Artificial intelligence takes hold at U.S. restaurants

Machines are doing a lot more work at chains such as McDonald’s, Starbucks and Taco Bell, and there’s evidence it’s working.
Photograph courtesy of McDonald's Corp.

Machines are doing a lot more work inside U.S. fast-food restaurants.

At Starbucks, artificial intelligence helps with labor scheduling. Taco Bell is using AI in its in-store kiosks to suggest certain items, the same thing McDonald’s is doing at its drive-thru menu boards.

The Chicago-based giant then doubled down on the idea by acquiring an artificial intelligence company called Apprente. Machines are taking voice orders at 40 Domino’s Pizza locations.

To be sure, artificial intelligence has a growing role inside many industries, particularly as internet-enabled businesses have taken hold. But it takes on a different meaning in a restaurant industry that employs a lot of people who frequently interact directly with consumers.

The chains’ investments promise to change how customers interact with restaurants not only over the phone but also inside the locations themselves. And there’s evidence it’s already having an impact on what customers order.

Starbucks has been working with an artificial intelligence effort over the past year that it calls “Deep Brew.”

That system powers the company’s personalization engine and helps manage inventory. But it also optimizes labor.

That system has helped reduce the number of administrative tasks inside restaurants, which has freed employees to interact with customers. That’s been driving sales: Same-store sales at the Seattle-based coffee giant rose 6% last quarter thanks to a mix of traffic and higher average check.

“We continue to see a strong correlation between Starbucks partner engagement and customer connection, which leads to increased consumer frequency,” CEO Kevin Johnson said on the company’s earnings call this week. “We are making targeted investments to elevate the partner experience with clear evidence that this in turn elevates the customer experience and drives growth.”

The industry is making these investments at a time of intense competition. Traffic for many chains is difficult to come by, and companies are investing in more technology to give themselves an advantage.

At the same time, the efforts are coming as restaurants face more labor pressure than at any time in recent history. Chains believe the technology can not only help sales but also can ease some of the labor challenges inside their restaurants.

Many of these efforts are customer-facing. Earlier this year, McDonald’s acquired Dynamic Yield, a company that gives Amazon-like abilities to its digital drive-thru menu boards. The boards display items based on the time of day, the weather and how busy the store is. Operators say the technology is already paying dividends in the form of higher average check.

As if to double down on this idea, the company turned around and bought an artificial intelligence company called Apprente that will ultimately use voice technology to take orders in the chain’s drive-thrus.

“We see voice technology playing an increasing role in all of our lives,” McDonald’s CEO Steve Easterbrook said on the company’s earnings call. “At McDonald’s, this is particularly significant because of the importance of drive-thrus to our portfolio.”

McDonald’s isn’t the only one. Taco Bell has kiosks in 6,100 locations. Those kiosks feature AI-driven product recommendations, David Gibbs, chief operating officer for Taco Bell parent company Yum Brands, said this week.

Sister company KFC, meanwhile, is planning to test artificial intelligence to take orders in its drive-thrus. “What I’m focused on from a tech perspective is to continue to drive sales by making our brand easier,” said Christopher Caldwell, chief information officer for KFC U.S., in an interview with Restaurant Business.

It’s not just big chains, either. Breakfast and lunch chain Snooze, an A.M. Eatery and burger chain Good Times are both testing AI-powered software to take orders. The program has already demonstrated an ability to get consumers to add more items to their orders.

AI-enabled ordering is also coming to an unexpected area: phone calls.

Wingstop and Domino’s are both working to add voice ordering capabilities to their phone orders.

For those companies, the strategy is practical: Despite the rapid growth in online ordering for items such as pizza and chicken wings, a percentage of the consumer still prefers to simply call the restaurant.

Digitizing those orders frees up workers to make pizzas and chicken wings. Domino’s voice-ordering test is in 40 restaurants, and the Ann Arbor, Mich.-based pizza chain is eager to get it into more locations.

Those efforts take time, however, because voice ordering technology needs to learn how to interact with humans. “It’s complex to do,” Domino’s Chief Technology Officer Kelly Garcia said. “I’d argue that our bot is way ahead of other technology.”

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