In an effort to reduce labor costs, restaurants are increasingly turning to artificial intelligence for drive-thru ordering, although widespread implementation of this technology may take years.
According to a survey by the National Restaurant Association, 16% of restaurant operators plan to invest in AI, including voice recognition, this year. Larger chains, with the necessary capital and scale, are leading this investment.
Labor costs have been a rising concern for restaurants even before the pandemic, prompting operators to explore technological solutions to maintain profit margins. The COVID-19 pandemic accelerated labor costs and shifted consumer behavior towards drive-thru services. Recent legislative changes, such as California’s decision to raise fast-food worker wages to $20 per hour, have further incentivized the adoption of automation, which has so far been primarily used for back-of-house tasks.
The emergence of tools like Chat GPT has spurred interest in generative AI within the restaurant industry, although the sector is traditionally slow to adopt new technologies.
However, there have been setbacks. In June, McDonald’s announced it would end its trial of Automated Order Taker, an AI technology developed in partnership with IBM, opting to explore other vendors instead. Similarly, Presto Automation disclosed that it relies on “human agents” in countries like the Philippines and India to complete orders, which may have deterred some operators despite the company’s efforts to introduce a fully autonomous version in May.
While some restaurants remain cautious about using AI for drive-thru, adoption is expected to grow in the coming months and years. T.D. Cowen analyst Andrew Charles predicts a tipping point for voice ordering within 12 to 18 months, with at least two of the nation’s top 25 restaurant chains likely to expand their trials significantly.
Voice-ordering technology companies argue that AI does not replace jobs but rather reallocates workers to other tasks. Additionally, AI offers secondary benefits. For instance, Sound Hound, an early leader in the field, claims its AI can process over 90% of orders without human intervention, compared to the typical 80% to 85% accuracy rate for humans. The technology can also expedite drive-thru lanes by approximately 10% and upsell customers on every order, increasing the average check size. In the future, AI may even be able to accommodate non-English speakers, presenting significant opportunities both domestically and internationally.
Despite these potential advantages, generative AI comes with its drawbacks. Bank of America Securities analyst Sara Senatore noted in a research report that inaccurate orders can lead to delays and frustration, which could harm a restaurant’s reputation. Additionally, while younger customers might appreciate the efficiency and reduced human interaction, older customers generally prefer fewer technological options, according to a consumer survey by the National Restaurant Association.
