Labor costs. Staffing shortages. Supply chain issues. This is the new normal that restaurants must conquer to achieve sustained profitability. As these challenges constantly evolve and grow, so must the industry response.
The old saying that the greatest predictor of future behavior is past behavior is true. But how can restaurants capture, analyze, and make informed decisions to ensure their staff and inventory are ready to welcome guests? The answer is being generated daily in the restaurant—it is data. And what you do with it will determine your success or failure.
Data-driven AI forecasting
While generating a lot of attention and a little misinformation, it is essential to remember what AI is and how it learns.
At its core, AI is an umbrella term for computer software that mimics human cognition to perform and learn from complex tasks. For both large and small restaurant chains, data-driven AI means recording and analyzing thousands of data sources instantly and factoring in sales, year-on-year trends, local and national events, weather and more to provide accurate insights into your operations and guest demands.
AI can help you answer the questions: How can I better predict demand and staff accordingly? How can I accurately track my inventory levels? And the answers to these questions are generated by data-driven forecasting. Data is the foundation of how you can attract and retain talent, optimize your inventory and workforce, and achieve profitability. When a number of small decisions taken at the right time can make the difference between profit and loss, AI-driven data will provide the answer.
It's amazing to think that we have barely scratched the surface of what AI can do if properly “fed” with accurate data. Dynamic preparation and production and recipe and menu management are just a few of the operational benefits AI can accomplish today. It will help you schedule to meet demand and ensure you have the inventory to serve your guests and be true to your brand.
It is your data, so don’t wait
According to the National Restaurant Association's 2023 State of the Restaurant Industry report, 92% of operators cite cost as a significant issue. To help meet this challenge, more than 40% of operators are planning to invest in technology solutions this year. Investing in AI technology that leverages the data you are already creating will provide cost savings and should be at the top of your list.
However, it is crucial to remember the capability of any AI-powered forecasting system is only as in-depth and accurate as the data being analyzed. So how can restaurants start to effectively leverage their own data?
One of the first things we tell customers is that it is your data, the longer you wait to properly utilize it, the more you risk falling behind. To improve performance in 2024, you need 2023 data. To optimize and transform performance, you want to analyze years of data, consumer patterns and economic trends. The first step is to ensure you are digitally capturing the correct data in an efficient way.
Make sure to ask the right questions … and that your vendor has a successful track record of using AI to help restaurants optimize operations and save money. A few crucial questions to start with:
- How big of a data repository are you leveraging and creating your forecasting models with? For accuracy, what matters most is the amount and quality of data you can flow through to learn. Ensure your vendor has the breadth of historical data you need.
- What examples can you point to of helping restaurants capture their own data to optimize operations? Make sure they can point to both large and small chains that have diverse geographical and operational backgrounds.
- Do you work with third parties or an in-house data science team? This is an important distinction—make sure your vendor has invested in the internal innovation capabilities and resources to achieve your long-term goals.
- What consulting and service programs do you offer to ensure your forecasting software is operating to its full potential? Make sure any vendor has the capacity and track record of being there for customers throughout the entire project and beyond.
Most important, a system based on AI helps you grow with your data—staying ahead of the competition.
I am excited about the efficiency and cost savings that AI can bring to the restaurant industry. The consensus is that it is our turn to leverage different technologies, including AI, to create accurate labor and inventory forecasting models to save money while reducing manager workloads. Other industries have long benefited from the use of AI, now it is time for the restaurant industry to reap the benefits too.
Your data is ready, and so is Fourth
Christian Berthelsen is Chief Technology Officer of Fourth. He has over 21 years of software engineering and management experience and oversees the product roadmap, development and infrastructure of all Fourth software.
