The restaurant industry finds itself at a crossroads, navigating a dynamic landscape fraught with supply chain disruptions, economic instability, labor scarcity, and evolving customer tastes, requiring unprecedented agility.

Enter artificial intelligence (AI), whose meteoric rise was driven by ChatGPT in early 2023 and captivated over 100 million users in fewer than two months. Since then, we’ve witnessed a revolution in business operations, including those within the restaurant industry.  

Embracing AI-powered technology enables restaurants to unlock its transformative potential. Optimization, automation, streamlined management, and enhanced customer engagement converge to deliver the next generation of dining experiences.

AI Solutions for Resilient Supply Chains

Global supply chains still face unprecedented challenges, from ongoing pandemic-induced bottlenecks to geopolitical tensions. With restaurants struggling to navigate these disruptions, which complicate operational processes to manage inventory and eliminate food waste, AI has emerged as a powerful tool to restore stability and resilience.

AI enables restaurants to see into the future of their supply chain, providing them with insights to conquer many challenges. By crunching historical data on foot traffic, sales, weather, and other key factors, robust machine learning (ML) algorithms predict demand with unparalleled accuracy. This future-proof approach prevents over-ordering, reducing food spoilage and its associated financial and environmental impact.

Restaurants cannot avoid the financial sting of food waste. The industry loses $25 billion in revenue from more than 11 tons of food waste generated yearly. One solution? AI-powered supply chain optimization—a technology delivering near instantaneous ROI. For every dollar invested in food waste reduction, restaurants can reap about $8 in cost savings. Imagine this combination of environmental and economic benefits elevating AI as an essential weapon in the fight against food waste.

Restaurants informed with real-time shipment tracking can pivot to react quickly to delays, ensuring ingredients arrive when needed. Sophisticated inventory management systems driven by AI become the ultimate guardians against waste, meticulously tracking expiration dates, ingredient levels, and future menu promotions to optimize orders with laser precision. This vision empowers restaurants to navigate supply chain complexities with efficiency and clarity.

Predictive analytics and real-time visibility help restaurants confidently navigate the ever-shifting supply chain landscape and potential disruptions, safeguarding profits and customer loyalty. 

AI-Driven Analytics Increase Economic Success

As inflation drives costs higher, restaurants must find ways to offset expensive ingredients, labor, and rent while still meeting value-conscious customers’ expectations.

AI-driven analytics have emerged as a reliable tool for enabling restaurants to make value-based decisions, ensuring profitability during economic turbulence. By constantly monitoring market trends, AI empowers restaurants to adapt to fluctuating supply costs and consumer behavior with dynamic menu pricing to protect profitability amid inflation.

Remember when the recent avian flu outbreak,paired with increased fuel and other costs, drove up the price of poultry? Restaurants using AI could adjust menu prices automatically to maintain their slim profit margins.

With 92% of restaurant operators concerned about rising operational costs—and more than 40 percent investing in technology—the data is clear: AI has moved beyond luxury to necessity. It allows for targeted cost reductions without compromising quality or customer expectations. By leveraging AI’s insights, restaurants can confidently adjust to evolving market dynamics and fine-tune pricing influenced by inflationary pressures.

Bridging the Gap: AI and Robotics as Allies in the Labor Landscape

Labor shortages continue to impact restaurants. In July 2023, the sector’s employment rate hovered at 0.5 percent below its pre-pandemic peak. Monthly job growth slowed significantly between April and July 2023, averaging fewer than 11,000—a stark contrast to the robust 53,000 average job gains of Q1.

AI and robotics offer restaurants a lifeline. Freed by AI-powered robotic servers and self-ordering kiosks that automate customer transactions and food delivery, human staff can focus on food prep, customer service, and other higher-value tasks.

This automation has increased operational efficiency by 30 percent, mitigating the impact of reduced staff. It also reduces costs between 5% to 9%, with self-order kiosks generating 30 percent increased sales in fast-food restaurants. Experts predict a 69% surge in AI and robotics use by 2027.

In the future, restaurants will likely rely more heavily on AI and robotics to deliver an enhanced customer experience, relieve operational strain, and gain a competitive edge in a challenging hiring market.

Leveraging AI for Personalized Restaurant Experiences

Today’s customers crave tailored experiences. A whopping 66 percent expect companies to intuit and understand their needs—and over half yearn for personalized offers. These expectations present a golden opportunity for restaurants to leverage AI to craft unparalleled loyalty and engagement.

Sophisticated AI algorithms can analyze vast amounts of customer data, uncovering hidden preferences and unlocking doors to personalized recommendations. Imagine: A restaurant uses guests’ past orders to recommend customized meals or tempting offers highlighting favorite menu items. AI enables restaurants to ensure each guest feels uniquely appreciated and valued.

A one-size-fits-all approach isn’t what customers want. However, AI offers restaurants a strategic tool for developing hyper-targeted campaigns instead of wasting resources on broad promotions.

Restaurant Ops 2.0: Unleashing AI’s Potential

In the competitive restaurant landscape, future customer loyalty and revenue growth hinge on one key factor: AI-powered personalization. By leveraging AI to understand and cater to individual customer preferences, restaurants will unlock a vital differentiator.

AI is poised to transform restaurant operations, ushering in a future of personalized service, optimized efficiency, and sustainable growth. From automating kitchen processes and order processes to seamlessly customizing order offerings and dining experiences, AI will redefine the industry.

Fully realizing AI’s potential will require restaurants to navigate specific challenges:

  • Protecting data privacy.
  • Providing proper employee training.
  • Avoiding an overreliance on technology.

By proactively mitigating these risks, restaurants will tap into AI’s true value, enhancing customer experiences and significantly increasing profits. The restaurant industry’s future is undeniably intertwined with AI. Those embracing this transformative technology will build resilience against disruption, gain a competitive edge, and assume a role in shaping the industry’s future — one personalized experience at a time.

Raju Malhotra is Chief Product and Technology Officer at PAR. In his role, he is responsible for the unified product and technology strategy and operations. He leads Engineering, DevOps, Product Management, and User Experience. Raju joined PAR through the acquisition of PAR Punchh, an omnichannel loyalty and engagement startup based in San Mateo, CA. Before assuming his current role, he held various executive positions, including Senior Vice President and General Manager for Marketing Cloud at Salesforce, Chief Product and Technology Officer at Khoros, and leadership roles in Microsoft’s enterprise technology businesses. Raju holds a bachelor’s degree in computer engineering from the National Institute of Technology, Kurukshetra (India), and an MBA from the Wharton School of Business at the University of Pennsylvania.

Outside Insights, Story, Technology