AI in Restaurants: How it’s Reshaping Restaurant Management
In an industry where profit margins are slim, running a restaurant can sometimes feel like a fight for survival.
Your key to staying ahead of the game?
Artificial intelligence software that makes restaurant forecasting more accurate and less time-consuming.
From employee scheduling and cutting down on food waste to projecting sales and planning promotions, the benefits of AI are numerous. Ultimately, it helps you minimize labor and food costs and maximize profits.
Let’s cover how AI is reshaping restaurant management and how it’s benefitting restaurant owners and operators today.
AI for restaurant forecasting
First of all, what is sales forecasting and why is it important?
In simple terms, sales forecasting is a set of processes that restaurants use to project their future sales. For many restaurants, this means looking at the previous year’s sales reports for a specific timeframe and using that as a benchmark for the current year’s sales over the same timeframe (for example, checking sales from June to August, 2018 and using that to project sales for summer 2019).
But there’s a problem with this process. There are a ton of factors that contribute to sales growth or regression that simply looking at last year’s sales doesn’t give insight into.
Things like the weather, your restaurant’s location, holidays and even local or international events can have a big effect on your sales.
Factoring in these variables results in more accurate sales forecasting, and that’s where machine learning comes in.
Using AI to forecast sales
The weather plays a huge role in restaurant sales. Research shows that 7 out of 10 restaurants say that weather forecasts have an impact on their sales.
Maybe it’s sunny and a perfect day to enjoy a sangria on a patio with friends, or maybe it’s cold and gloomy outside and you feel like a comforting hot chocolate at a cozy cafe.
Whether it’s sunny, cloudy, rainy, snowy or warmer than usual, consumers are drawn to certain foods and drinks based on the conditions outside. Based on the food and beverages a restaurant serves, the weather will influence how many customers a restaurant serves on any given day.
How to forecast sales using weather conditions
With machine learning, restaurants can accurately project their sales based on the day of the week, previous sales performance and weather conditions.
For instance, if an establishment sold a high volume of alcoholic beverages on rainy days last year, machine learning-powered forecasting solutions will cross-reference all those data points and tell you which menu items drive the most sales for that time of year and those weather conditions. Additionally, it lets you know how many sales you can expect in the future based on that historical sales and weather data.
Armed with that information, shift planners can schedule the right amount of staff to meet the projected volume of customers, whether it’s projected to be a busy shift or a quiet one.
Using AI to reduce food waste
Food waste is an environmental issue that requires action from suppliers, businesses, restaurants and consumers to resolve. Thankfully for restaurants, helping solve the global issue of food waste can actually save them money.
A study from the World Resources Institute found that for every dollar a restaurant invests into reducing their food waste, they save seven. That’s a 7x return on investment!
So, how can forecasting help restaurants reduce their food waste and save money as a result? By using historical sales data and weather conditions to predict how much inventory you actually need to buy to fulfill customer demand. In doing so, restaurants remove the risk of overspending on cost of goods sold (COGS).
If the data shows a 30% decrease in burger sales when it rains, you can order less beef during rainy weeks and order more of the items that you typically sell more of in those weather conditions.
Scale profits by reducing food waste
Waste reduction is not just great for your bottom line, but diners actually care about how their food waste is handled. So much so that 47% of consumers are willing to pay more to eat at a restaurant that actively tries to reduce food waste.
Not only does reducing waste lower how much you spend on COGS, but promoting your efforts could help attract a higher volume of environmentally conscious customers.
AI and machine learning can help time-strapped restaurant owners and operators properly manage their restaurant inventory by arming them with the data they need to consistently make high-ROI decisions.
Using AI to forecast holiday sales
The general assumption is that, over the holidays, you’ll make more sales, but assumptions can be costly.
While some restaurants can benefit from sales spikes for certain holidays and special dates, upscale restaurants can experience up to a 60% decline in sales.
Using AI, restaurants can accurately project their sales, inventory and staffing needs for holidays. Instead of guesstimating your sales for events like Saint Patrick’s Day, use artificial intelligence to decipher what (and how much) food and beverages you need to stock up on to fulfill demand.
Location, location, location
Your restaurant’s location will also affect sales on holidays, and AI can help you predict foot traffic and walk-in customers based on the same historical sales and weather data.
Note: The longer your restaurant’s been in business, the more accurate the AI software’s forecasting will be.
Using AI to forecast event foot traffic
Like holidays, events can have a huge impact on your restaurant sales.
For example, if your restaurant or bar is near a basketball arena and your local team is in the finals, you can expect larger crowds of customers who want to watch the game. If you’re not prepared for that spike in customers, that’s effectively missed revenue.
The same applies for events you organized and host at your restaurant.
Let’s say you host a weekly trivia night every Monday. Rather than guess which menu items attendees prefer, pinpoint your best (and worst) sellers and adjust what you purchase from suppliers accordingly.
Bottom line? It’s all about being prepared—and AI can make being prepared a lot less time-intensive.
Using AI for promotions
Promotions are a big part of the hospitality industry. Both restaurants and bars use them to increase efficiency, sales and performance. AI can help restaurateurs determine what their promotion includes, which maximizes that promotion’s returns.
Imagine coming up with a great idea for a promotion for your restaurant. You’ve planned it out and gotten your staff ready and excited for it. But then, it unexpectedly fails.
One of the most beneficial aspects of bringing artificial intelligence to your restaurant is being able to predict which items should be included in a promotion to maximize that promotion’s performance.
By understanding your customer’s buying behavior you’ll be better prepared to create promotions that your customers will be receptive towards, which increases the sales that the promotion generates.
Artificial Intelligence is smart forecasting
With AI-powered forecasting, businesses in the hospitality industry can plan and make decisions based on previous sales data and analytics in relation to the weather, their business location and so much more.
The benefits of AI-powered forecasting for restaurant management is clear. With it, restaurant owners, operators and managers can optimize food and labor costs, throw events and promotions that actually work—all of which maximize profits.
AI used to be a pipe dream we only heard about in sci-fi movies, but it’s now a very accessible reality for independent businesses in the hospitality industry.
Are you ready to be an adopter?