Back-of-house Technology

Sweetgreen said on its Q4 earnings call Thursday that tests of its Infinite Kitchen automated system at two suburban stores yielded improvements in throughput, order accuracy and labor turnover. Average ticket at those units was over 10% higher than in surrounding markets. 

Sweetgreen CFO Mitch Reback said each Infinite Kitchen represents $450,000 to 500,000 in incremental development costs but could yield a 7-point margin improvement at restaurants where it is installed.

CEO Jonathan Neman said the cost of retrofitting restaurants with the robot makeline is higher than the $450,000 figure, but that the cost depends on the level of renovations and amount of downtime needed to fit the machine into existing restaurant footprints.

Sweetgreen plans to open between 23 and 27 new restaurants in 2024, seven of which will contain Infinite Kitchen technology, Reback said. The chain also aims to renovate three to four large, urban stores to include the automated system. 

The $450,000 to $500,000 per-unit incremental cost of the Infinite Kitchen system is equivalent to the yearly starting wage of approximately 14 full-time kitchen workers at one Washington, D.C. Sweetgreen, based on current job posting listing the hourly rate for back-of-house workers as $16.63. That cost is also equivalent to about 23 employees working the average weekly hours for a restaurant production worker based on Bureau of Labor Statistics data. 

Neman said the robotic makeline has the capacity to make 500 bowls an hour, and that it hasn’t reached that level of demand in the current test markets. But Neman believes “some of the places that we're going to be testing this year are going to be those heavy urban environments where it does have that [level of demand]. So we do expect a sales lift in those restaurants.”

It’s unclear how the Infinite Kitchen’s production rate compares to a standard store. The company didn’t immediately respond to a request to clarify what about the Infinite Kitchen system was driving higher tickets or, whether the performance difference between the test units and the surrounding market existed prior to the installation of the robotic makelines.

Sweetgreen is also looking to make changes to its Sweetpass program.

“We have not yet seen the benefit of that program. So something that we're actively working on our optimizations and simplifications of the program,” Neman said. He added that the chain wants to make it ”simpler, better for the customer and better for the company to drive more transactions.”

Neman expects the program to be a major priority this year. Sweetgreen plans to simplify its rewards, improve to the in-app experience and create greater personalization.

The company’s Sweetpass+ subscription program, the higher tier of its loyalty program, has yielded “some incrementality out of those guests but it's not a huge member base. So it's not really driving the overall transaction growth in a big way,” Neman said.

Yum bolstered its technology across thousands of restaurants in 2023, deploying a range of products from front-of-house kiosks to back-of-house automation to support franchisees and grow digital sales. 

“2023 was a landmark year for successfully scaling our suite of proprietary technologies across our global restaurant base,” Yum CFO Chris Turner said Wednesday during the company’s earnings call. 

Technology remains an important aspect of Yum’s digital sales, which grew 22% to nearly $30 billion in 2023. Digital mix also exceeded 45%, according to the company’s earnings release. Systemwide sales were up 10% globally, as well. 

“If you look at that 10% global system sales growth for the full year, we think digital played a big part of that, both on the unit side and the same-store sales side,” Turner said. “As those capabilities continue to mature, we can get more and more leverage out of our digital technology, teams and capabilities in-house.” 

Yum has also accelerated the rollout of proprietary technology that optimizes back-of-house operations and helps operators better run their restaurants, CEO David Gibbs said. 

“We are equipping our franchise partners with distinctive capabilities that differentiate them from the competition, especially in emerging markets,” Gibbs said. 

Check out how Yum is deploying various technologies across its restaurant brands below.

Kiosks

Kiosks help provide a consistent customer experience, boost ticket sizes and help streamline operations, Turner said. Over the past year,  the chain increased its penetration of kiosks by 70% in KFC restaurants outside of China. By the end of the year, kiosks were installed in 500 KFC U.S. locations, up from about zero two years ago. The company has begun adding kiosks to KFC Latin America units using its proprietary TicTuk platform, and expects to triple the number of restaurants featuring kiosks this year, Turner said. Kiosks will likely be in a vast majority of KFC stores by the end of 2026, Turner said during the company’s November earnings call. Kiosks are also being installed across Habit Burger restaurants. 

Kiosks have been installed in all Taco Bell U.S. locations and are already making an impact on sales. Taco Bell’s U.S. same-store sales were up 3% during the quarter and 15% on a two-year basis. Taco Bell reported a record digital sales mix of 31%, a seven-point increase year over year, during Q4. In-store kiosks sales increased 15 points last quarter, as well. 

Point of Sales

Poseidon, Yum’s proprietary point-of-sales system, was added to 1,700 Taco Bell U.S. locations last year. A total of 5,000 restaurants featured the system at the end of 2023. Poseidon is a cloud-first system that incorporates order management, cash management and real-time store reporting, according to Yum’s website. 

Artificial intelligence and automation

Dragontail, an AI-based kitchen order management and delivery technology, was deployed in 1,000 more restaurants during the quarter. For all of 2023, Yum added the tech to 4,000 additional units, Gibbs said. Dragontail is now in 7,000 locations across Pizza Hut and KFC. This year, Dragontail will be added to nearly 6,000 more restaurants. Yum acquired Dragontail Systems in 2021 for over $72 million.

Yum’s custom-built SuperApp, which offers automated routine management tools for restaurant managers, is in 8,500 Pizza Hut restaurants globally. KFC plans to have it installed in 6,000 units in 2024, Turner said. 

An AI-driven inventory management system is now in 90% of its KFC U.S. locations and about half of its Taco Bell U.S. locations. The technology is helping drive “more seamless and more accurate inventory ordering processes for our restaurant managers,” Turner said. Another 3,000 KFC, Taco Bell and Pizza Hut stores will have this system installed this year. 

Yum’s GlobalData Hub

The company will continue to bring together insights and provide “smarter and quicker decision making,” and further the company’s use of data, Turner said. This year, Yum expanded the reach of its Yum GlobalData Hub, which gathers most of its global transaction-level sales data and other key operational and customer metrics. The company will develop and test new AI-driven capabilities that use this data and integrate it into its tech platforms. The technology could allow personalized upsell recommendations for customers using digital platforms, intelligent pricing recommendations and routine management for general managers, Turner said. 

Jersey Mike’s and SoundHound have deployed the latter’s voice ordering artificial intelligence tool at five or six Jersey Mikes locations  in the first wave of a 50-store pilot, a Jersey Mike’s representative wrote in an email to Restaurant Dive. 

SoundHound’s AI now answers “100% of calls” at participating stores and is capable of taking multiple calls at once, according to a press release shared Wednesday. 

SoundHound wrote in an email to Restaurant Dive that its technology was trained on Jersey Mike’s menu and recognizes natural language, meaning “a customer can ask for a #55 or a ‘Big Kahuna’ or a Chicken Cheese steak, and the system understands that these are all the same sub.”

AI is becoming a key tool to bolstering restaurant staff and delivering top-notch customer service, Jersey Mike’s Scott Scherer, chief information officer, said in the release.

SoundHound said the technology, in addition to taking orders, could answer “a broad range of menu questions (e.g., about specials and promotions), and even provides information about opening times, parking, [and] allergens.”

Major chains have been testing phone ordering AI since well before the COVID-19 pandemic, with Chipotle running a version of the tech at 1,800 stores in 2019. But in recent years, the trend toward voice-ordering AI has accelerated, and a multitude of restaurant companies are using or testing it both at the drive-thru and on the phone.

Del Taco, for example, has worked with Presto AI to implement its voice-ordering tech at the drive-thru, where such bots are particularly useful in upselling. Wendy’s said its franchisees can test drive-thru AI powered by Google Cloud this year, and DoorDash announced last summer that it was developing an automated phone system for its partner restaurants. Last summer, White Castle announced it would deploy SoundHound AI to over 100 restaurant drive-thrus by the end of 2024.

SoundHound said its AI “frees up Jersey Mike’s employees to focus on making delicious food and giving great service to in-store customers.” Robotics and artificial intelligence companies often frame their labor saving devices as ways to free up labor for redeployment within an establishment, rather than as a way to replace workers.

Wendy’s plans to expand its Wendy’s Fresh AI platform, which is currently active in four company restaurant drive-thrus in Columbus, Ohio, Wendys’ SVP and Global Chief Technology Officer Matt Spessard wrote Monday in a blog post. 

More restaurants are slated to add the AI chatbots to the drive-thru channel, and Wendy’s said it will offer franchisees the opportunity to pilot the technology in 2024 following ongoing interest from operators.

Wendy’s began piloting this program — a partnership with Google Cloud — in May to provide a tool that could understand customer customizations and respond to their common questions.

A growing number of QSRs have shown interest in generative AI as labor-saving technology that can improve the customer experience.

McDonald’s said last week that it partnered with Google Cloud to create cloud-based analytics across thousands of restaurants and develop AI. McDonald’s plans to add edge servers managed by Google Cloud on premise for faster analytics and enhancements to customer platforms, such as its mobile app and self-service kiosks. Restaurants will also have access to cloud-based analytics and AI onsite. Domino’s partnered with Microsoft earlier this year to use generative AI to improve the ordering experience and restaurant operations, with a pilot expected in the coming months.

