Do you want AI with that? Fast food chains go digital

Computers listen for drive-through orders

TORONTO — Fast food restaurants are diving deeper into the digital realm, adopting strategies that range from dynamic pricing to drive-thru voice bots and weather-based menu boards.

Experts say the cutting-edge sales tactics have the potential to streamline service, lure new customers and fill in labour gaps amid high staff turnover, but they also warn the public may be put off by poor communication and privacy concerns.

News of a plan at Wendy’s to implement “dynamic pricing” drew backlash after CEO Kirk Tanner told financial analysts on a Feb. 15 conference call that the 7,000-outlet burger chain would introduce it as early as next year.

Wendy’s clarified in an email Wednesday that the fluctuating price tags will mean lower prices during slower times of day, rather than surge pricing during peaks.

The initial confusion over whether the 55-year-old establishment would embrace up-anddown pricing tactics similar to tech-savvy ticket sellers and ride-hailing companies marked the latest shift for a quick-service sector that’s increasingly shaped by digital technology and artificial intelligence.

Chains including Canadianowned Popeyes as well as Taco Bell, Panera Bread and Chipotle have tested AI-driven virtual assistants at drive-throughs.

Next year, Wendy’s plans to try out menu boards at all U.S. locations that can offer AI-prompted changes and “suggestive selling” based on the weather — “a cool Frosty on a warm summer day,” said spokeswoman Marcy McMillan. McDonald’s has done likewise for about eight years, and in 2019 acquired Israeli AI firm Dynamic Yield in a reported $300-million US deal before selling it two years later.

As far back as 2017, KFC offered customers in Beijing recommendations based on their apparent gender, age and mood via facial recognition technology embedded in a menu screen.

“In the last five, seven years in the restaurant segment, there’s been so much adoption of technology through your thirdparty aggregators, your loyalty apps, your people ordering online through your website — you can collect all that data, you can collect your competitors’ pricing strategies. And all of that comes together and starts to be analyzed in real time,” said Robert Carter, managing partner at the Straton Hunter Group.

“The output is a much more competitive pricing strategy.”

However, food costs are a sensitive topic after nearly two years of high inflation, and companies need to be cautious in how they roll out and promote dynamic pricing and other tech, said retail analyst Bruce Winder.

“What Wendy’s is trying to do is smooth out demand so that their patrons don’t come exclusively at noon and exclusively at 5 or 6,” he said. Lower prices at off-peak times could also attract more guests overall.

“But you’re kind of asking the customer to break a tradition that’s been around for a couple of hundred, if not thousands, of years.”

Maintaining consumers’ sense of privacy is also key — at least for now.

“If I pull up to a drive-thru and they say, ‘Hey, Bruce, how you doing?’ I might feel a little taken aback by that,” Winder said. But experts also say younger buyers tend to be more blasé about personalized data collection.

Dynamic pricing already plays a role in range of industries, and not just those led by digital disrupters. Airlines, hotels, big-box stores and sports venues all rely on sophisticated algorithms for continual price fluctuation based on demand, supply and consumer behaviour, as do companies such as Uber and Amazon.