How AI is spurring innovation in the restaurant sector

Time to read: Minutes

AGI logo

The following content has been prepared by Allianz Global Investors GmbH (AllianzGI), and is reproduced with permission by Voya Investment Management (Voya IM). Certain information may be received from sources Voya IM considers reliable; Voya IM does not represent that such information is accurate or complete. Any opinions expressed herein are subject to change. Nothing contained herein should be construed as (i) an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security.

Some restaurant chains are using conversational AI to help take customer orders, while others have opened fully and semi-automated kitchens to cut down on labour costs and improve efficiency.

  • Advanced automation and artificial intelligence (AI) technologies have the potential to drive outsized innovation and efficiency in the restaurant space
  • Some restaurant chains are using conversational AI to help take customer orders, while others have opened fully and semi-automated kitchens to cut down on labour costs and improve efficiency
  • Among other highlights: One popular fast-casual chain has also experimented with “Chippy” (a tortilla chip-making robot) and “Autocado” (a guacamole robot)

How AI is spurring innovation in the restaurant sector

Over the last decade, innovation in the restaurant industry has mostly centred around digital menus and ordering capabilities. Meanwhile, the restaurant industry is grappling with lagging labour productivity, ongoing labour shortages, persistent input cost inflation and other significant challenges.

Restaurant labour productivity has lagged that of other industries
Restaurant labour productivity has lagged that of other industries

Source: Bureau of Labor Statistics, Evercore ISI Research. As of 2020.

We believe that restaurants will start counteracting these headwinds by adopting artificial intelligence (AI) technologies to speed up menu innovation and improve efficiencies. We are closely monitoring these developments, looking for early movers that could see outsized benefits to their top and bottom lines. 

Examples of AI’s recent advancements

Voicebots: Creating convenience through conversational AI

Several restaurants are testing conversational AI systems with the goal of increased throughput and enhanced guest experience.

  • A sector-leading, multinational fast-food restaurant chain has tested a drive-thru voice-AI ordering system that shows promise, though filtering out background noise has been a challenge.
  • A quick-service-restaurant specialising in chicken wings has seen good success using conversational AI to take phone orders. This not only offers a better guest experience by removing missed calls and reducing hold times, but also frees up time for store associates. After a successful 200-store test, the restaurant chain will roll out AI-powered phone ordering capability at more locations in 2024. 

Fully automated kitchens: Creating a customer-centred cuisine while cutting down on labour costs 

  • A salad-focused fast-casual chain opened their first automated restaurant in a Chicago suburb. It produced 400 to 500 bowls in an hour, offering customers a short wait time with consistent portioning and accuracy. During a recent conference, the company’s CFO stated that “about half of our labour is involved in assembly, and [this technology] automates about 70% of that half.”1 On the back of this initial success, the firm plans to open a second automated restaurant in Los Angeles in 2024. 
  • A fast casual chain specialising in Mexican food, is testing an automated system, which moves bowls and salads through an automated “makeline”.  

Semi-automated kitchens: Robots are spicing up restaurant innovation

  • The aforementioned Mexican-themed fast-casual restaurant is leaning heavily into AI and automation technologies. The company has not only experimented with a tortilla chip-making robot and a guacamole robot, but it is also testing an AI-enabled double-sided grill that could transform protein preparations. The company’s CEO said, “[the grill] definitely frees up the capacity, which then allows us to evaluate how we do new menu items and maybe how long we want to keep certain menu items on, and so that is a big unlock for us.”2 The doubled-sided grill is currently being rolled out to more of the chain’s restaurants.

The bottom line

Despite lagging other industries to date, we believe advanced automation and AI technologies have the potential to drive outsized innovation and efficiency in the restaurant space. While we have mostly avoided the restaurant industry until now given its general lack of tech investment, we see the select examples and broader commentary around tech adoption as encouraging. We are more actively investigating the opportunity set and will continue to diligently analyse the investment options on a case-by-case basis, with the goal of identifying the emerging leaders in the AI-enabled restaurant industry space.

1 Source: Company conference call, November 2022
2 Source: Company conference call, July 2023

Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

This material has not been reviewed by any regulatory authorities. In mainland China, it is for Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations and is for information purpose only. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication's sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of this document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced, except for the case of explicit permission by Allianz Global Investors. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional /professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.

This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; Allianz Global Investors UK Limited, authorised and regulated by the Financial Conduct Authority;in HK, by Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; in Singapore, by Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; in Japan, by Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424], Member of Japan Investment Advisers Association, the Investment Trust Association, Japan and Type II Financial Instruments Firms Association; in Taiwan, by Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan; and in Indonesia, by PT. Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK).