What is AI for Restaurants?

What if I told you that you could type in a question like “How do I improve my delivery sales?” or “How can I lower my labor costs?” and get an answer instantly? In the past, you’d have to pay a consultant or ask your COO or CFO to spend weeks analyzing the data for each of your stores to get an answer. Now with AI, it’s become a reality.

We’ve all seen the headlines: AI is taking over the world. Artificial intelligence is all anyone is talking about these days. Whether it’s all hype or reality, one thing is true, every business across all industries are trying to figure out how AI will impact them. This is just as true for the restaurant industry as any other. But it’s not very clear how AI will impact restaurants, because it is a people-first business. In a service industry, where people are preparing and serving food to other people, how does AI come into play? That’s the billion dollar question that many are asking. Restaurant operators around the globe are wondering how they can leverage AI to help their businesses improve performance and increase the bottom line. There are a number of ways that AI will have a huge impact on restaurants, so let’s break them down.

Artificial Intelligence 101

Not everyone is familiar with what AI really means. The term is thrown around loosely these days and it can mean different things to different people. Artificial Intelligence or AI refers to the simulation of human intelligence processes by machines, especially computers. These processes include learning, reasoning/deduction and self-correction. Think of AI as a toddler learning how to use a fork by trial and error, except it’s a computer and it can learn infinitely faster than a human can because it can run thousands of trial and error experiments in rapid succession. You can see this when you use AI image generators or watch robots learning to perform a task. You will see some comical mistakes like images of people with extra fingers or robots tripping over themselves, but over time, they learn from those mistakes and adapt. 

You already use AI in your daily life: The autocomplete suggestions in your text messages or email application are based on AI predicting what you’re going to write next. The recommendation engine on Netflix that knows what shows or movies you like to watch. The voice recognition on your phone or Alexa. All of these use a form of AI to operate. Other examples of this that you may have seen are self-driving cars and text summaries of your video conference calls on Zoom.

Here’s a helpful primer on different types of AI:

• Machine Learning (ML): A subset of AI that involves the use of algorithms and statistical models to enable computers to perform specific tasks without explicit instructions, relying on patterns and inference instead. ML is broadly categorized into supervised learning, unsupervised learning, and reinforcement learning.
• Natural Language Processing (NLP): This field focuses on the interaction between computers and humans through natural language. It involves enabling computers to understand, interpret, and generate human language. Applications of NLP include language translation, sentiment analysis, and chatbots.
• Robotics: AI in robotics involves programming robots to perform tasks that require human-like intelligence. This includes activities such as visual perception, speech recognition, decision-making, and the ability to move and manipulate objects.
• Computer Vision: This area deals with how computers can be made to gain understanding from digital images or videos. It involves methods for acquiring, processing, analyzing, and understanding visual data.
• Expert Systems: These are AI programs that simulate the decision-making ability of a human expert. They use a knowledge base and a set of rules to solve specific problems within a particular domain.
• Neural Networks: Inspired by the human brain, these are a series of algorithms that attempt to recognize underlying relationships in a set of data through a process that mimics the way the human brain operates. They are a key technology in deep learning.
• Autonomous Systems: These systems are capable of performing tasks in the real world without human intervention. Examples include self-driving cars and drones.
• Generative AI: Generative AI is a subset of artificial intelligence focused on creating new content or data that resembles a given dataset. Unlike other AI systems that are primarily designed to analyze and make predictions based on existing data, generative AI models can produce new, original outputs such as images, text, music, or even complex data structures.

Ultimately, the goal of AI is to create systems that can perform tasks that normally would require human intelligence, and are designed to enhance human capabilities and efficiencies. Most AI that we see today is known as narrow AI, designed for specific tasks. AGI or Artificial General Intelligence refers to a type of artificial intelligence that possesses the ability to understand, learn and apply knowledge across a broad range of tasks at a level comparable to human intelligence. In other words, AGI would replicate the cognitive abilities of the human brain and allow it to perform any intellectual task a human can. This is when you get into the science fiction level of Jarvis from Iron Man or C3P0 from Star Wars.

