While AI has potential benefits to numerous, critical industries, there’s a huge learning curve for the development of a true AI solution, and there are significant limitations to its effectiveness during this learning period. While it’s promising, it’s not the magic bullet to increase your revenue in 2023. Conversely, proven solutions exist that can increase your guest personalization and drive new revenue, today.
AI is everywhere: It’s pasted across headlines (like this one), trending on social media and the subject of conversations. Based on all the buzz, it’s touted as AI-mazing for marketing. This has led many businesses to view it as a marketing magic bullet to solve their revenue woes. In fact, the number of businesses adopting AI grew by 270 percent in four years. The numbers are growing among restaurants, too. Of the 2,000 restaurant operators surveyed by Lightspeed, about 50 percent in the U.S. said they planned to utilize some form of AI automation technology. But before you bet the farm on AI, let’s dig into is AI truly the magic revenue-generating bullet restaurants think it is?
The benefits of AI for restaurants are undeniable from automation, to real-time control and information analysis, to improved customer service. However, in the food service industry, there are just a few things that need to be understood about AI before you go out and buy the new AI Robot Cook–or trade out your hostess for an AI-driven hologram of Jennifer Aniston or Chris Hemsworth, and the primary one is this: AI isn’t where you should be looking to save your 2023–or even your 2026. There are available technologies that can be deployed across ten thousand restaurants, within just a few weeks, or at the local diner in days, that are more cost effective, that will dramatically impact your revenue.
As a software engineer, as much as I would love to geek out on this subject, I’ll keep it simple. In this article, I’ll share the areas where AI is best suited to improve your restaurant business, what the limitations are and how restaurants can leverage alternatives to drive revenue, today.
How Can AI Really Benefit the Restaurant Industry?
Before poking fun at the AI dream and its limitations, it’s important to acknowledge that AI truly is a cool answer to improved efficiency and customer service for some restaurant needs and useful in your operations. These include:
Chatbots and customer-facing AI: Who doesn’t want to enhance their dining experience? Customer-facing chatbots provide instant assistance to customers and can be used to address inquiries, facilitate reservations or to place orders. They streamline communication and free up staff while reducing wait time for customers.
Social media analysis: Social media analysis, and other forms of basic analysis, are potentially good applications of AI. The goal being to increase understanding. AI can be used to analyze social media data to identify trends and user sentiment, monitor customer feedback and track the success of marketing campaigns. This might include correlation of social media posts, to reviews, to point of sale metrics.
Predictive analysis: AI offers tremendous potential in predictive analysis, enabling restaurants to make informed decisions based on data-driven insights. Traditionally, market leaders have invested millions in attempting to analyze data sets to identify factors contributing to success or failure. However, the ability to extract meaningful correlations from limited data and complex relationships has been a challenge. This is where AI excels: by leveraging unlimited data sources and analyzing vast correlations to optimize performance.
Menu optimization: AI's impact on menu optimization extends beyond merely analyzing sales data and customer feedback. It empowers restaurants to proactively adapt and fine-tune menus to meet evolving consumer preferences that can include layout, readability and reduced anxiety from an over cluttered menu. By leveraging AI models tailored to the restaurant industry, businesses can consider a multitude of variables from diverse sources. This enables them to identify complex relationships that drive consumer behavior and make data-backed decisions about seasonal menus, specials and pricing.
Informing decisions: By looking at large amounts of historical data, AI can aid in devising tailored strategies, such as remodels, operational adjustments, marketing plans, and staffing transitions. By embracing AI, restaurants can make informed decisions with data-driven insights.
While the above AI applications provide tangible benefits for restaurants, the impact is felt long-term, and it’s important to point out that none of these are immediate revenue drivers. Which leads to the unrealistic expectations restaurants may have for AI, and more detrimental to the restaurant, the investment to obtain minimal results while distracting from the opportunities to leverage existing, integrated, solutions that improve the guest experience or lead to increased tickets or more return visits and, therefore, drive new revenue.
What Is AI, Really? And What Are the Unrealistic Expectations?
