We dive into how technology is shaping the future of fast food by helping the likes of McDonald’s and Domino’s upsell orders and reduce labor costs.
This is part of our Future of Fast Food report. Download the full report.
In the future, conversational AI and AI-powered recommendation engines will make ordering food more human-friendly, accessible, and convenient. These technologies will be able to integrate with drive-thrus, smart speakers, apps, and even metaverse avatars, allowing customers to simply speak their order using a convenient channel while the restaurant makes hyper-relevant recommendations that can increase order value.
This is one of the key technologies that will shape the future of the fast food experience. Below, we dive into this technology: how it works, who has an edge, and how it’s changing the future of fast food.
WHAT are CONVERSATIONAL AI AND AI-POWERED RECOMMENDATION ENGINES?
Conversational AI allows customers to interact with software using their voice or text (via chatbots), with natural language processing (NLP) allowing for human-like communication. AI-powered recommendation engines use data to develop personalized recommendations for customers.
By pairing these technologies, restaurants can create virtual ordering assistants that can take orders, upsell, integrate loyalty, and answer questions from guests, allowing restaurants to prioritize staff for other tasks like food prep or order fulfillment.
FIRST MOVERS
In a rare move for the fast food giant, McDonald’s acquired AI-powered recommendation engine Dynamic Yield in 2019. While McDonald’s ended up selling the company to Mastercard 2 years later so Dynamic Yield could scale to other industries, McDonald’s still has a partnership that integrates Dynamic Yield’s software into its drive-thrus and app. Through this collaboration, McDonald’s can dynamically change menu boards to make smarter suggestions to customers based on time of day, weather, restaurant traffic, and trending items.
Meanwhile, the applications of conversational AI for restaurants are not limited to just drive-thrus — the tech could also be used for customer-facing interfaces like phone and SMS orders, voice assistants, and mobile apps. Domino’s has partnered with ConverseNow which provides conversational AI for phone orders. After an order is placed through ConverseNow’s software, which is integrated with the existing point-of-sale system, employees can immediately see the order and prepare it. ConverseNow also provides conversational AI for drive-thrus and has raised an $11M Series B round in Q3’22.
Recently, Panera announced a partnership with OpenCity to begin testing their conversational AI in select drive-thrus.
Finally, one key instance of a quick-service restaurant combining these two technologies is Wendy’s partnership with Google Cloud. Through Google’s speech-to-text technology, Wendy’s can take drive-thru and phone orders and then in future instances use voice recognition to make personalized recommendations for the customer.
IMPLICATIONS
- For restaurants with drive-thrus, conversational AI can help reduce labor costs and increase average order size. AI tools can also personalize order recommendations based on local preferences, weather, and item availability. Using this technology to cross-sell during order flows has been shown to increase sales by upwards of 10%.
- To best facilitate consumer adoption, these solutions should initially be positioned in scenarios where guests aren’t expecting to interact face-to-face with employees, like at the drive-thru speaker. Conversational AI solutions can also be integrated into smartphone apps, which can improve accessibility for disabled users.
- Restaurants should keep in mind that potential challenges to conversational AI can come from unexpected requests or substitutions made by customers, meaning that some sort of human staff will need to be available in these situations. Additionally, programs will need to be updated with any menu changes or limited edition items.
- The back-end data collected by conversational AI and AI-powered recommendation engines adds another layer of value that would be more difficult to synthesize with human employees. Integrating AI solutions throughout the order flow can help restaurants A/B test different strategies to help increase check size.
Read more in this report about how tech will shape the future of fast food, including:
- The metaverse, which will become an extension of the brand experience
- AI tongues and social listening to help brands quickly develop and test new menu items to meet changing consumer demands
- Robotic food preparation will automate cooking to increase profitability and reduce food waste
- Autonomous delivery will help reduce reliance on gig workers
- NFT loyalty programs will create unique experiences and boost customer loyalty