Fast food industry - areas of development

The benefits of ordering food online and through mobile apps for food delivery became evident during the global COVID-19 outbreak in 2020. This method has given customers access to their favorite foods while also allowing food providers to continue operating during the pandemic. In many developed and developing countries, especially during the COVID era, the surge in online food ordering has revolutionized the way customers interact with food suppliers. Fast food is no exception. An important factor in the development of demand in this segment is also the dynamic lifestyle of millennials and the global growth of the working population. Over the past few years, consumer spending on food consumed outside the home has increased, including on fast food items.

In developed regions, ordering food for delivery was a common practice even before the pandemic. However, in developing countries such as India, the Philippines, Indonesia, South Africa, Qatar, Saudi Arabia, the United Arab Emirates, Singapore, Turkey, Argentina, Brazil and Chile, the trend has gained momentum during the COVID-19 pandemic.

Consumers are rapidly moving from traditional ordering methods to digital ones because it is simple, fast and completely transparent. Moreover, a strong franchise business model allows large global operators to expand their influence in new markets. The Asia-Pacific region and South America offer great potential for growth due to their broad consumer base.

It is also necessary to mention the factors hindering the development of the market. Although fast food is a popular category, it is high in calories and has lower mineral, fiber and water content compared to natural foods. Increasing consumption of fast food among young people leads to high fat intake, which can lead to obesity and hence obesity-related chronic diseases. Obesity can cause several chronic diseases, premature death and serious illnesses, including cancer, diabetes, gallbladder disease, fatty liver disease, heart disease, arthritis and joint disease. Fast food consumption has been identified as a potential risk factor for obesity among children. Concerns about the potential health impacts of fast food products will on the one hand limit the growth of this industry, on the other hand, solving this problem represents a potential opportunity for business expansion.

Other problems in the fast food sector are associated with declining profitability in the restaurant industry, and in the fast food segment in particular.

Thus, to succeed in the fast food segment, companies need to invest in the development of innovative solutions that increase profitability, increase customer loyalty and increase productivity. At the same time, innovative technologies in the field of robotics, artificial intelligence and social digital interaction technology can not only help restaurants optimize operational processes, but also create a personalized, seamless consumer experience with the brand. In turn, solutions that help reduce restaurant operating costs are also important. It is expected that by 2022, investments in the development and implementation of new technologies in the restaurant business will exceed $6.5 billion, which is more than double the amount raised in 2020.

The future of the fast food sector depends on many major players in the industry. These are quick service restaurants (QSR chains) with global operations. They are the main drivers of technological development in the industry today. Among them are the largest fast food chains (McDonald's and Chipotle), technology leaders providing digital services (Google, Meta), and robotics manufacturers that combine software and equipment for restaurant automation (Hyundai, Nuro). By forming strategic alliances, these companies will work together to create a future of fast food that will take the industry beyond traditional restaurants. On the other hand, the future of fast food will be influenced by the actions of companies in the restaurant and foodservice industry's supply chain. These include food suppliers (e.g. Tyson Foods, JBS), food service companies (e.g. Sodexo, Compass), and last-mile delivery companies (e.g. DoorDash, Deliveroo).

Emerging shifts in the fast food industry mean that restaurants need to focus more on serving customers outside of traditional establishments. A significant portion of a company's interactions with customers (such as food orders) now occurs outside of the restaurant. Fast food chains and other food service companies are striving to ensure that these innovations meet consumer expectations while adding value to their offerings.

So again, the metaverse is virtual worlds, with virtual products and digital experiences that are interactive and highly engaging. Virtual restaurants are emerging in the metaverse and are successfully serving as digital sales channels. Customers can enter a virtual restaurant, browse the menu, meet friends, and even order real food that will then be delivered to their door in reality. It is expected that by 2030 the metaverse will occupy a significant place as a sales channel and not only for the fast food industry. It will allow restaurants to create virtual experiences, offer exclusive menu items or digital products, and host virtual events for customers.

