Automation - The Future of Restaurant Operations

Restaurants differ from other service industries. Their services are based around physical products, but, unlike traditional retailers, restaurants must tailor the physical product to each customer at the point of delivery. For this reason restaurants present some significant and unique operational challenges as a service business.
 Restaurants are actually mini-factories – and not simple ones. Just as with any production facility, restaurants take in a variety of raw materials and process them to output customer-ready products. The restaurant production process requires multiple, parallel steps to create a meal. Moreover, the product must be produced at a time and place convenient to the customer, and customized to the customer’s specific order at that moment. This complex, time-critical production process has defied automation, and restaurant production remains heavily labor intensive. Indeed, the food service production process epitomizes flexibility, while at the same time it is subject to costly ongoing quality issues.

Factories in traditional industries concentrate on reducing costs and achieving high quality production. Factories sweat the details of equipment efficiency and productivity, product quality, production cycle times and inventory management and wastage control. High performing factories are closely controlled and managed, and successful factories are run that way. Restaurants differ significantly from these production best practices.

A number of service industries emulate modern industrial production practices. Transportation, banking, and wholesale/retail distribution centers all have tightly managed and controlled operations. They understand that you can only manage what you measure, and they measure everything. These companies measure asset and equipment productivity, labor deployment and productivity, inventory levels, supply chain performance, operations cycle times, and the complexity and efficiency of their operating processes. The capture, automation and analysis of operating data are a distinctive advantage for the leading companies in these service industries. This is true even for service industries with a large number of small, geographically dispersed operations, such as low cost mass retailers and branch banking. But these practices are not true in restaurants.

Although restaurants do operate like small factories, there are several considerations that discourage managing them like factories. First and foremost among these factors is that restaurant success is not driven by operational excellence. Restaurants are successful primarily because the product is attractive to customers – an appealing menu at a reasonable price – and because the ambiance of the restaurant encourages dining. This is where restaurants concentrate to achieve success, regardless of their venue. Good performance on these dimensions far overshadows operational performance.

Other factors impede the ability to manage restaurants for operational excellence. Restaurants typically operate on thin margins, and available capital tends to get invested in improving product (or building more restaurants) rather than in improving operations or reducing costs. Restaurants require very high flexibility. The exact order that needs to be produced in one to thirty minutes (depending on format) is not known until the customer appears. On top of this, menus are changing constantly. The high variation in product mix makes it difficult to visualize how to achieve the benefits of traditional production management.

There is, however, a growing impetus to improve restaurant operations particularly for large, national chains seeking to bolster profits. Having saturated the U.S. market, many restaurant chains can not grow profits by growing the number of stores. The restaurant and food services industry must look to operational improvements for the biggest impact on profitability in the US market. Broadly dispersed national chains, can especially benefit by applying more disciplined and comprehensive operation management to these large number of stores. Several of these chains, particularly in quick serve restaurants, are already moving in this direction.

The knowledge and technology to improve kitchen management is largely available. Just as with conventional factories, equipment can be instrumented and networked so that measurements can be made and recorded of all critical performance factors – inputs and outputs, equipment efficiency and productivity, product quality, throughputs and hold times, etc. Once available, this data can be analyzed to identify opportunities to improve process design, equipment selection, and inventory management.

Once restaurant operations are being measured at this level, it is a natural and easy extension to then increase the degree of automated control employed within the meal production process. Information on kitchen operations, together with automated order taking, enables efficiencies to be created in raw material picking/kitting, cooking, and meal preparation and delivery. Analysis of data on restaurant operations will indicate the best places to improve the operation to raise labor and equipment productivity. Restaurants may modify processes; integrate information flows among different stages of operations; and automate processes that were previously manual. This is likely to occur initially in the limited menu, high volume operations of corporate-owned quick serve restaurants. But once the principles and benefits are proven, automation will gradually extend to a larger portion of the food service industry.

The implementation of automated measurement and control processes would actually address many of the challenges facing restaurants today. Industrial factories have shown that automation actually improves the ability of production processes to handle short cycle times, accommodate highly variable product mix, and adapt to changing processes and product flow. Some measure of automation also helps enable just-in-time production and reductions in inventory levels. Automation also helps operate processes that are repeatable, predictable, and with high quality, particularly when a high level of expertise and training can not be maintained in managers and operators. Finally, more automated processes usually lead to lower cost processes. And while the menu will always be “king” in restaurants, higher profitability through lower cost operations will increasingly help a restaurant be successful.

Some restaurants have already started a process to centrally manage and automate their store operations. These innovative chains have installed energy management systems in their restaurants that enable central monitoring of store energy consumption and automate control of their HVAC, lighting and refrigeration. These systems provide centralized control of several restaurant systems that are not directly involved in meal production. It will be an easy future extension for these restaurant chains to expand their automation and centralized control to the meal production aspects of their operations.

Eventually cost reductions from improved operations will matter – and an early mover will force innovation on the rest of the industry by using this approach to improve their profitability. The technology and methodologies to automate restaurant operations are already available. What is needed is a restaurant chain with vision and an excellent understanding of their back end to start incorporating more central automation and control.