Wendy’s plans to expand FreshAI into additional channels to improve the employee and customer experiences, as well. 

“This could include integrating AI with the Wendy’s app, in-restaurant kiosks, mobile devices, smart home devices and more with a multi-channel approach to provide the best experience for our fans — however they choose to order,” Spessard said. 

Adding AI to its digital channels could help Wendy’s grow this part of the business, which made up over 12% of sales during the third quarter. Wendy’s CEO Todd Pennegor said in November during the company’s earnings call. The company also has grown its loyalty program to 35 million and monthly active users grew 40% to 5 million quarter-over-quarter.

Wendy’s FreshAI uses generative AI that generates responses and adapts in real-time versus following a specific set of rules, Spessard said, adding that with “more than 200 billion ways to order Dave’s Double, leveraging generative AI is a crucial piece of innovating the Wendy’s drive-thru experience for customers.” 

So far, one of the chain’s test sites yielded service times that were 22 seconds faster than the rest of the Columbus market average. The technology allows staff to focus on preparing and completing orders with quality and speed. Accuracy has also improved. Wendy’s FreshAI has seen a success rate of nearly 99%, defining accuracy as an order that is started by the chatbot and submitted to the point-of-sales system even if a human had to join the conversation to fix an inaccuracy. 

“Our accuracy during the pilot, measured as the percentage of orders successfully handled by Wendy’s FreshAI without restaurant team member intervention, averaged 86% and we would expect the average to only to increase,” Spessard said.

Accuracy of drive-thru AI has come into question of late, especially after Presto Automation said in an SEC filing that about 70% of its orders require human intervention. Presto has partnered with Del Taco, CKE and Checkers & Rally’s in recent years. As its technology improves, Presto expects that number of orders not needing human intervention will reach 30% or better, improving to 70% by the end of 2024. The company said it plans to have its technology installed in 2,610 stores by 2025.

CaliExpress by Flippy, a fully automated restaurant created by Cali Group, Miso Robotics and technology firm PopID, is expected to open this month in Pasadena, California, according to a press release. 

The restaurant uses autonomous grill and fry stations that use proprietary artificial intelligence and robotics to cook food, requiring minimal human labor.

Customers order by creating signing into a PopID account on digital kiosks, after which robots prepare and cook their orders.

CaliExpress by Flippy claims that its technology creates a “safer, easier and friendlier kitchen” for employees by nearly eliminating slippage and burns at the fry station. Its creator companies also said it provides above-average wages to employees because the restaurant can be run by a small number of workers.

The use of technology also allows the restaurant to offer more expensive wagyu beef blends “at price points competitive with other premium burgers using standard meat,” per the press release. Its menu consists of burgers, cheeseburgers and french fries. An online menu has its hamburgers priced at $7, cheeseburgers at $8 and french fries at $4.50. 

The financial savings and streamlined operations offered by robotic makelines are making them popular among U.S. restaurant chains. Remy Robotics opened a bot-run “Better Days” kitchen in New York City over the summer that can cook hundreds of menu items in a 200-square-foot space. Sweetgreen opened its first automated kitchen this year and plans to accelerate the deployment of the technology in 2024. Chipotle is in the process of testing an automated makeline with Hyphen. 

“AI-powered, robotic order-taking and cooking enables the major chains that feed America to substantially improve quality, consistency and speed,” Rich Hull, CEO of Miso Robotics, said in a statement.

The location will also provide a “pseudo-museum” experience with Miso Robotics equipment on display, including “dancing robotic arms from retired Flippy units, experiential 3D-printed artifacts from past development” and photo displays. 

The restaurant, which is at 561 E. Green Street, is opening with reservations initially but will have a grand opening to follow. The company didn’t respond to questions, including queries about the staffing levels and the possibility of additional locations, by press time. 

Potbelly has developed a tool to help new and existing franchisees fight inflation: a smaller store design. 

Its new prototype, which includes design elements like a customized-drink station and pickup shelves, is 1,800 square feet — 500 square feet smaller than its traditional shop. These shops are faster to build than traditional ones, and cheaper to maintain as well, said CEO Bob Wright.

“Franchisees and some other brands have really struggled to offset … inflation,” Wright said in an interview. “Our job with this prototype was to try to help figure out what to do about that inflation. We think we can offset a lot of that. Obviously, a smaller shop is cheaper to build.” 

The first of these locations opened in Arkansas in May 2024, and the bulk of new units set to open this year will have elements of the new prototype or the full design. At the end of Q1 2024, the chain had over 640 shops open and committed, Wright said. With 427 currently in operation as of March 31, 2024, that means over 200 future shops will likely have this new design in the foreseeable future.