Company Chipotle  was one of the first fast food brands to enter the metaverse. In 2021, the Mexican fast food chain partnered with Roblox to create a digital version of its famous Halloween celebration. Players dressed up their avatars in Chipotle Halloween costumes, played mini-games, and received promo codes for free burritos that could be used at the actual restaurant. The virtual restaurant received more than 8 million visits during the campaign and set Chipotle's record for digital sales in a single day. In 2022, the company continued develop this direction and launched a new menu item in Roblox through an interactive game.

McDonald's also came to the metaverse, inviting their clients to an event celebrating the Chinese Lunar New Year. The company partnered with AltspaceVR and Spatial to create a hall of Chinese zodiacs that players could explore in virtual reality. McDonald's has also filed a number of trademarks as it plans to soon open a virtual restaurant that sells both virtual and real goods for home delivery.

Wendy's is another fast food chain experimenting with the metaverse. In April 2022, Horizon Worlds (a Meta virtual reality world using the Oculus VR platform) opened Wendyverse. Players were given a set of challenges that they could complete to win a promo code to use at a real Wendy's restaurant.

The metaverse gives restaurant chains room to experiment with menus and marketing. Fast food chains investing in the metaverse can explore new opportunities in depth, testing new strategies for virtual programs that increase brand awareness for new audiences. They can offer different forms of creative interaction with consumers, virtual events, or even experiment with areas such as restaurant design or menu content.

The Metaverse is still in its early stages of development. But participation in it is necessary. To understand what strategies work, it is necessary to study the successes and failures of other consumer industries, such as fashion and food, that have previously experimented with a presence in the metaverse. The Metaverse may well become an additional sales channel, attracting new consumers, increasing revenue and customer loyalty.

AI-based taster and social listening (social media monitoring) can significantly reduce R&D costs. In the future, restaurants will be able to create and test new recipes in a faster, less wasteful and more cost-effective way. By combining AI-powered tasting with social listening, restaurants can recognize new demand trends early on.

Computer tasting systems use sensors and artificial intelligence to replicate how people perceive taste. This allows for quick tasting without involving a person. Social listening technology identifies consumer sentiment conveyed in social media posts, online reviews and other forms of digital content, and from there generates actionable information about new ingredients, flavors or consumer habits that are gaining popularity. By combining these two technologies, restaurants can predict which new items will be popular and improve the recipes and flavors they offer. Identifying new consumer preferences early on helps restaurants adapt other elements of their offering beyond taste, including hours of operation, room layout and product category offerings.

These technologies are still in the very early stages of development. Large consumer goods companies with wide product lines were the first to use them to experiment with new ingredients.

In 2019, McCormick & Company entered into a partnership agreement with IBM to use the newly developed Hypertaste system, a “digital taster” powered by artificial intelligence. McCormick & Company claims that the time required to develop new products has been significantly reduced and that they are now able to tweak formulations multiple times before finding the final product.

Company Tastewise offers a system based on artificial intelligence and social listening to create menus, create dynamic dashboards for restaurants, food services and consumer goods companies.

Using similar technologies, a Singapore company AI Palette  tracks ingredient and flavor trends in 15 different languages and identifies promising new products by geographic region. It also predicts how long consumer demand for a particular product is likely to last.

Both startups have partnerships with major consumer goods companies such as Nestle, Pepsico and Kellogg's.

AI-powered tasters and social listening technology can help restaurants update menus faster than usual. Traditionally, it takes about a year to introduce a new dish to the menu. With these technologies, restaurants can reduce the risk of uncertainty and shorten the time it takes to develop products to meet changing consumer preferences, thereby increasing their competitiveness.

It should be noted that it makes sense to form partnerships and investments in these areas early in the innovation cycle. When a technology is still in its infancy, vendors are more likely to form exclusive partnerships to test and scale capabilities. This gives significant advantages over competitors.

AI-powered chatbots allow customers to interact with software using their voice or text (via chatbots), while natural language processing (NLP) allows software to communicate in natural language. AI-powered recommendation engines use data based on collected customer preferences. By integrating these two technologies, restaurants can create virtual assistants that can take orders, make changes to orders, answer guest questions, and encourage customer loyalty. They allow restaurant employees to focus on other tasks, such as food preparation and direct customer service, increasing their productivity.

