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Over the last decade, innovation in the restaurant industry has mostly centred around digital menus and ordering capabilities. Meanwhile, the restaurant industry is grappling with lagging labour productivity, ongoing labour shortages, persistent input cost inflation and other significant challenges.

Key takeaways
  • Advanced automation and artificial intelligence (AI) technologies have the potential to drive outsized innovation and efficiency in the restaurant space.
  • Some restaurant chains are using conversational AI to help take customer orders, while others have opened fully and semi-automated kitchens to cut down on labour costs and improve efficiency.
  • Among other highlights: One popular fast-casual chain has also experimented with “Chippy” (a tortilla chip-making robot) and “Autocado” (a guacamole robot).

 

How AI is spurring innovation in the restaurant sector
Over the last decade, innovation in the restaurant industry has mostly centred around digital menus and ordering capabilities. Meanwhile, the restaurant industry is grappling with lagging labour productivity, ongoing labour shortages, persistent input cost inflation and other significant challenges.

 

   

We believe that restaurants will start counteracting these headwinds by adopting artificial intelligence (AI) technologies to speed up menu innovation and improve efficiencies. We are closely monitoring these developments, looking for early movers that could see outsized benefits to their top and bottom lines.

 

Examples of AI’s recent advancements

Voicebots: Creating convenience through conversational AI

Several restaurants are testing conversational AI systems with the goal of increased throughput and enhanced guest experience.

  • A sector-leading, multinational fast-food restaurant chain has tested a drive-thru voice-AI ordering system that shows promise, though filtering out background noise has been a challenge.
  • A quick-service-restaurant specialising in chicken wings has seen good success using conversational AI to take phone orders. This not only offers a better guest experience by removing missed calls and reducing hold times, but also frees up time for store associates. After a successful 200-store test, the restaurant chain will roll out AI-powered phone ordering capability at more locations in 2024.

Fully automated kitchens: Creating a customer-centred cuisine while cutting down on labour costs
  • A salad-focused fast-casual chain opened their first automated restaurant in a Chicago suburb. It produced 400 to 500 bowls in an hour, offering customers a short wait time with consistent portioning and accuracy. During a recent conference, the company’s CFO stated that “about half of our labour is involved in assembly, and [this technology] automates about 70% of that half.”1 On the back of this initial success, the firm plans to open a second automated restaurant in Los Angeles in 2024.
  • A fast casual chain specialising in Mexican food, is testing an automated system, which moves bowls and salads through an automated “makeline”.

Semi-automated kitchens: Robots are spicing up restaurant innovation
  • The aforementioned Mexican-themed fast-casual restaurant is leaning heavily into AI and automation technologies. The company has not only experimented with a tortilla chip-making robot and a guacamole robot, but it is also testing an AI-enabled double-sided grill that could transform protein preparations. The company’s CEO said, “[the grill] definitely frees up the capacity, which then allows us to evaluate how we do new menu items and maybe how long we want to keep certain menu items on, and so that is a big unlock for us.”2 The doubled-sided grill is currently being rolled out to more of the chain’s restaurants.

The bottom line

Despite lagging other industries to date, we believe advanced automation and AI technologies have the potential to drive outsized innovation and efficiency in the restaurant space. While we have mostly avoided the restaurant industry until now given its general lack of tech investment, we see the select examples and broader commentary around tech adoption as encouraging. We are more actively investigating the opportunity set and will continue to diligently analyse the investment options on a case-by-case basis, with the goal of identifying the emerging leaders in the AI-enabled restaurant industry space.

 

 

 

1Company conference call, November 2022.
2Company conference call, July 2023.

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