSuite, FranConnect, Restaurant365, Plate IQ, FreshBooks, Deskera, Xero, Get Linked, Free Agent, QuickBooks, Crunch, and KashFlow.

4. Kitchen Display System (KDS) Providers

Helping coordinate back-of-house functions, leading KDS companies include SR, Advantech, Bermatech, and FreshKDS.

5. Restaurant Reservation Systems

Operating as both a B2B and B2C function, reservations systems for restaurants include Yelp, OpenTable, Waitlist Me, Resy, Tablelist, tripleseat, tock, Gather, TableUp, and Hostme.

6. Restaurant Scheduling and Labor Management Systems

Addressing one of the main pain points in the foodservice industry,  labor management systems include Proliant, Poached, Harri, When I Work, Shiftboard, Swipeclock, Culinary Agents, Jolt, Snag, Sling, 7 Shifts, Schedule101, Push, Worksmith, Planday, Pared, Fourth, HotShedules, Stratex, Instawork, Shiftgig, Dolce, Humanity, Homebase, Bizimply, ScheduleFly, and Deputy.

7. Catering Software

Expanding beyond in-restaurant sales, catering software includes Foodify, Platterz, Foodsby, CaterCow, Foodee, Fooda, Forkable, Stadium, ZeroCater, Peach, Ritual, EZ Cater, Chewse, FoodtoEat, Monkey Media, Better Cater, and Spoonfed.

8. Online Food Delivery Companies and Delivery Partners

Another B2B and B2C bridge, sometimes referred to as “third-party aggregators, online food delivery companies include  Doordash, Postmates, UberEats, Grubhub, Caviar, Deliveroo, Just Eat/Takeaway, Delivery Hero, Glovo, Waitr, OrderUp, Slice, MealPal, EatStreet, ChowNow, CardFree, MenuDrive, Bringg, Olo, Onfleet, Zuul, Relay, Ordermark, Flipdish, SpeedETab, and Seamless.

9. Robotics, Automation, and Smart Kitchens

A relatively new but increasingly significant category in robotics includes companies such as Picnic, Chowbotics, Mashgin, Miso Robotics, Dishcraft robotics, Autec, Bear Robotics, Starship, Nuro, and Creator.

10. Ordering and Payments

Sometimes overlapping with the POS system, but serving a dedicated function, ordering and payment software companies include  Brightloom, Onedine, Ziosk, Presto, SpeedETab, Tray, TableSafe, Rooam, Zivelo, Bite, Advanced Kiosks, Alveni, Acrelec, Tapin2, and Olea.

11. Ghost kitchens

Another emerging category in foodservice tech, leading ghost kitchen companies include CloudKitchens, Kitchen United, Reef Technology, Kitopi, Zuul, and Rebel Foods.

12. Restaurant Marketing, CRM, and Loyalty

While not all dedicated to restaurants specifically, leading marketing technologies for the industry include Groupon, Bentobox, Punchh, Fishbowl, AppFront, Main Street Hub, Seated, Sevenrooms, OpenMenu, Thanx, PayTronix, SinglePlatform, Venga, Yext, Wisely, Mobivity, Hooked, Bridg, Incentivio, PosIQ, Fishbowl, Fivestars, Valutec, Google AdWords, and Mailchimp.

Glossary of Restaurant Technology Terms, Trends, and Examples

The costs of dismissing new restaurant technologies are often underestimated, and businesses can never make it too easy for people to buy from them. Here we include some examples and definitions to help make sense of the latest restaurant technology trends.

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 obtained customer data in their app. With close to 12.5 million orders in 2018, the potential for data mining is invaluable. Upside: customer loyalty, traffic, and average check growth.

Artificial intelligence 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: In 2019 Domino’s launched DOM Pizza Checker in Australia and New Zealand. This application of Artificial Intelligence has the purpose to ensure each pizza has the right toppings, 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

Augmented reality 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.

  • Augmented Reality for Restaurant Marketing: In 2019, Panera 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.
  • 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

Automated kitchens can prepare meals with little to no intervention of humans (usually using robotic arms). Automated kitchens are attracting a lot of investment, from Miso Robotics, creator of Flippy, to Spyce, where robots cooks the entire meal (though they still employ humans to help customers figure out the system). For many restaurant businesses the pace of adoption is slow, so consumers shouldn’t expect that their next meal will come from a robot. Upside: labor cost reduction, performance optimization.