Virtual conversations and AI-based recommendations not only have the potential to increase check size, but also collect additional data on consumer preferences. In the future, these technologies will make the process of ordering food faster, more accessible and more convenient for people. They will be able to automate the operation of restaurants for motorists (drive-in), be included in the systems of intelligent voice assistants, various applications, and even become avatars of the metaverse.

In 2019, McDonald's made a rare move for the fast food giant: the company acquired artificial intelligence-powered recommendation system Dynamic Yield. Two years later, Mastercard acquired the system from McDonald's and began using it for other industries as well. However, McDonald's retained the right to use Dynamic Yield in its applications. Thanks to this, McDonald's can dynamically change its menu and make more effective offers to customers depending on the time of day, weather, restaurant traffic and popular dishes.

Virtual chat systems can also be used for orders by phone, SMS or smartphone apps.

Domino's partners with developer ConverseNow . The ConverseNow system enables restaurants to use an omnichannel experience, including ordering by phone and SMS. Moreover, as soon as an order is placed, it is immediately transferred to the appropriate restaurant outlet and employees can begin preparing it.

More recently the company Panera Bread  announced a partnership with OpenCity , And started testing my virtual interlocutorand in some vehicles.

Finally, one key example that combines these two technologies is Wendy's partnership with Google Cloud. Using Google's speech-to-text technology, Wendy's restaurants can take orders over the phone and directly at the drive-in. The company plans to use speech recognition in the future to provide personalized recommendations to its customers.

The use of virtual interlocutors in drive-in restaurants significantly reduces labor costs and allows you to increase the average order size. AI tools can also personalize order recommendations based on local preferences, weather and product availability.

Of course, at the moment virtual interlocutors cannot completely replace a person. Potential problems may arise due to unforeseen non-standard requests or substitutions made by customers. Therefore, human personnel must be available for these situations.

The data collected by virtual conversations during the customer service process adds another layer of value creation for companies that would be more difficult to synthesize with human employees. Integrating these solutions into ordering processes can also help restaurants test different strategies to increase check size.

Robotic systems being developed for restaurants use artificial intelligence and machine learning to prepare, assemble and pack ordered food. Cooking robots can cook food exactly according to a recipe, doing it better than a human and with fewer errors (such as undercooking or overcooking). Their use results in reduced waste and increased customer satisfaction. Some robotic systems can be installed in kitchens where people also work, while others are autonomous machines.

Robotic cooking improves the efficiency of the order preparation process and is now approaching price parity with human labor.

In the future, fast food restaurants will adapt their processes to fully embrace the use of culinary robots. The machines will prepare meals, package them and transfer them to autonomous delivery vehicles to accurately fulfill customer orders.

Over the past year the company Miso Robotics has established partnerships with fast food chains such as Chipotle, White Castle and Buffalo Wild Wings. Its robots prepare foods such as tortillas, hamburgers and chicken wings.

The use of culinary robots is growing rapidly in the United States as well as in Southeast Asia and the Pacific. For example, in 2020, KFC partnered with Hyundai Robotics in Korea to develop culinary robots.

Implementing culinary robots requires a high initial investment. Despite this, fast food chains are actively developing this area, expecting to gain significant competitive advantages from the use of this technology. As a result of the expansion of the scope of its application, prices for culinary robots are falling. So Miso Robotics set a goal to reduce the cost of robots by a third to about 20 thousand dollars apiece.

Restaurants that are willing to test robotic cooking but don't have the luxury of investing heavily in it may want to consider using the technology through a Robots as a Service (RaaS) model. In many cases, the cost per hour for a culinary robot is less than the cost of a part-time worker.

Robotic cooking technology for efficiently performing simple, repetitive tasks, such as flipping burgers or servicing deep fryers, has become the industry's most widely used technology. Restaurants need to think strategically about how robotic cooking can be used in their current menus or how new menu items can be created.

