Tag: restaurants

OM in the News: Weight-Loss Drugs Crush Food Demand as Farmers Face Dumping Mountains of Potatoes

The rising popularity of weight-loss drugs like Ozempic, Wegovy, and Zepbound (GLP-1 agonists) is significantly impacting the food industry, resulting in reduced food demand, changes in consumer purchasing habits, and potential surpluses for agricultural producers, according to Fox News (April 1, 2026).

 

Impact on Food Demand and Consumption

  • Reduced Overall Demand: Users of weight-loss drugs often eat less and report a decreased appetite, with some users consuming up to 50% less than before taking the medications.
  • Andy Goodacre has about 1.3 million pounds of top-quality potatoes at risk of going to waste because of changing diet habits

    Surplus Agricultural Products: Farmers, particularly in the United Kingdom, are facing challenges with rising surpluses of traditional staples, such as potatoes, as consumer demand declines.

  • Shifting Restaurant Trends: Restaurant owners report that customers are ordering fewer items, selecting lighter options, and often not finishing their meals, leading to a decline in overall food sales at restaurants.
  • Impact on Packaged Goods: Food companies, including snack manufacturers, are evaluating the long-term impacts of these drugs on consumer purchasing behavior for high-sugar or less-healthy items.
Changes in Eating Habits and Nutrition
  • Reduced “Food Noise”: Users report decreased cravings for alcohol, salty snacks, and high-fat foods, which is reshaping American tastes and reducing demand for ultra-processed foods.
  • Focus on Healthier Options: Many users are pivoting towards healthier, lower-calorie options, and in some cases, increasing their intake of protein to combat muscle loss.
  • Concerns About Malnutrition: Some researchers are flagging potential risks of malnutrition and micronutrient deficiencies, as reduced food intake can limit the intake of necessary nutrients.
Future Projections
  • Long-Term Industry Shift: By 2035, it is projected that 9% of the U.S. population may be on weight-loss drugs, which could lead to a sustained, significant reduction in the consumption of soft drinks, alcohol, and snacks.
  • Adapting the Food Sector: The food industry is beginning to adapt by considering adjustments in portion sizes and developing products that align with the dietary needs of GLP-1 users.

    Classroom discussion questions:

  • 1. What forecasting approaches do the farmers and restaurants need to consider?
  • 2. How should a firm like Frito-Lay address this issue?

OM in the News: AI Will Soon Take Your Order at Taco Bell

operations management blog artificial intelligenceYum Brands, owner of Taco Bell, Pizza Hut, and KFC is partnering with Nvidia to build a range of new AI-driven services in its restaurants. The first—AI-powered voice-ordering at the drive-through lane and on the phone—was built using tools from Nvidia, and will begin rolling out at 500 Yum Brand restaurants this year.

The ultimate goal is to move all orders through digital channels instead of human order-takers, an effort Yum says will boost sales. Yum will also use AI to enhance a number of the company’s internal operations.

Other planned changes include the use of computer vision to spot fumbled orders and AI that filters internet chatter on the restaurants for useful feedback for their managers. “Yum and other quick-service-restaurant chains, like McDonald’s, have been leaning into more digital experiments for efficiency gains and improved customer satisfaction as inflation squeezes low-income diners,” writes The Wall Street Journal (March 19, 2025). 

Voice-ordering has been a priority for Yum for some time as it works to receive 100% of its orders through digital channels rather than through humans. Currently it is above 50% including orders that come through its app or online, up from 19% in 2019. Consumers end up spending more when they buy via digital channels because the restaurant can upsell, personalize and entice eaters through notifications.

Yum is currently evaluating whether existing CCTV cameras can provide images sharp enough for computer vision to determine whether the food received is what was ordered or whether it’s missing any ingredients. “Order accuracy is a big problem that a lot of quick-service restaurant companies face,” says the Chief Technology Officer.

In-restaurant workers won’t disappear. Instead, they will focus more on customer service, for instance, helping people with orders.