  • 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.

Restaurant Technology Trends

Autonomous 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 self-driving cars: 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.
  • Refraction, 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).

Payment flexibility has always been important to restaurant guests, but who among us hasn’t been met with a “We can only split the bill for parties of 8 or more” when visiting a restaurant? With apps like Venmo (which allows users to easily send money to others with just the touch of a button) growing in popularity, it makes sense that restaurants would offer easier ways for guest to go Dutch. There are several apps aiming to allow restaurants to deliver a more customized payment experience, including Divvy, Billr, and Plates. 

What we’ve said in the past to be the biggest buzzword of the restaurant industry for a time: these are delivery/takeaway-only restaurants that don’t have any sitting space. For most, guests order via third-party platforms. Though this has basically been Domino’s model for decades, ghost kitchens’ popularity grew significantly after the COVID-19 pandemic. This also made room for the creation of brands that work exclusively as ghost kitchens. The industry of dark kitchens was estimated to be $40 billion in 2019, and some estimates indicate that it could grow to be a quarter of the global foodservice industry by 2030.

  • Kitchen infrastructure providers: these include Zuul, Reef, Rebel, Swiggy, Cloud Kichens, Kitopi, Kitchen United, Deliveroo, and several others. They provide the kitchen (space and equipment) and host several brands in the same space.
  • Restaurant-operated kitchens: these exploded during the pandemic. One example is the “It’s Just Wings” concept developed by Brinker to give additional use to its more than 1k kitchens.

ghost kitchens

Contactless transactions take place when two devices are close to each other, but don’t need to touch to process the transaction. In restaurants, it is widely used for payment, though the term has been introduced to food delivery (“contactless delivery”) as well.

This field refers to the ability of computers to understand images, video, and live streaming. It can help automate tasks that the human eye regularly does. There are very few applications to the restaurant industry so far.

  • Object detection: can help from knowing if all ingredients are correctly placed in the plate and during food preparation to reporting back on safety and sanitation practices (for example if employees are wearing masks and globes properly).
  • Event detection: could help determine if guests are unhappy, if employee-guest interactions had any problems, etc.
  • Indexing: can help with inventory, theft prevention, even accounting for employees.

Buying or selling services or products over the internet. Food delivery services would enter this category.

This is a technology that allows identifying faces from images or video. 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

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 them to the final destination.

Food-Delivery-by-Drone

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

  • 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.

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.

  • 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).

geolocation and geofencing for restaurants

IoT is a blanket term that refers to a series of objects equipped with sensors and software to “talk to each other”. The objects connect to other objects and devices and are able to exchange data via the internet.

The most “modern” appliance in the restaurant industry has a green screen on it. There is an opportunity to combine smart features into “dumb” equipment to make them smarter. Many suppliers are realizing it’s time to invest into R&D, product, and channel development. It’s a question of who can prepare fast enough.

  • Foodservice Equipment Suppliers are starting to take note. For example, Welbilt has a digital platform called KitchenConnect® that allows for monitoring consumption data (electricity, water), utilization rates, production statistics, manage recipes, and more.
  • Table-tracking technology also uses IoT. For example, Panera’s table-tracking devices allow servers to find guests in their tables.
  • Suppliers are also leveraging IoT: Restaurant Technologies is using IoT to track oil usage and deliver oil on time (not before and not too late).

 

These systems allow inventory control by centralizing and controlling the flow of goods (mostly food ingredients), reducing food waste (by comparing theoretical food costs with actual ones and evaluating the variances), and facilitating kitchen operations.

Usually presented in digital screens, systems that connect to the point of sale (POS) in commercial kitchens, ultimately streamlining communication between front- and back-of-house, monitoring preparation times, and reducing order preparation mistakes.

Machine Learning (ML) 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).

When payment takes place with a mobile device rather than cash, check, or credit card.  Examples are ApplePay and Samsung Pay.

