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AI and Automation Are Making a Huge Impact on the Restaurant Industry in 2024

The restaurant industry is now leaning into technological advancements such as AI and automation to improve marketing, alleviate labor costs and inform vital investment decisions.

By Erica InmanStaff Writer
SPONSORED 4:16PM 05/03/24

Artificial Intelligence (AI) and automation have been reshaping the restaurant industry for years — and anticipation for even more significant AI-driven transformations is running high in 2024. 

1851 Franchise spoke with Jim Balis, partner, strategic operations group at CapitalSpring, about these current technology trends in the restaurant industry and how quickly we can expect to see them integrated.

AI’s Impact on the Restaurant Industry

AI has become especially trendy over the past year, with just about every aspect of the restaurant sector looking for some way to take advantage of this rising technology. Balis says the first two areas of the industry likely to experience a dramatic transformation are marketing and human resources.

“If consumers share data with restaurants through loyalty programs and other channels, AI is going to absorb that data and run correlations between the various consumers to understand certain dining habits or behaviors,” Balis said. “You're going to start to see a lot of brands using that data to market more efficiently to try to get incremental visits from their guests.”

Loyalty apps are not the only avenue where AI can be leveraged for increased profitability.

“You're already seeing it in drive-thrus,” Balis said. “A chatbot’s taking orders and processing those directly into the point-of-sale system. It’s being used to customize the experience; if it's cold and rainy outside, AI may see that and prompt for an upsell to a warm beverage, versus when it's very hot outside and it may prompt an upsell of something colder.” 

Beyond analyzing and predicting consumer desires, AI is also set to streamline restaurant operations, particularly in recruiting and HR. Balis explained how managers are coming to rely on chatbots (computer programs that simulate human conversation) to relieve pressure in the early stages of the hiring process by offering automation and scheduling services. 

"If you see an ad for a job you’re interested in,” he  said, “you're probably going to see an AI chatbot interact with you on the other side."

Technology Integration is Ramping Up

Technology integrations have been coming in hot for the past few years, but Balis is confident this is only the beginning. In addition to streamlined HR processes and increased sales through customized marketing, AI and automation can offer restaurants solutions to labor shortages and high labor costs, so why wouldn’t brands take advantage of that? 

“California’s AB 1228 just went into effect, which means about a 25% increase in the minimum wage. That puts a lot of pressure on wages,” Balis said. 

For this reason alone, Balis said he expects to see the California market progress with AI faster than any other market: “Anything that can reduce this wage pressure will accelerate the adoption.”

Other markets will likely follow shortly. Balis noted that while 100 or so restaurants in the U.S. have added AI drive-thru technology, he wouldn’t be surprised if this number increased 10 times over by the end of the year. 

AI’s Role in Mergers and Acquisitions

The integration of AI and other advanced technologies may also start to influence big investment decisions, particularly, mergers and acquisitions within the restaurant industry. Balis believes that technology will play a role in identifying upcoming opportunities for mergers and acquisitions (M&As) by matching various investment criteria. He also believes that such an expensive decision will ultimately require human consultation and judgment.

“I think at the end of the day, the real M&A process is still going to be quite driven by non-AI and people interacting,” he said. 

The Restaurant Industry is Poised for a Technology Upgrade

From personalized marketing strategies to streamlined recruitment processes and enhanced operational efficiency, the impact of these technologies is huge and the influx of their services has only just begun. As restaurants navigate evolving consumer preferences and economic dynamics, embracing AI and automation presents an opportunity to continue growing and thriving in a competitive market. 

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