As of May 2024 Potbelly had about 30 units in various stages of development and another 10 in early stages that could open in late 2024 or early 2025, Wright said during the company’s Q1 2024 earnings call. The new prototype will help it reach its goal of having 2,000 units in the U.S. 

“We can accelerate growth, and that’s what the franchisee wants and that’s what we want,” Wright said. “[Franchisees] are very excited about it. They see the things that matter the most to them: brand differentiation, brand distinction, efficient and faster real estate decisions.” 

The benefits of a smaller design

Chains are turning to smaller format stores to reduce construction costs for franchisees, accelerate development, introduce more flexibility with real estate and enter markets that could not support larger stores. 

Perkins will open two different small-format stores later in 2024, a full-service store up to 3,500 square feet and a fast casual restaurant of about 1,500 square feet. Other chains like Panera, Sweetgreen and Dunkin’ have been deploying small digital-only stores without dining rooms.

One of Potbelly’s key strategies right now is boosting its franchise development, which explains why it put so much time and effort into improving the design. The average investment to build a traditional shop is $650,000, which yields an average unit volume of $1.3 million, a two-to-one investment ratio that already makes Potbelly attractive, Wright said. 

Reducing occupancy costs, improving revenue and boosting profitability helps operators improve their overall financial performance, Wright said. That leads franchisees to feel confident about building out the rest of their territories. 

The design is flexible and is more like a “kit of parts,” Wright said, meaning that franchisees have the option to fit this prototype into different types of real estate. 

“[The prototype] opens up much more potential real estate,” he said. 

It also takes less time to build. The restaurants take about 11 to 12 months to build after signing a development agreement, compared to the industry standard of 12 to 18 months. 

“There’s no silver bullet in terms of cost extraction, but there are certainly a lot of places to look for efficiency,” Wright said. 

Potbelly’s design strategy

Since 2021, Potbelly revised restaurant operations, how it services its customers and its digital assets. The company, for example, added Potbelly Digital Kitchens to better service digital orders off the back line — an important move considering digital now makes up about 40% of sales.

Potbelly did a lot of work with its labor model and the placement of its associates during rush and post-rush periods. It has found ways to be more efficient with online orders and looked at the capacity of its equipment and its dining room, Wright said. 

“The work on the prototype is essentially bringing all that together,” Wright said. “We really did want to evolve the shop, but not completely revolutionize everything.”

Potbelly hired a design firm to develop the new stores. Although this was a novel format for the company, the firm incorporated lessons from the company’s traditional stores. For example, management knew from its capacity studies that the shop could be smaller and have a little less dining space. 

“We also knew that our dining room was incredibly important to the shop experience,” Wright said. 

Another element it incorporated into the design is the Potbelly Digital Kitchen, which originally retooled a catering prep line into one that serviced online orders. The chain never had a chance to build that particular makeline from scratch in its previous units. In the new stores, Potbelly has repositioned various equipment, like a cooler, and all of the items that would be needed to create a more streamlined experience.  

For customers, the digital experience is more consistent in the new designs. While placement of pickup shelves in the company’s current crop of stores vary by location, the new design has them in the same location, near the drink station. Staff members no longer have to walk across the restaurant to place pickup orders on a shelf, Wright said. The pickup shelves are also within sight of the service line, so if a customer needs something, staff can address their needs better, he said. 

There is also clear digital signage that shows the progress of orders, he said. 

The drink station situated next to the pickup area looks like a piece of furniture, Wright said, with light green tones and cabinets. 

The chain also will continue to provide touches like handmade tables and special artwork that fits each shop’s neighborhood. 

Potbelly has a facility in Chicago where it manufactures a lot of elements for restaurants, including tabletops, chairs and art frames. The company will recycle frames for its in-store artwork. It also will build its pickup shelves instead of importing them, which can help save costs. 

“You’re certainly going to recognize that you’re in a Potbelly as a customer, but you’re not going to feel like you’re in a cookie cutter [location],” he said. 

Domino’s has partnered with Microsoft to use generative AI technology and cloud computing to improve ordering and restaurant operations, the companies said in a press release Tuesday. 

The companies will use Microsoft Cloud and Azure OpenAI Service to enhance the ordering process with personalization and simplification. 

The two companies will work together over the next five years and Domino’s expects to begin piloting generative AI technology for stores and customers within the next six months. 

Domino’s said it has already been working with data and AI to create more simplistic and robust restaurant operations.

