Restaurant technology trends to watch out for in 2020

According to multiple outlets, 2019 was the year of the chicken sandwich. Social media feuds and new product debuts kept fried chicken top-of-mind within the QSR industry and beyond. But the chicken sandwich wasn’t the only important development of 2019. In our view, the theme of the year was lasting developments in technology: restaurants bet on big data and modified their operations to accommodate the continued rise of digital ordering. However, it’s clear that the movement has just begun. Here, we take a look at the trends that defined 2019 and are expected to go strong well into 2020. 

Betting big on technology

In the National Restaurant Association’s 2019 State of the Restaurant report, 70% of quick service restaurant operators planned to devote more resources to investing in technology, with 57% planning on investing more in back-of-house operations like POS systems and 41% planning on investing more in customer-facing technology like self-order kiosks. 

In collaboration with Baidu, China’s largest search engine, KFC debuted a facial recognition system designed to predict personalized menu options based on a customer’s age, gender, and mood. In collaboration with Yext, Taco Bell is enhancing its digital presence, ensuring that the brand pops up when customers use search terms like “fast food”, “Mexican food”, and “drive-thru.” 

Large multinational companies who are particularly well-placed to make investments in technology are at the forefront of this movement. McDonald’s acquired Dynamic Yield, a startup that provides retailers with decision logic technology, for $300 million in March. Just a month later, McDonald’s also announced it had acquired a 9.9% minority stake in Plexure, a mobile-app vendor. Then, in September, McDonald’s acquired Apprente, a company that builds conversational agents focused on fast-food ordering. Many predict that this will be another big year for M&A in the restaurant space. The year already kicked off with big news about the Yum! Brands acquisition of Habit Burger. But in 2020, will more restaurants follow McDonald’s lead in acquiring tech companies?

Using artificial intelligence in novel ways

McDonald’s acquisitions of Dynamic Yield and Apprente in 2019 reflected the industry trend of investing in artificial intelligence. With both of these acquisitions, McDonald’s is aiming to overhaul the entire drive-thru experience, using Dynamic Yield’s technology to show customers personalized drive-thru menus and Apprente’s technology to automate voice ordering. 

Other companies are making more modular changes. To improve phone ordering, Chipotle is testing a conversational voice bot, using voice recognition technology to interpret customers as well as machine learning to improve the algorithm after every conversation. In the field of marketing and rewards, TGI Fridays is using artificial intelligence to personalize mobile device notifications, and Punchh recently closed a $41 million round of funding in order to augment its AI algorithms, which generate targeted multi-channel marketing campaigns in order to foster brand loyalty. Other fun applications include Domino’s DOM Pizza Checker, which uses computer vision to check the quality of pizzas before they are delivered to customers in Australia and New Zealand, and Chick-fil-A’s customized artificial intelligence system that predicts foodborne illnesses based on social media mentions. 

Redesigning stores to be digital-first

To grapple with the ever-increasing influence of digital ordering, companies are testing out new store formats that prioritize off-premise orders. 

Some of these changes have been incremental, building infrastructure for customers to pick up their digital orders in a designated space. Firehouse Subs, a Florida-based sandwich chain, debuted a new restaurant format with an emphasis on pickup shelves to accommodate the off-premise orders that now make up 62% of sales. In a variation of the Firehouse pickup shelves, Pizza Hut debuted a new location with carry-out pizza lockers. 

However, some restaurants are also piloting takeout-only models. Marking the first time the international burger chain has debuted a new store format since launching drive thru restaurants in the 1980s, McDonald’s unveiled a new, take-out only store in London with kiosks and a reduced menu for convenience. Similarly, KFC opened an experimental drive-thru only location in Newcastle, New South Wales in November. Even delivery services like DoorDash are getting in on this trend: DoorDash is piloting a series of “ghost kitchens,” offering dedicated restaurant space to some of its partners (The Halal Guys, Nation’s Giant Hamburgers, Rooster & Rice, and Humphry Slocombe have already signed on) to prepare orders exclusively for DoorDash deliveries. We’ll see interesting results in 2020 as these innovative new restaurant models are launched and evaluated. 

The rise of the self-order kiosk

Major players like Burger King and McDonald’s have been experimenting with kiosk ordering since the mid-2000s, but it was not until recently that the restaurant industry began to see the mass adoption of self-order kiosks. This shift was set into motion by major restaurant brands like Subway, Panera, and Wendy’s, who began testing kiosks in between 2015-2017. Today, self-order kiosks are in two-thirds of Wendy’s locations. 

However, kiosks are no longer only reserved for major restaurant brands who can afford to make large technological investments. Companies like Bite, offering out-of-the-box solutions to smaller restaurant brands, are democratizing this valuable technology and making it available to brands of all sizes. In 2020, we’ll expect to see even more restaurants jump on the bandwagon with kiosk ordering, especially as it becomes an operational model that customers have grown to expect.

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