Now serving: How AI and the cloud are transforming your favorite restaurant

The culinary world loves to tinker, coming up with new and novel methods of food preparation and presentation. Sous vide, cooking vacuum packed food in hot water to the perfect temperature, came en vogue about 20 years ago. Savory foams topped dishes around the world. And molecular gastronomy led to a combination of science and artistry that transformed haute cuisine. 

Despite the constant innovation in what we eat, the places where we eat have been surprisingly resistant to change. 

The restaurant industry has faced a reckoning in the last few years. The pandemic forced people out of the restaurant and into their living rooms. Digital tools became the only way for restaurants to survive. And now, as the pandemic hopefully wanes, diners have come to expect an entirely different type of experience with their favorite food spots, transforming a dynamic that hadn’t changed for hundreds of years.

Yet for many restaurants, embracing new technologies has been a tall order.

“Once you get going, the margins are so razor thin, it's hard to replace technology all the time,” said Brian Poe, chef and owner of The Tip Tap Room and Parish Cafe in Boston, in an interview with Transform.

Boundaries to tech innovation

In a world filled with inexpensive mobile gadgets, digital tools and cloud services, restaurants have long been technologically slow adopters, relying on old and inefficient systems. 

A host of factors has held them back: foremost, money, people, and mindset.

Restaurants are low-margin businesses. The average profit margin for a full service restaurant is three to five percent, according to Restaurant365, which provides cloud and digital services to the industry. Fast casual restaurants—like Panera, Five Guys or Chipotle—see profit margins at six to nine percent, while catering companies have margins around seven to eight percent. Bars do a bit better with margins around 10% to 15%.

Staff turnover can be very high in the industry, which can make hiring and training on new systems a pyrrhic task.

“Why am I going to buy all that technology for people who are coming and going so quickly?” said Poe. “I tried to put a computer in my prep room so my prep staff could pull up recipes like I do and they couldn’t. They wouldn’t. It wasn’t in their wheelhouse.”

The pandemic and changing consumer and restaurant behavior

The service industry was the hardest hit during the pandemic. It is now facing the triple threat of inflation, supply chain problems, and labor shortages. Across the United States, 80,000 restaurants were estimated to have closed permanently in 2020, and restaurant sales were down by $240 billion from their expected levels that year. The only thing that kept many restaurants open was the Paycheck Protection Program (PPP) loans from the federal government. 

The only real choice for restaurants now: adapt, or die.

As the pandemic set in, restaurants had to scramble to understand and transform themselves to fit the new paradigm. Websites needed to be updated. Third party delivery apps needed to be integrated into the POS system. Not only did online ordering need to become the primary (in many cases, only) driver of sales, but done so in an easy and seamless fashion. And all this needed to happen yesterday, while navigating mask mandates, social distancing, PPP loan applications, and employees getting sick. 

The restaurants that survived, and have the potential to thrive after the pandemic, are the ones that successfully made the transition to digital, cloud, and artificial intelligence tools.

The cloud-enabled restaurant

New, cloud-based services have moved into the restaurant industry within the last decade with the aim of making digital adoption and transformation as easy as possible. If a restaurant is starting from scratch today, it has a wide array of cloud technologies to choose from to increase efficiency and streamline processes. 

One restaurant, ClusterTruck, a kitchen and delivery service, has embraced digital in every aspect of its business. It uses cloud and AI technology to combine the convenience of delivery with the food quality you’d expect at a restaurant. Unlike other food delivery services out there, ClusterTruck makes all its own food in one central kitchen and delivers it to customers itself. It owns the customer experience end-to-end and uses AI to optimize every step of the process including sourcing ingredients, updating the menu, preparing and cooking the food, delivering the food and finally increasing customer loyalty.

“Our software controls everything, even telling different stations on the line when to fire,” says ClusterTruck CEO, Chris Baggot. He says the kitchen does about 800 orders a day in Indianapolis.

Baggot believes that data is the key to ClusterTruck’s success. Even building out the menu is algorithmic, with cross-utilization of ingredients an important factor. “If the ingredient can’t be used in multiple menu items, we won’t use it,” he says. Unless it might unlock a new group of customers, such as vegans, then they evaluate that segment. 

ClusterTruck runs on Google Cloud, as do many restaurants, large and small, for solutions like data storage, artificial intelligence and machine learning, and communications tools like Google Workspace. Google Cloud is working with national pizza chain’s Papa John’s and Dominos to streamline digital transformation and improve customer experience, as well as quick service restaurants like Wendy’s. 

As the restaurant industry continues to evolve, the importance of data and knowledge of the customer is crucial, according to Baggot. He believes what the big chain restaurants haven’t realized (yet) is that food delivery is its own category. “It’s not an add-on, it’s a real business,” he says. “Our reorder rates—who comes back and why—that’s our strategic advantage.”