For example, some operators are using AI-enabled technology to start preparing pizzas before the customer completes their online order, CEO Russel Weiner said during the company's August earnings call. Some of Domino’s units have also been dispatching pizzas to drivers before they return to stores. This allows for quicker delivery since drivers no longer have to waste time finding a parking spot at the restaurant. 

Domino’s is currently in the “early stages of developing a generative AI assistant powered by Azure OpenAI Service to help store managers save time on daily tasks such as inventory management, ingredient ordering and staff scheduling,” per the release. These tools are expected to improve pizza preparation and quality control, leaving managers more time to dedicate to the team member experience and customer service. 

As part of this partnership, Domino’s and Microsoft will create an innovation lab, in which companies’ leaders will work with engineers to accelerate the rollout of smart store and ordering innovations, the companies said. Both firms said they are also “committed to responsible AI practices that protect customer data and privacy.” 

Domino’s has long been exploring technology to improve operations. In 2019, it opened its Innovation Garage in Michigan to focus on piloting technologies like ordering kiosks, GPS delivery technology, autonomous delivery vehicles and the company’s AnyWare ordering tech. A few months after opening this center, the company rolled out a GPS delivery tracker to help improve delivery times. The company previously tested autonomous delivery vehicles in select markets. This year, the company rolled out Pinpoint Delivery where customers can put a pin on a map and have pizza delivered to that location.

Presto has partnered with Taco John’s and restaurant POS platform Qu to add Presto Voice in select restaurants as part of a drive-thru pilot, the tech company said in June 2024.

The initial pilot began in a Minnesota location in April 2024 and is now being rolled out to a second unit in Wyoming, which is slated to go live before August 2024. 

Taco John’s, which has roughly 400 restaurants, plans to expand the technology to its franchised locations this year following the completion of the pilot phase. 

As part of its partnership with Taco John’s, Presto integrated its voice AI with Qu’s POS and kitchen production technologies, allowing automated voice orders to be managed end to end with Taco John’s existing tech stack. 

“Preliminary test results have been very positive,” said Ryan Baune, vice president for technology at Taco John’s. “We are seeing improvements around speed of service, order accuracy, and an increase in average ticket size primarily driven by upsell attachment.”

The technology is also helping improve the guest experience as staff don’t need to interrupt the guest at the pickup window to take an order for another guest, said Steve Smyth, director of restaurant technology at Taco John’s. 

Taco John’s has been growing its tech stack in 2024, partnering with Flybuy, a location-based ordering system, in May. Flybuy’s geolocation technology predicts how much time a kitchen needs to prepare an order before the customer arrives.

Presto has been focusing solely on its voice artificial intelligence platform since spinning off its tablet business earlier this year. The company is also testing a voice AI that doesn’t need humans to help complete orders. It is piloting Spanish-speaking voice AI at a location in Southern California, as well. The company partners with Carl’s Jr., Hardee’s and Checkers and Rally’s.

Chipotle is preparing its major technological initiatives for new rounds of testing and expansion, CEO Brian Niccol said on the chain’s earnings call in late July 2024.

The brand has tested its dual-sided grills in 10 restaurants with positive results and now plans to deploy the technology in at least 74 high-volume restaurants and will “evaluate the economics prior to rolling it out further across the organization,” Niccol said. This technology can cook chicken and steak in half the time of its current grill.

The chain’s more advanced tech, namely its digital makeline and robotic avocado processor are undergoing final checks ahead of in-restaurant pilot testing Niccol told analysts. CFO Jack Hartung said on the same call that the makeline would be ready for restaurant testing in August or September of 2024.

An early promotional video for Chipotle’s automated makeline showed ingredient bouncing out of bowls and landing inside the machine, raising questions about the technology’s safety. Niccol said on the earnings call that the brand’s technology testing process accounted for safety.

“Our food safety and operation teams have worked closely with our technology teams to assure that the design takes into account things like cleaning, speed and accuracy,” Niccol said. 

Hartung hinted at other equipment changes the brand is considering to increase efficiency.

“We’ve got things that make us more efficient with prep, whether it's Autocado, a veggie slicer, a dual-sided grill, looking at modifications to our rice cooker, our fryer equipment,” Hartung said. “There's a lot of things going on back at house to make us more effective culinary-wise, prep-wise, which then sets us up to be successful consistently.”

Chipotle has dedicated considerable resources to the development of new culinary equipment through its Cultivate Next Fund, which backed Vebu, the maker of the avocado processing machine, Autocado, and Hyphen, the firm developing Chipotle’s automated makeline for digital orders. Initially capitalized at $50 million in 2022, Chipotle doubled its investment in the fund in early 2024. But the key to handling the company’s high order volumes in 2024 has been increased deployment of labor, rather than eye-catching technical changes.