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Quick-Service Restaurants Turn to AI to Manage Pandemic Woes
Quick-Service Restaurants Turn to AI to Manage Pandemic Woes

September 4, 2024

AI

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The fast food industry finds itself in crisis mode. The takeout boom that sustained revenues early in the pandemic has slowed. Now the sector faces a triple threat: 78% of operators report insufficient staff to meet demand according to the National Restaurant Association, 96% suffered supply delays or shortages last year, and food costs are up across the board. Brands must reimagine operations to survive mounting economic headwinds.  

Artificial intelligence and machine learning offer a high-tech lifeline, say experts. By analyzing sales, inventory and consumer data, AI-based systems can boost accuracy, efficiency and profits. McDonald's is testing an AI drive-thru bot that can understand complex orders from a diverse customer base while Domino's Pizza is using predictive analytics to align labor schedules with fluctuating demand, saving an estimated $500 million annually.

Intelligent inventory management is another promising application. Linking point-of-sale and supply chain data, AI algorithms can track stock levels in real-time. The system learns seasonality and events that influence demand swings, automating supply orders to prevent shortfalls or waste. Panera Bread credits demand forecasting AI with a 2.5% uptick in bakery sales through reduced waste.  

Scheduling software is desperately needed in an industry slammed by 1 million job openings economy-wide. Predictive models factor in historical sales data, weather and other variables to schedule staff more precisely, saving labor costs. Starbucks tests scheduling algorithms in select stores with a 10% reduction in labor costs so far.

In an inflationary environment, dynamic pricing tuned to micro-economic factors allows brands to balance customer value perception with profit goals. Meanwhile "flash sale" markdowns on perishable ingredients prevent waste. According to ReFED, the average cost of food waste is 5.6% of total sales.

Even kitchen equipment gets a smart upgrade. Internet-connected appliances feed sensor data to AI platforms, enabling predictive maintenance and slashing downtime costs. Taco Bell expects to cut maintenance costs by 30% using IoT-enabled kitchen equipment. 

Capturing these benefits requires change management and talent investment to develop, test and implement advanced analytics. But the market demands action as labor, food and operating expenses ravage margins. Industry giants are betting big on AI, and smaller brands will need to follow suit or risk extinction. Past the pandemic pain lies a tech-charged future for quick service.

The article was first published on CSM Blog Named: Quick-Service Restaurants Turn to AI to Manage Pandemic Woes


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