Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
There is a revealing pair of stats about technology in the National Restaurant Association’s just-released state of the industry report.
The first one is not a huge surprise. Among operators who have invested in technology over the past two to three years, 69% said that it has made their restaurants more efficient and productive.
This was by far the biggest benefit restaurants saw from technology. There was a 30-point gap between that and the next closest thing: 39% of restaurants said tech has improved overall customer satisfaction.
This is good news. Efficiency tends to be one of restaurant tech’s biggest selling points. Just about any product, from online ordering to loyalty programs to AI, claims to be able to make a restaurant easier to operate. The response here suggests that tech is keeping those promises.
Here’s where things get a little weird. Just 28% of restaurants surveyed said investing in technology has improved their profits.
At first glance, that doesn’t make a lot of sense. If tech is making restaurants more efficient and productive, you would think there’d be some sign of that on the bottom line. But that has not been the case for the vast majority of restaurants. Or at least they don’t see it that way.
A couple of things could be happening here. The past two or three years have been tough for restaurant profitability. Costs are up across the board, and for many operators, traffic is down. It’s likely that the efficiencies restaurants are gaining from technology have not been enough to offset those conditions.
Plus, tech adds its own costs to the P&L, from monthly subscription fees to hardware and training. Depending on what kind of investments restaurants made, it could be a while before they start to see a return on all of that.
But I suspect that the truth might be a bit more complicated. Operators are saying that technology is making their restaurants run more smoothly. But the path from that fact to the bottom line can be long and winding.
Let’s take drive-thru AI as an example. Quite a few fast-food chains are now testing voice bots to take orders in the drive-thru. At first glance, the profit equation seems pretty simple. You’re paying for a machine to do something that a human used to do. If the machine costs less than a person and/or performs better, there should be a clear positive return.
But most chains using drive-thru AI say they aren’t replacing human workers—they’re just assigning them to other more valuable tasks. So then the question becomes, what are those other tasks?
“ROI extraction is ‘What do I do instead?’” said Carl Nank, an operations specialist and advisor to AI voice supplier Hi Auto, during a panel at the FSTEC conference in September. “How do I engage the team to make them want to do it, and then how do I make that start appearing to the customer as value added that brings them back?”
Ultimately, he said, the actual bottom-line impact of voice AI will come from top-line growth. Customers will come back more often because the AI allowed them to get better, more consistent service.
You can see how that might be hard for a restaurant to calculate in the near-term. Which leads me to the conclusion that restaurant tech has a blind spot on ROI. It’s not necessarily that tech isn’t making restaurants more profitable. It’s that it can be difficult to measure the impact tech is having.
Tech vendors could do more to help bridge this gap. They could start by talking about it in clear terms like Nank did above: Here is how this product will make a restaurant more profitable, and here is where that profit will come from. The actual profits may or may not happen, but it will be impossible to tell without first creating a framework.
Restaurants, meanwhile, should make sure they’re asking those questions up front when shopping for tech, and keeping track of the results once they’ve invested.
More tech consolidation should help restaurants get better at tracing the line from tech to profits. There’s been a shift toward systems that are more integrated and give a fuller picture of the business. A clearer view of the inputs and outputs should help identify where tech is making an impact.
And at the end of the day, none of this is stopping restaurants from investing in technology. According to the state of the industry report, 83% said they feel tech gives them a competitive advantage. This year, 61% of operators plan to invest in front-of-house tech, while 57% are investing in the back-of-house.
It continues to be something restaurants feel they can’t do without. Now they just need to understand what it's actually doing.