How restaurants are using Artificial Intelligence (AI) to overcome challenges and improve performance

By Daniel Whelehan, Audit & Assurance Partner, Deloitte & Touche LLP

Talking points

• At the 2024 Restaurant Finance & Development Conference (RFDC), November 11–13, an executive panel discussion explored potential benefits of using AI in restaurants.
• From back-office automation to an improved guest experience, AI is having a substantial impact across the industry.
• But success with more advanced forms of technology such as Generative AI (GenAI) will require restaurants to overcome various obstacles on the road to readiness.

AI is nothing new in the tech-savvy restaurant industry. During the pandemic, for example, we watched with relief as AI helped the quick service restaurant (QSR) segment pivot to alternative service approaches enabled by contactless ordering kiosks, online portals, and even delivery robots.

Now a new generation of AI technology is driving critical advances for restaurants and helping them overcome a new set of challenges:

• High operating costs—including material and labor costs—despite declining inflation
• Pressure to increase guest traffic and offer a better digital experience
• Rising information technology (IT) and system costs aimed at overcoming legacy system shortcomings such as the inability to accurately forecast guest demand and provide real-time insights

Top panel discussion takeaways

At RFDC 2024, a panel of finance, technology, and operations executives from well-known international restaurant chains convened to discuss the impact and potential benefits of AI for restaurants. The panelists fielded questions on topics ranging from the most exciting applications of AI by restaurants to the biggest challenges they face in adopting the technology. Here are our top takeaways from the conversation.

Current state of AI adoption

The restaurant industry has long been an early adopter of technology, and AI is no exception. The industry continues to expand its use of AI-powered restaurant tech for a growing range of applications. They include inventory management, recruiting and onboarding, schedule optimization, automated ordering, kitchen management, loyalty marketing, and personalizing customer experiences.

AI and back-office automation

Where are restaurants seeing the greatest benefits from AI to date? According to the panelists, some of the successes have come from automating back-office processes, including:

• Real-time inventory tracking: AI can help restaurants forecast inventory and demand, stock equipment and supplies, and cut unnecessary costs by reducing waste.
• Compliance checks: AI tools can monitor restaurant health and safety regulations, track compliance, and help improve employee regulatory awareness and training.
• Sales forecasting: With AI-powered predictive analytics, restaurants can quickly analyze large volumes of data to identify guest traffic patterns, detect sales trends, and make more accurate sales forecasts.
• Recruiting and onboarding: AI chatbots and virtual assistants can help restaurants overcome high employee turnover by enhancing recruiting and onboarding of new talent. One CFO on the panel described her restaurant chain’s use of an AI recruiting assistant to answer candidate questions, schedule interviews, and ultimately identify hundreds of thousands of candidates.
• Labor scheduling and deployment: Many restaurants use AI tools to simplify and enhance scheduling, resulting in more efficient labor utilization and enhancements to their employees’ experience.

With these AI use cases, operational excellence in restaurants continues to rise. The reasons: increased operational efficiency, better data insights and decision-making, streamlined guest interactions, and improved employee management.

Innovation and new services

In Deloitte’s “State of Generative AI in the Enterprise: Quarter Three Report,” the top three benefits of GenAI, based on a recent survey, were improved operational efficiency and productivity (34%), enhanced innovation (12%), and improvements in existing products and services (10%). ¹These findings track with the experience of restaurant chains that have begun applying GenAI.

Restaurant operators have incorporated GenAI for innovative new applications like autonomous drive-thru ordering boards and voice recognition payment apps. GenAI can also help restaurants manage reservations and waitlists, detailed guest profiles, personalized menu recommendations, and highly targeted promotions.

How ready are restaurants for emerging AI?

The panel observed that while AI tools offer remarkable benefits, they come with certain risks and caveats. The executives underscored that a lack of preparation has caused many AI pilots to fall short of expectations. To reduce the likelihood of these pitfalls, they offered these recommendations from their own restaurants’ AI journeys:

• Prioritize: Many AI experiments never make it to scale because of insufficient investment related to a restaurant operator biting off more than they can chew. Have a solid business case and sound economic rationale for going after targeted AI applications that will deliver a return on investment.
• Put people first: AI was designed to automate repetitive tasks, freeing up humans to be more strategic. To be successful, AI has to continue to complement and serve humans. It requires continuous human oversight to harness its benefits and keep risks in check.
• Go for the low-hanging fruit: AI technology continues to evolve from intelligent automation, predictive analytics, and machine learning to more sophisticated technologies like autonomous agents and GenAI. It can be easier and less risky to implement simpler forms of AI than jumping in at the deep end with GenAI.

• Don’t overlook governance: AI requires robust governance to manage legal hurdles and risks like data security and privacy. Data is a tremendous asset for restaurants but also carries serious risks. To securely gather, store, and retrieve data, restaurants need a governance, ethics, and risk management solution like Deloitte’s Trustworthy AI™ framework.
• Train your workforce: AI readiness entails training the entire organization to be AI literate. This requires a multifaceted training approach involving upskilling professionals to use GenAI, as well as providing practical experience with the technology.

What role can Deloitte play?

Deloitte understands that AI technologies can deliver exceptional opportunities to restaurant businesses when risks are effectively managed. By fusing the power of AI with the knowledge and experience of our people, we can advise restaurant financial leaders on how to navigate, react, and respond to AI opportunities and challenges. For more information, visit “Embrace the future: Trustworthy AI in finance & accounting | Deloitte US” or visit Deloitte’s Consumer Industry Audit & Assurance Services page. Don’t hesitate to reach out with any thoughts or questions.

Endnotes

¹Jim Rowan et al., “Now decides next: Moving from potential to performance,” Deloitte’s State of Generative AI in the Enterprise: Quarter three report, August 2024.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

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