Mobile Order-and-Pay technologies keep growing. Starbucks and Domino’s have pioneered mobile order and pay. Already in 2017, Digital payments made up nearly a third of Starbucks’ sales. The coffee giant opened the app’s mobile order-and-pay capabilities to non-Rewards members in 2018 and saw the share of digital ordering almost double: mobile order and pay represented 13% of company-operated transactions in the U.S. in 2018, as opposed to 9% in 2017.

When customers can purchase using the internet, visiting the restaurant website, or using an app, selecting food items, arranging for pickup or delivery, and making the payment. Loyalty programs have leveraged online ordering to make purchases easier and faster and increase frequency as well as average check size.

The convenience restaurant technologies offer has had profound effects on consumer behavior. For one, with online and mobile ordering guests are less concerned about being judged for their order when they place it digitally. Pizza chains such as Domino’s, Pizza Hut, and Papa John’s reported that spending on the average order is 18% higher online than via the phone.

Almost half of consumers also cite improved experience with digital order. They save time and skip long lines by picking up their already prepared and paid-for food. The ability to browse the menu at their own pace is another benefit of digital ordering, as is improved order accuracy.

From the business’s perspective, these technologies provide insights into consumers’ ordering habits and preferences, allowing for more tailored product offerings.

Restaurant POS systems are computerized programs that allow recording transactions and payments (credit and debit, cash, even paying via phone or online). Nowadays, POS software is capable of integrating sales data, customer information, inventory tracking, payroll, cash flows, and consumer sentiment all in one.

Consists of the use of machines to perform (usually repetitive tasks) done by humans.  We’ve been writing about automation and robotics in the restaurant industry for a while now. Robots can do the dangerous, boring, monotonous jobs that people don’t want to do.

  • We estimate the U.S. restaurant robotics market size to be around $16 billion, considering one robot, automated kitchen, or robot arm per restaurant.
  • Robots have the potential to complete a majority of restaurant position tasks. Serving workers, cooks and food preparation positions, and support positions comprise 82% of all U.S. restaurant employees and could be automated, to a large extent.
  • Some foodservice robotic companies are claiming they can reduce restaurant costs between 30%-70%.
  • There is a low penetration of robots in restaurants, and fast introduction can quickly obsolete competitors.

restaurant robotics opportunities

Self-ordering capabilities are becoming mandatory for QSR and fast-casual operations. In 2020, it was reported that the global self-service kiosk market was close to $27 billion.

Manufacturers continue to upgrade and polish their products while POS system providers have been working on units that incorporate mobile ordering, kitchen display systems, and back-office IT management systems.

Research shows that kiosks can produce check increases of up to a third, with some reaching even higher growth. Self-service orders tend to have higher margins than counter orders because kiosks are so cost-effective, allowing a higher volume of orders without increasing the number of front-of-house employees, building higher sales per labor hour.

VR uses an interactive computer-generated image to show a 3D setting in which the viewer can feel immersed.

  • 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.

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 Restaurant Recruiting: McDonald’s “Apply Thru” program allows job seekers in nine countries to apply for a job using Alexa or Google Assistant. 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.

Restaurants seeking innovation are as plentiful as investors seeking investment.

We are proud to serve at the intersection of the needs of both. This industry will advance more in the next five years than it did in the previous 50 years. And decisions today should not be based on what others wanted yesterday or can prove today, it's much more about predicting what will happen in the tomorrows ahead.

Technology in Restaurants: Insights From Our Library

How to Lead: Restaurant Tech Change

In today’s day and age, there can be a tendency to be dismissive of the forces actively reshaping the industry — things that once sounded like science fiction (neuromarketing, machine learning, automation, and so on) are becoming more and more part of the conversation, and part of the actuality of disrupting many chained restaurants in the era of the Fourth Industrial Revolution.

While most foodservice executives recognize the need for innovation to keep pace with evolving consumer demands and behavior, many resist creating these new ideas on their own: they’d rather someone else take the risk than stake their capital. Not only does this leave them with pale imitations of strategy tailormade for a competitor, but it also means they miss out on the incredible valuations that come from being a leader in the field. The moment to act is now.

How We Help: Consulting Experience and an Investing Advantage

We work at the intersection of capital, concepts, and management teams for foodservice operators, technology providers, and investors. 

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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.