Classroom discussion questions:

  1. How else can AI be used in this industry?
  2. What are some disadvantages of depending on AI?

OM in the News: AI is Taco Bell and Pizza Hut’s “Secret Sauce”

Since the pandemic, fast-food chains have increased investing in technologies like digital ordering and more drive-throughs, betting those trends will last, reports The Wall Street Journal (April 2, 2024). Now, pressured by higher labor costs—including California’s new $20 minimum wage law—and inflation-weary customers, more fast-food operators are banking on AI to drive sales and help lower costs.

Yum Brands has worked to consolidate customer data for its four brands.

The explosive growth of generative AI, which has already made its way into sectors like healthcare and retail, is further accelerating the pace at which fast-food chains embrace cutting-edge technologies. While these restaurants have traditionally lagged behind other sectors in technology adoption, that is quickly changing. The chains are finding they must keep pace with increasingly tech-savvy consumers, while keeping labor and other costs in check.

Yum Brands’ “AI-powered”  artificial intelligence shapes nearly every aspect of how its Taco Bell, Pizza Hut, KFC and Habit Burger Grill restaurants are run. The fast-food giant has been increasing its investment in technology and automation. About 45%, or about $30 billion, of Yum’s sales are digital, double the level in 2019.
Yum’s SuperApp, a mobile app for restaurant managers to track and manage operations—Yum calls it “a coach in your pocket”—is testing a generative AI boost. Team members can ask the app questions like “How should I set this oven temperature?” rather than turning to training materials or tapping through an app interface.
The goal is for SuperApp, now in use in more than 8,700 Pizza Hut and KFC locations, to connect technology systems so managers can order ingredients and schedule shifts without leaving the app. SuperApp can also be updated as features are developed, such as with an augmented reality tool for teaching employees how to make new products like Pizza Hut Melts.
Like its competitors, Yum is also testing generative AI’s use for customers, such as voice AI for drive-through orders. The company is also looking into image-recognition AI to count cars and waiting times in a drive-through, as well as digitally linked and managed kitchen appliances
.
Classroom discussion questions:
1. How else could AI be used in managing a restaurant?
2. What is generative AI?

OM in the News: McDonald’s Unveils First Automated Location

McDonald’s opened its first automated restaurant, with machines handling everything from taking orders to delivering the food – and dividing opinions everywhere, reports Fox Business (Dec. 24, 2022). 

OM in the News: A Restaurant Without Servers, Registers or Visible Cooks

Eatsa is aiming for a more efficient and less expensive experience like the automats found in Japan and Europe (and like the old Horn & Hardart automats in NYC, which closed in 1991).
Eatsa is aiming for a more efficient and less expensive experience like the automats found in Japan and Europe (and like the old Horn & Hardart automats in NYC, which closed in 1991).

There’s a new quinoa restaurant in San Francisco, one where customers order, pay and receive their food and never interact with a person, writes The New York Times (Sept. 9, 2015). The restaurant, Eatsa, the first outlet in a company with national ambitions, is almost fully automated. There are no waiters or even an order taker behind a counter. There is no counter. There are unseen people helping to prepare the food, but there are plans to fully automate that process, too, if it can be done less expensively than employing people. Whether a restaurant that employs few people is good for the economy is another question. Restaurants have traditionally been a place where low-skilled workers can find employment.

Automation is transforming every industry. Business owners look to substitute machines for human labor. It happened to blue-collar workers in factories and white-collar workers in banks and even law firms. With self-driving vehicles, it may happen in the taxi and trucking industries. Robots are expected to transform health care. Automation is already part of many restaurants. Reservations are made online, orders arrive at the kitchen electronically, and bills are paid with a swipe on an iPad. Chains like Chili’s use tablet computers for ordering and paying, to speed the process and cut personnel costs.

Eatsa is one more example of how rapidly machines have moved beyond routine jobs like clerical and manufacturing work to knowledge jobs and service jobs — like waiting tables.  “The objective is over time we want to automate more and more to increase speed and reduce cost, so we create a food product that’s much cheaper and also happens to be healthy,” said the founder. “By not hiring people to work in the front of the restaurant,” he said, “they save money on payroll and real estate.”

