Where is all this technology getting the restaurant business?

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Restaurants have more technology than ever. They are also less profitable. | Photo: Shutterstock.

We’ve been thinking a lot of drive-thru AI lately. McDonald’s, as we reported this week, is back in the game, with a five-unit test of the technology using Google, as part of a broad use of AI in its restaurants. 

But the company also wants to improve the hospitality at its restaurants. Chris Kempczinski, McDonald’s CEO, told franchisees that customers shouldn’t have to choose between “hospitality or speed. Great taste or convenience. Value or quality.” 

The question I’ve had since is, if the company wants to improve hospitality, why is it using a robot to interact with customers?

When we put the question forth on our X account, we were greeted with responses such as McDonald’s can’t prioritize hospitality at scale because of its size, or that customers don’t want hospitality at McDonald’s or that humans suck to talk to.

I personally think that the experience at McDonald’s is often excellent, particularly during busy periods when the best workers are doing their jobs and the management is excellent. There is little reason that the company couldn’t operate at scale with a more hospitable mindset. 

I once believed that McDonald’s customers don’t necessarily need to talk to human beings. But then I was enamored with the success of brands like Chick-fil-A, Dutch Bros, In-N-Out, Raising Cane’s, Culver’s and Jersey Mike’s. Each of those brands were built on customer service, even for a moment in the drive-thru. And we’ve never had a bad experience anytime we’ve visited any of those chains. 

When we went to 7 Brew, we interacted with two human beings, each of whom was young and well-trained and, dare I say, hospitable.

Each of those chains outpaced sales growth in the Technomic Top 500, with an average of 30.3%. Remove 7 Brew from the calculation and it’s still 12.3%. A customer service focus just works. 

The restaurant industry today has more technology than it has ever had. We have kiosks in lobbies. There are aggregator apps enabling customers to order from whatever restaurant they want and have that food brought to them. Mobile apps. Loyalty programs. Fancy screens that do a better job than humans at recommending items and suggestive selling. 

The bulk of that customer-facing innovation has taken place over the past seven years. The pandemic lit a fire under much of the restaurant industry, spurring a virtual technological revolution after years of operating like a collective luddite.

Yet the average restaurant in the Top 500 serves fewer customers than it did in 2019, before most of this technology came into play. 

They are not more profitable, either. The average restaurant today is less profitable than it was in 2019. 

If anything, technology is making life more difficult for restaurant operators, particularly franchisees that pay for more fees to use technology that isn’t actually generating customer traffic growth or profitability. They are also the ones who have to deal with the low-profit, high-problem third-party delivery aggregators. 

With all these costs, the operators are more likely to cut back on the workforce, which is still very much needed. The average restaurant has fewer employees, too, than it did in 2019. 

Which brings us back to the drive-thru AI question. If McDonald’s really wants more hospitality, then why does it want a robot taking orders? Doesn’t that eliminate a chance for more hospitality? And what happens if the robot doesn’t work properly? AI drive-thru errors may be fewer than people errors, but those AI errors are far more maddening.

And then doesn’t the cost of that robot incentivize franchisees to cut labor to generate a profit to pay for that technology and still fund debt they will need to remodel units? The math may pencil out today, but tomorrow it may be a loss.

The restaurant chains we mentioned above use plenty of technology. Each has a mobile app. Dutch Bros and 7 Brew have successful loyalty programs. Jersey Mike’s was an eager, early adopter of delivery. We can use a mobile order pickup lane at Chick-fil-A. They have successfully threaded the needle between technology-enabled restaurant and hospitality and are winning.

Technology isn’t a bad thing. But restaurants need to remember what they are: A service business that sells food.



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