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How Will AI Impact the Restaurant Industry

You might be thinking, all of this is interesting, but how does any of this affect me as a restaurant owner or operator? Robots are the future, but they’re also extremely cap-ex intensive and not a realistic option for most restaurants. Do a search on AI for Restaurants and you’ll get results that focus on mostly customer service, but there are many ways that AI can help restaurant operators today:

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Personalized Customer Experience:

• Recommendation Systems: AI can analyze customer preferences and ordering history to suggest personalized menu items, enhancing the dining experience. Domino’s uses an AI assistant, Dom, for online orders. And Starbucks’ Deep Brew (launched in 2019) offers tailored suggestions to customers based on their previous purchases and preferences. 
• Chatbots and Virtual Assistants: AI-driven chatbots can handle reservations, answer customer queries, and take orders, providing a seamless customer service experience. Companies like Popmenu and Slang are using AI to answer customer calls and orders with automated AI service agents, so you don’t end up missing out on revenue. 

Operational Efficiency:

• Inventory Management: AI can predict inventory needs based on historical data, reducing waste and ensuring that ingredients are always available. London-based Dishoom, implemented an AI tool for inventory management that reduced food waste by 20%.
• Supply Chain Optimization: AI can streamline the supply chain, forecasting demand, and managing suppliers more effectively to reduce costs and improve delivery times.

Menu Optimization:

• Dynamic Pricing: AI can adjust prices based on demand, time of day, and customer segments, optimizing revenue. Wendy’s is planning on testing dynamic pricing in 2025 using AI-enabled menus.
• Menu Engineering: By analyzing sales data, AI can help design menus that maximize profitability and customer satisfaction.

Kitchen Automation:

• Robotic Cooking: Robots powered by AI can assist or fully handle cooking tasks, ensuring consistency and efficiency in food preparation. Companies like Miso Robotics and Chef Robotics are replacing labor with kitchen automation. 
• Quality Control: AI can monitor the cooking process to ensure that food is prepared to the highest standards.

Customer Feedback and Sentiment Analysis:

• Review Analysis: AI can analyze online reviews and social media mentions to gauge customer sentiment and identify areas for improvement. 
• Feedback Management: AI can automate the collection and analysis of customer feedback, providing actionable insights for restaurant management. 

Staff Management:

• Scheduling: AI can optimize staff schedules based on predicted customer traffic, ensuring adequate staffing levels while minimizing labor costs.
• Training: AI-driven training programs can help staff learn new skills and improve performance more effectively.

Marketing and Promotions:

• Targeted Advertising: AI can analyze customer data to create personalized marketing campaigns, increasing the effectiveness of promotions.
• Loyalty Programs: AI can enhance loyalty programs by offering personalized rewards and incentives based on customer behavior to drive increased sales.

Delivery and Takeout:

• Route Optimization: For restaurants offering delivery, AI can optimize delivery routes to ensure timely and efficient service.
• Order Prediction: AI can predict peak ordering times and help manage kitchen workflows to handle high volumes efficiently.

As you can see, there are numerous ways that AI will help the restaurant industry by enhancing the customer experience and improving operational efficiencies. Expo is leading the pack as the only AI platform for restaurant operations that can give your team insights and answers. Expo creates your data warehouse with all of your data sources and connects the dots. By analyzing and learning from your data, the AI can determine patterns and identify opportunities for improvement. Think of it as your real-time analyst that works 24-7 looking for ways to enhance performance. The AI looks at all your stores and identifies ways to increase sales from salesmanship, delivery and customer feedback. It also finds ways to decrease costs from labor, inventory, waste, and loss prevention. Expo quantifies the size of each opportunity in dollar amounts so your team can prioritize. 

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“Expo has played a crucial role in boosting our client’s free cash flow by +3.5 margin points, equating to an impressive $3.5 million! We rely on it daily to efficiently manage and optimize our group of portfolios of restaurants and nightclubs, pinpointing opportunities with ease. As a finance professional, Expo is indispensable to my work and the success of our clients.” 

- B Brian Martin, Managing Partner of AnalysisLAB (a boutique hospitality consulting firm) talking about a restaurant group in Dallas

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The power of AI is that it can scale and grow with your business, because it is automated and can perform complicated analysis that would take a human several dozen hours to generate. This generally would fall on your team to spend time doing, instead of working on what matters, serving the needs of your customers. Here is an example of a company overview of a large fast food franchise:

Think of it as a health check. You can’t expect your doctor to know what’s going on with your health without getting a blood test or checking your blood pressure and other vitals. Why should you expect it to be any different for your business? Expo gives you and your managers a daily health report on each of your stores. It looks at their metrics and “vitals” and compares it to where a healthy operation should be. It helps your team focus on the things that will move the needle instead of going on hunches or waiting for an Excel spreadsheet from your analyst. 

For more information on how Expo works and what it can do for your business, please visit the Expo website.