Classroom discussion questions:

  1. What are the advantages and disadvantages of Eatsa‘s approach?
  2. What technologies do other restaurants use already?

OM in the News: OM Technology Makes for Happier Diners

Making the list of “Most Innovative Companies” at FastCompany (March, 2015) are two firms whose goals are to make for happier diners. Here is how E la carte and Panera Bread won the recognition:

 fast company 1E la Carte

For selling restaurants on an upselling machine.

E la Carte offers a quick tech solution for any restaurant: a tablet at each table, which it sells or charges a fee to operate. Johnny Rockets, Applebee’s, Genghis Grill, and other chains embraced it after they saw happy customers tapping away and ordering more. (1) Tap to eat. Customers order food on the tablet–and then some. Checks are an average of 25% higher. (2) Wait and play. Diners can play trivia or memory games, or add music to the restaurant’s communal queue. (3) Pay and leave. No checks. Johnny Rockets says the tablets helped cut bill paying from 8 to 2 minutes.

fast company2Panera Bread

For using tech to improve everything–including the food. The $4.5 billion soup-and-sandwich chain is rolling out what it calls Panera 2.0 to all of its 1,845 North American locations. It’s an Internet of Things reboot, with new ways to order and a kitchen that’s updated to manage more customized orders. (1) Order in advance. Place an order via app up to 5 days in advance, then grab the food from a designated shelf. (2) Food finds you. An RFID system identifies where diners are seated, so employees can easily deliver food to them. (3) Make a meal. Order at kiosks (or Panera’s app), where food is customizable and preferences are stored.

Classroom discussion questions:

1. How do these two technologies differ? Are similar?

2. In what other ways can technology be used in restaurants?

OM in the News: Paying Employees to Stay, Not to Go

This new In-N-Out Burger in Encinitas, CA, pays well above the state's $9 minimum wage, and the federal $7.25 minimum
This new In-N-Out Burger in Encinitas, CA, pays well above the state’s $9 minimum wage, and the federal $7.25 minimum

In-N-Out Burger, the chain based in California, pays all its employees at least $10.50 an hour, while Shake Shack, the trendy, lines-out-the-door burger emporium, has minimum pay of $9.50. Moo Cluck Moo, a fledgling company with two hamburger joints in Michigan, starts everyone at $15. “The No. 1 reason we pay our team well above the minimum wage is because we believe that if we take care of the team, they will take care of our customers,” said the CEO of Shake Shack.

The nation’s fast-food restaurants, which employ many of the country’s low-wage workers, are at the center of the debate over low pay and raising the federal minimum wage — fueled by protests demanding that fast-food chains establish a $15 wage floor, writes The New York Times (July 5, 2014). McDonald’s was pilloried last year for a hotline that advised employees how to seek food stamps and public assistance for heating and medical expenses.

Fast-food industry officials have long contended that raising the minimum wage would result in fewer jobs and higher prices. Complaining of low profit margins that generally accompany inexpensive menu items, most fast-food restaurants try to keep wages down — the median hourly wage for fast-food workers nationwide is $8.83, compared with $11.50 at Boloco and $10.70 at Shake Shack. In 2002, when the minimum wage was $5.15 an hour, Boloco raised its minimum pay to $8. It also began subsidizing commuting costs, providing English classes to immigrant employees and contributing up to 4% of an employee’s pay toward a 401(k). A major benefit of paying $15, said the owner of Moo Cluck Moo, is “we don’t have any turnover. We don’t have to train people constantly.”

Classroom discussion questions:

1. Why are these wages an operations issue?

2. How does this article relate to the human resource strategy we discuss in Chapter 10 on page 398?

OM in the News: Hi, I’m a Tablet and I’ll Be Your Waiter Tonight

ipad restauarntThe CEO of Panera Bread, who once declared that “the food business is not a technology business” has spent just $42 million to update Panera. “The goal is to eliminate friction points so that customers have a better experience,” he says.