The benefits of robotic cooking include not only recipe accuracy and cooking quality, but also reduced food waste. Because of this, and by reducing human errors such as food burning or cross-contamination, the use of culinary robots helps increase profits, improve quality and productivity, while increasing customer satisfaction.

Autonomous order delivery vehicles are robots that move on the ground or flying drones. They automate the delivery process and often include features such as temperature control and storage of perishable goods. Some autonomous delivery vehicles are designed to operate on roads alongside passenger cars, while others can only travel on pedestrian sidewalks.

By 2030, autonomous vehicles are expected to be regularly used by restaurants to deliver orders. This opens up significant opportunities to create new products and services (for example, 24/7 delivery) and reduce customer costs by eliminating expenses such as tips.

Among the first manufacturers of autonomous ground delivery vehicles is the company Nuro, which has received funding from Chipotle and has partnered with Domino's. In the third quarter of 2022, Uber Eats announced a 10-year strategic partnership with Nuro to deliver in Texas, with plans to expand into California.

Refraction AI https://refraction.ai/ is another player in this field. In 2022, the company partnered with Chick-fil-A to test autonomous delivery.

Drone delivery is also starting to make inroads into the fast food space. Flytrex's services https://www.flytrex.com/ attract the attention of many restaurants. In 2022, the company partnered with Brinker International, the holding company of Chili's Grill & Bar and Maggiano's, as well as sandwich chain Jersey Mike's. These partnerships confirm interest in drone delivery from leading market players.

It should be noted that autonomous delivery still faces a number of barriers to commercialization. This is primarily due to the complex regulatory framework, which makes it difficult to launch and scale services. However, it is necessary to follow the pioneers and the results of their experiments.

Drone delivery has a number of advantages over land-based alternatives. For example, drones can deliver goods faster and cheaper without creating additional traffic congestion or burning fossil fuels. This also means that orders delivered by drones, all other things being equal, will be fresher than those delivered by ground transport.

As autonomous delivery capabilities evolve, restaurants will need to adapt their operations planning and restaurant location. There will be a need to store and maintain vehicles somewhere. It may also be worthwhile to set up small ghost kitchens in densely populated areas to optimize service patterns and the ability to use drones for delivery.

Non-fungible tokens, or NFTs, are a blockchain-based way to prove ownership of digital assets that are the result of creative or intellectual activity, including images, music, videos, avatar clothing, etc. NFTs can be used as incentives in corporate loyalty programs and used by companies as a new way to interact with customers.

Restaurants can also attract customers by including NFTs in their loyalty programs. Companies can reward their most loyal customers with unique NFT-based collectibles, while also attracting new customers from the younger generation. The movement of NFTs from hand to hand can provide useful information about the habits and lifestyle of their owners.

The scope of NFTs can be broader than their use as a digital asset itself. For example, an NFT can provide access to exclusive events or physical products. Such NFTs help companies build communities with consumers after purchase and more effectively combine virtual and real experiences.

In the third quarter of 2022, Starbucks announced the launch NFT loyalty programs called Starbucks Odyssey. The company, which generates more than half of its sales from loyalty program members, wants to use NFTs to create deeper emotional connections with customers by creating immersive experiences with the brand.

Other networks are also experimenting with NFTs. In early 2021, Taco Bell sold 5 NFTs to raise money for its charity The Taco Bell Foundation. Similarly, Domino's used NFTs in their organization's operations. Domino's Partners Foundation.

NFTs give companies the opportunity to offer unique rewards and experiences, setting them apart from the plethora of traditional loyalty programs. To make loyalty programs more attractive, restaurants need to think about how they can tie NFTs to rewards, such as reward points or exclusive access. With NFTs, they can also appeal to a younger demographic who are more likely to actively seek out and strive to earn such rewards.

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So, the future of the fast food industry, as well as other consumer markets, will evolve in line with automation, robotics and artificial intelligence solutions that increase productivity, increase profits and improve customer interaction. Although some of these technologies may require significant initial investment, as these technologies mature, the costs associated with their use decrease. By continuing to experiment with new technologies such as the metaverse, AI-powered tastings, virtual buddies, and NFTs, restaurants can adapt to changing consumer habits.