AI is amazing and may seem like magic–or even human. After all, the AI hologram, Joi, in the movie Blade Runner 2049, served as a companion, just like the AI character Samantha in Spike Jonz’s Her. Humans have a desire to humanize AI, often using words like thinking, or in robotics, taking actions like “driving” a car or “working” a fryer. But it’s just like a computer brain. It’s initially trained by humans and analyzes and compares billions of patterns with a flawless memory. And when a mistake is made, it eliminates the mistake and it’s never made again–becoming a building block moving towards a better answer. Both the failures and the successes become knowledge, and as the process continues, it’s always capable of adding new data and testing its own “learned” intelligence for improved results. What it lacks is contextual human understanding–and human interaction–particularly within a restaurant environment.
Therefore, for the foreseeable future there are specific applications where it is not the best choice due to limitations.
AI does not capture customer data. AI requires data inputs to analyze and derive insights, and should not be given direct access to the guest. After all, it’s important to remember that the learned intelligence actually relies on failures. Most AI systems are trained on vast amounts of data to learn patterns and make predictions. These data sets “learn” from failures just as much as success.
Also, AI falls short in personalized customer engagement in restaurants because it lacks the ability to establish direct interactions and real-time engagement channels that are crucial for immediate and tailored communication with customers. Additionally, AI may struggle to capture and interpret nuanced preferences and behaviors that require direct customer input or context.
Why Isn’t AI a Magic Bullet?
The key to driving revenue today is authentic, personalized engagement with your guest, creating a more loyal and therefore valuable relationship. The truth is, there are no magic bullets. But other technologies exist, and they can fill in the gaps where AI has limitations or isn’t well suited.
Take integrated WiFi marketing. It works by capturing customer behaviors through WiFi logins and return visits, as well as days and times in the venue. Having a comprehensive “intelligent” system enables restaurants to analyze those behaviors at a single location, or across an entire franchise, while providing the power to communicate directly with those unique guests and initiate new marketing campaigns (or continue an ongoing funnel, uniquely with each guest). Simply put, you have the power to send tailored promotions, personalized offers and gather feedback right on the spot. You have a direct line of communication with your customers, engaging them in real-time with that personal touch that AI alone can’t quite match. It’s like having a WiFi-powered assistant that helps you build meaningful connections that boost your bottom line.
Let’s look at an example to illustrate how this works.
Building meaningful connections and driving revenue in the restaurant industry requires a thoughtful blend of technology, strategy and creativity.
Your Monday – Thursday happy hour is very popular at your restaurant, and these guests are loyal, meaning multiple visits per week. But, your point of sale data tells you these guests are ordering drinks and appetizers, but not staying for dinner. This is a lost revenue opportunity. So, to capitalize on customers that are “inhouse" (80 percent of the challenge in the restaurant industry), and extend your revenue opportunity, you would build out targeted, personalized messages, specifically for those loyal guests: Those that have been at four happy hours in the last week, but leave by 7 p.m. Upon arrival, the customers who fit these parameters will be greeted when they enter the restaurant with “We’re happy you joined us for happy hour! Why not stay for dinner? Text HAPPY20 to XXXX for 20 percent off your dinner order.”
Think of it this way. If you’re a customer already sitting in the restaurant having a drink, and right then and there you receive a relevant message with a special offer to stay for dinner, it’s awfully enticing. Suddenly, because you understand your guests’ behaviors, through innovative marketing you are converting the happy hour guests into dinner guests. This equates to a nearly immediate revenue boost and, if the behavior is shifted, it multiplies as they now become dinner regulars.
It’s crucial to recognize the limitations of relying solely on AI for restaurant customer engagement and personalization, as it may not deliver an immediate revenue boost. While AI is awfully alluring, it’s costly, and exploring alternative approaches becomes essential to drive tangible results.
The key is to embrace a holistic perspective that goes beyond AI, considering a range of technologies and strategies to enhance customer interactions. By diversifying your toolkit, you can tap into the power of integrated WiFi marketing. And there are also areas where your CRM system, mobile app, and social media platforms can best serve you. Each of these tools offers unique opportunities to engage customers, gather feedback and tailor experiences.
Remember, building meaningful connections and driving revenue in the restaurant industry requires a thoughtful blend of technology, strategy and creativity. By leveraging a combination of suitable technologies and exploring customer-centric approaches, you can cultivate genuine engagement, customer loyalty, and ultimately, long-term success. So, let's shift our focus from the AI hype and embrace a well-rounded approach to customer engagement that captures the true magic of restaurant business.