Restaurants have been late to the tech party, writes The New York Times (June 21, 2014), and many are now scrambling to incorporate tablets, apps, computerized kitchen equipment and data analysis capabilities. Chili’s has added 1,200 computerized ovens that use conveyor belts, infrared technology and hot air to prepare food — at a cost of $100,000 per oven. Together with tableside tablets that allow customers to order desserts and alcoholic drinks as well as pay their bills and play games without the help of a waiter, new technology has helped Chili’s address one of its customers’ biggest complaints — slow service — and add higher-margin items to its menu. The Chili’s system is so sophisticated that it can ask different questions to customers based on their orders, soliciting opinions on a new special or dessert item. A customer who has a coupon can opt to switch on a camera that will read it.

At Panera, orders roll in from kiosks in the front of the store where customers peruse a broader menu than can be displayed on boards above cash registers. Customers can add or subtract ingredients, save their preferences for the next visit, swipe credit cards and move on to pick up their meals. Says an industry exec, “Remembering how a customer likes his favorite meal helps create stickiness among guests — and that’s what this is all about, increasing retention, frequency and average check size.” Panera’s customers also can order directly from their tables, using their mobile phones, and have the meals delivered to the table. Panera has installed the new technology in about 20 company-owned restaurants so far, at a cost of about $125,000 each. Profits are up in all of them, and orders have increased. At Applebee’s,  orders placed using the chain’s new online systems were $5 higher than regular orders.

Classroom discussion questions:

1. Why is technology an important operations issue for restaurants?

2. What are the advantages of tablet computers at Chili’s and Applebee’s tables?

OM in the News: Chipotle’s Operations Strategy for Faster Service

chipotle-serviceLines snaking out the door at lunchtime have long been a bottleneck to growth at Chipotle, the burrito chain, writes Quartz.com (Jan. 31, 2014).But the fast-food firm managed to speed up service by 6 transactions per hour at peak times this past quarter by implementing what it calls the “four pillars of great throughput.” Here they are:

+“Expediters.” That would be the extra person between the one who rolls your burrito and the one who rings up your order. Her job? Getting your drink, asking whether your order is for here or to go, and bagging your food.
+“Linebackers.” The people who patrol the countertops, serving-ware, and bins of food, so the ones who are actually serving customers never turn their backs on them.
+“Mise en place.” What in a regular restaurant means setting out ingredients and utensils ready for use means, in Chipotle’s case, zero tolerance for not having absolutely everything in place ahead of lunch and dinner rush hours.
+“Aces in their places.” A commitment to having what each branch considers its top servers in the most important positions at peak times, so there are no trainees working at burrito rush hour.
Chipotle is also mulling incorporating a Starbucks-style mobile payment system (the chain already accepts online orders for pick-up), which the company is hopeful will help funnel customers in and out of its lines a bit faster. But the company is open to a number of other options, too, so long as they help speed up service.
Classroom discussion questions:
1. Which of the techniques for improving service productivity in Chapter 7’s Table 7.3 is Chipotle using?
2. Which Process-Chain-Network (PCN) Analysis domain (see Figure 5.12 in Chapter 5) best describes Chipotle?

OM in the News: Hi, I’m iPad–May I Take Your Order?

In our Table 7.4 (from the Process Strategy chapter) we list several examples of technology’s impact on services, including “wireless orders from waiters to the kitchen”. I think we may need to update this idea for the next edition! USA Today (Feb.16,2011) just reported that a new restaurant chain is opening soon in S. California in which each of the 60 tables will have an industrial-strength iPad for customers to design and place their orders.  Diners at Stacked: Food Well Built will use the iPads not just as menus and to order, but to pay for the meals as well.

The future of restaurant ordering and design may well be digital. Two-thirds of young people (18-34 year olds) responded to a national survey that they’d favor a restaurant with high-tech gear.

Others have tried iPads already: NY’s Kennedy and La Guardia airports have them at restaurants near Delta Air gates; and Bone’s Restaurant in Atlanta found that wine sales jumped 20% since iPads were added 6 months ago.

Will this be the future for all restaurants? Certainly your students will find the topic interesting for class discussion.

Discussion questions:

1. What are the downsides of this new technology? The advantages?

2. Where else might the iPad concept work besides restaurants?