As the Restaurant Industry Embraces AI Self-Service, Striking the Right Balance Between Innovation and Personal Touch Becomes Paramount
This year, restaurants are aiming to improve customer experiences (CXs), optimize operations, and, most pressingly, alleviate the labor challenges that have plagued the service industry in recent years—all to mitigate inflation and prepare for a potential economic downturn.
Many brands are, as a result, adopting AI self-service technologies, including automated ordering through kiosks or mobile apps, voice-activated assistants, tableside tablets for personalized recommendations, chatbots for reservations and information, payment automation, and so forth, to help them reach these objectives. And this trend shows no signs of slowing down. By 2027, the self-service market is expected to reach $63 billion, up from $40 billion in 2022.
According to GuestXM’s latest research, after years of instability, the labor market finally appears to be stabilizing, and restaurants hope to reap the rewards of an experienced workforce once again to drive exceptional CXs. Undoubtedly, focusing on meeting customers’ needs will be paramount this year: instead of cutting back on dining out, consumers are choosing to dine less frequently but are willing to spend more per occasion for higher-quality, engaging restaurant experiences.
Nonetheless, while the labor market shows signs of improvement, it doesn’t guarantee immediate benefits for restaurants. In the meantime, integrating AI self-service technology may seem, and could prove to be, beneficial for enhancing efficiency and convenience.
The issue? Striking the right balance between AI and the human touch is a major challenge.
Consumers continue to fear that certain AI technologies may decrease personalized service at restaurants. Research from a PYMNTS study, “The Digital Divide: Technology, the Metaverse and the Future of Dining Out,” revealed that roughly 4 in 10 consumers at least partially agree that restaurants are becoming increasingly less personal.
The positive news is that most customers are not necessarily opposed to AI self-service, provided that human support is available when needed. As per Forbes Advisor, despite AI concerns, 65% of consumers trust businesses using it, highlighting the potential for improved CXs when AI is employed responsibly and transparently:
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According to Square’s “The Future of Restaurants” report, 79% of customers said that they’d prefer to order via online kiosks rather than directly through staff.
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Regarding QR codes, most customers prefer ordering and paying through them. However, according to the National Restaurant Association’s findings in the “State of the Restaurant Industry 2023” report, only 46% of baby boomers are interested in accessing menus on their phones via a QR code versus 73% of Gen Z adults. Baby boomers are also less willing to use contactless or mobile pay options (57%), and only 53% said they would order and pay using a smartphone app.
AI-Employee Equilibrium
AI self-service technologies have the potential to significantly lighten the workload for employees. For instance, self-service kiosks and mobile apps empower customers to place orders independently, easing the workload on restaurant staff during busy periods. Additionally, AI-driven self-service payment systems streamline checkout, minimizing wait times and enabling staff to focus on food preparation and customer service.
A study by Adobe revealed that 92% of workers believe AI technology is having a positive impact. They reported the top productivity gains of AI as:
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Saving time (67%)
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Helping employees work faster (61%)
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Reducing or eliminating tedious work (45%)
But again, the goal should be to integrate AI and humans seamlessly—and the most critical factor involves training staff on how to use the technology effectively (86% of employees want training on AI). Staff should be able to balance their regular tasks, support customers in navigating the technology if any issues arise, and be able to take over and think innovatively if these issues can’t be solved promptly.
Brands need to understand that fostering employee confidence and offering necessary support, such as training or reducing workload, can improve the employee experience. This will, in turn, lead to lower turnover rates and increased customer satisfaction.
Unfortunately, as many companies have come to realize, employee turnover can be costly: recent FSR research showed that the average cost of training a new restaurant employee is $3,646!
In our latest State of the Industry webinar, we revealed that general manager turnover has a direct influence on a company’s financial performance; for example, in Q3 of last year, restaurants with any general manager turnover on average experienced no growth in sales, while those with no general manager turnover rates experienced a 2% increase in sales.
Our research also highlighted that thorough onboarding and training contribute to lower job abandonment rates: companies that spend over 30% of manager training on leadership-skills development have 10% lower non-management turnover and 14% lower management turnover.
AI-CX Equilibrium
While these technologies can be a lifesaver, replacing actual employees with AI can lead to customer dissatisfaction:
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According to a 2023 Wall Street Journal article, out of ten orders placed by customers at a White Castle in Indiana that leverages AI in their drive-through, three people asked to speak with a human employee, citing either an error or a preference for human interaction.
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At the end of 2023, Anthony’s Coal Fired Pizza & Wings, owned by BurgerFi International, decided to do away with its automated phone-answering system. BurgerFi CEO Carl Bachmann stated, “Our guests have told us loud and clear that they want to speak with a human when placing orders. Technology is critical for innovation, but AI for guest service was not providing an exceptional experience for our guests.”
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Additionally, since McDonald’s deployed their AI-ordering system in 2021, many customers have reported instances of order-taking failures, sharing their bad experiences on TikTok.
For restaurants to determine whether customers are accepting of their self-service technology, they must consistently monitor reviews across social media and online review platforms. In addition, conducting customer feedback surveys can also help brands understand customer sentiment, take proactive steps to improve CX, and potentially prevent customers from leaving negative online reviews.
Careful Consideration
Excessive automation can depersonalize the entire CX. As per Forbes, a study revealed that 78% of customers surveyed said that the number-one driver of satisfaction in a self-service experience is personalization. However, while AI technology can help with collecting and analyzing customer data and provide a certain level of personalization, it still lacks the warmth inherent in human interaction.
When deciding whether to invest in AI technologies, brands should first define their business goals, assess product value and reliability, and determine the necessary skills required for operating these technologies. In fact, according to Forbes, 43% of businesses are concerned about technology dependence, and 35% worry about having the technical skills to use AI effectively.
All in all, making sure you strike the right balance and don’t compromise the guest experience lies in training your restaurant staff to work alongside AI systems so they can assist customers if need be, provide recommendations, ensure a smooth experience, and know when to step in for complex inquiries, adding a personal touch and addressing unique concerns. Again, effective onboarding and training result in reduced job abandonment rates, and as we highlighted previously, focusing on delivering the best CX possible should be a key focus for restaurants this year.