Restaurant operators are turning to technology to offset higher costs

Find high-tech ways to take the sting out of increased food and labor expenses

As restaurants struggle with rising food and labor costs, some operators are turning to technological solutions to cut costs and increase revenue. The State of the Restaurant Industry 2023 report from the National Restaurant Association reveals that 90% of operators view inflation as a major challenge, with 92% of operators saying food costs a major challenge and 89% responding similarly regarding labor costs.

Three years ago, the pandemic prompted many operators to quickly adapt to technologies that streamlined operations as they moved to an off-premises, low-contact model — including online orders and payments, mobile point-of-sale devices, and digital menus accessed through QR codes. . Today, restaurant operators continue to innovate and adapt to meet the challenges posed by inflation, turning to high-tech solutions to help boost their bottom line. Cost-cutting technology Technology solutions can streamline internal processes, reduce food and labor costs:

AI Order Assistant. Panera Bread and Popeyes are among the restaurants that are testing AI voice assistants in their own restaurants. Chatbots take customer orders, ask follow-up questions as needed, and upsell drinks, desserts, and side dishes. Meanwhile, team members can focus on preparing guest requests. In a test run on the Popeyes franchise, the AI ​​voice platform received orders with 99.9% accuracy and increased soda sales by 150%.

remote workers. Not ready for AI, but are you looking for ways technology can help handle orders? Some restaurants with drive-by counters or windows turn to remote workers, who appear live on a video screen. The majority of customers in every age group have a positive reaction to this method of ordering, including 78% of Gen Z adults (ages 18-26), according to the State of the Restaurant Industry report.

Work management solutions. “When you have work management tools that give managers a time in their day and give team members great transparency, you are setting yourself up for success,” says Hilary Holmes, resident operator at restaurant and payments technology company SpotOn. Data-driven scheduling software can help managers anticipate their business needs by drawing on sales history, weather forecasts, and upcoming events. “Guided employee scheduling helps operators keep their labor costs low, because it automatically looks at your schedule and checks whether your schedule is overschedule or underschedule,” reducing oversubscribed labor costs and understaffing inefficiencies. Integrated scheduling apps empower team members, putting the power to switch shifts in their hands. With the right software, operators can cut the amount of time managers spend scheduling and performing other labor management duties, including distributing payroll and tips.

kitchen display systems Looking to simplify your kitchen? Some operators have moved to a paperless system for handling orders, relying on digital displays that organize, prioritize and track orders, rather than printed or handwritten order tickets. “Kitchen Display Systems (KDS) are huge for the culinary world,” says Holmes. “It allows restaurants to work with fewer team members and move around a lot faster, just based on the organization and being able to see everything they need at a glance.” Pair this with a handheld POS device, and an order appears on the kitchen screen before the server leaves the table.

Inventory management software. Comprehensive inventory management means less food spoilage and can deter inside theft – both ways to cut food costs. Most inventory management software can integrate with a restaurant’s POS to track inventory in real time; In fact, inventory capabilities are built into some POS systems. These software packages can predict inventory needs, provide reorder alerts, and create purchase orders, reducing a manager’s back office hours. Some systems even connect to foodservice vendors for automatic cost updates, and feature recipe costing capabilities that can inform menu and pricing decisions to help improve profit margins. revenue-increasing technology Restaurant operators are also leveraging technology to define their marketing efforts. Some trends to watch:

Variable pricing. Taking a page from the travel industry’s playbooks and cruise brochures, some restaurants are shifting toward a variable pricing model—offering discounts during slow times and higher prices during peak demand. About four out of five adults have a positive reaction to a restaurant’s pricing strategy, according to the State of the Restaurant Industry report.

Restaurants have always indulged in changing prices. Think early bird and happy hour specials. Today, they can take advantage of the technology that enables this strategy. Sophisticated POS systems not only allow time-based pricing structures, but some technology platforms are optimizing dynamic pricing based on real-time restaurant sales and demand data, helping operators reap higher margins during busy times and attract high-value guests during slower times. . Mobile apps and social media help alert customers to discounts and special offers. Online ordering, digital menu boards, and QR code menus facilitate flexible pricing.

Metaverse Marketing. Major restaurant chains are opening storefronts in a virtual reality world, building brand awareness and customer engagement in new areas. For example, VR fans can explore the Wendyverse in Meta’s Horizon Worlds, playing cheese shuffleboard and shooting baskets with Wendy’s Breakfast Baconator. “You have the opportunity to reach a different audience,” says Asif Khan, president of the Location-Based Marketing Association. “The demographics in general tend to be younger.” Restaurants experiment with promotions and new product launches in the virtual world which translate into real sales.

Location based marketing. “The location-based ad targeting space has changed a lot in recent years,” says Khan. Apple and Google privacy updates make it more difficult for companies to push ads to consumers’ phones in the vicinity. “Real-time location data is hard to come by.” In contrast, Khan is seeing a growth in mass advertising, which tracks consumer traffic patterns for individuals who fit criteria that align with the brand, and collects their mobile phone identifiers. For example, a restaurant that specializes in salads might look for consumers who visit the gym and shop at an organic market. The restaurant can then direct its advertising budget, reaching these individuals through social media advertising.

Ready wherever you are. Wouldn’t it be great to have an order ready for a guest as soon as they arrive, even if they’re stuck in traffic? Some operators take advantage of location-based technology to do this, promoting themselves for their commitment to customer service. “It works like an Uber reverse,” Khan explains. “I’m sharing my location on my way to buy my coffee, versus ordering an Uber, and I want to know how far my driver is.” The restaurant receives an ETA along with updates, which helps in appropriate order prioritization and facilitates an efficient and smooth delivery process. “It’s about focusing on the idea of ​​convenience and customer service and tying that to your brand,” notes Khan.

The State of the Restaurant Industry 2023 report is the authoritative source for industry sales forecasts and trends. It is based on analyzes and forecasts by National Restaurant Association economists and surveys of restaurant operators and consumers conducted throughout the year. Download a copy here.