Calculating the ROI of AI in restaurants

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The restaurant industry has traditionally operated on thin margins—a fact that has been further complicated by the recent rise in food and labor costs, and increased customer demands.. The use of new technology in restaurants, like artificial intelligence (AI), is becoming an increasingly popular way to streamline operations and reduce costs. However, as restaurant owners explore the use of AI technology, they must carefully assess its return on investment (ROI)to find a competitive advantage that directly improves their bottom line.

This strategic analysis examines the real-world ROI of AI adoption in restaurant operations, with specific calculations that demonstrate why AI-powered solutions are essential for sustainable profitability.

4 key ROIs of AI in restaurant operations

Let’s examine four areas where the ROI of AI in your restaurant can have a positive impact.

1. Eliminating revenue loss from missed calls

Every missed call represents lost revenue. Restaurants that miss just 30% of incoming calls during peak hours can lose significant revenue. Whether the call was to place a takeout order or answer a question for a potential guest, these unanswered calls result in lost revenue.

The AI solution

AI-powered phone assistants ensure a restaurant never misses a call. Using chatbots, AI phone assistants can answer multiple calls 24/7, ensure order accuracy, and upsell customers in real-time. By handling guests’ questions, staff can focus on improving the in-house experience. One example of an AI phone assistant is Yelp Host, a fully customizable AI tool that handles reservations, answers customer questions, shares wait times, and more through automation.

Sample ROI calculation

Here’s an example of what the ROI might be for a casual dining restaurant receiving 100 calls per day:

• Average missed call rate: 30% (30 missed calls daily)
• Average revenue per missed call (take-out or in-person dining): $45
• Daily lost revenue: $1,350
• Annual lost revenue for a restaurant open seven days/week: $492,750

2. Strategic labor cost optimization

Labor costs typically represent 25-35% of restaurant revenue, making staff productivity crucial for profitability. AI-driven solutions can’t replace the human touch in the hospitality industry, but they can streamline workflows, giving staff freedom to focus on the guest experience and maximize efficiency.

The AI solution

AI can be used to optimize staff efficiency in many ways, benefiting both front- and back-of-house team members. Automated guest check-in, online ordering, chatbots for upselling and order tracking, and inventory management are just a few ways AI can help any restaurant business.

For example, utilizing automated inventory tracking saves time for the back-of-house team and reduces food waste by forecasting food needs during specific times. Another way the use of AI for restaurants can optimize labor is through automated guest check-in. A product like Yelp Kiosk checks guests in upon arrival so hosts can focus on seating. This creates more efficient workflows and increases guest satisfaction.

Sample ROI calculation

Here is an example of the potential ROI for a mid-size restaurant with $2 million annual revenue:

• Current labor costs: 30% ($600,000)
• Labor needs reduction through AI-driven optimization: 15%
• Annual savings: $90,000

3. Increased reservation volume

Research shows that nearly two-thirds of diners make their reservations online, making it critical for your restaurant to be easily found. Optimizing your table listings ensures your restaurant reaches customers where they are searching.

The AI solution

AI-powered reservation systems, like Yelp Guest Manager, can significantly increase booking capacity and customer acquisition. These systems work to attract customers to your restaurant by understanding customer preferences and providing easy access to your reservation system, 24/7.

Sample ROI calculation

Consider a fine dining restaurant that primarily books reservations. Here is an example of the ROI of using AI:

• Current monthly bookings: 1,100
• Rate of booking increase through AI systems: 25% (275)
• Average ticket price per table: $125
• Monthly revenue increase: $34,375
• Annual revenue increase: $412,500

4. Maximizing customer lifetime value through retention

Guest retention is exponentially more profitable than acquisition. AI-driven customer experience improvements and loyalty programs create measurable increases in repeat business and customer satisfaction. In fact, a recent survey shows that the most common way restaurant owners use AI to their advantage is to enhance the customer experience.

The AI solution

Using recommendation engines, restaurants can analyze customer data like past orders, dietary needs, and preferences to suggest menu items, creating a personalized experience. Communication with guests can also make them feel valued. Products like Yelp Guest Experience Survey, which allows guests to provide feedback after their visit, can demonstrate the restaurant’s sincerity to their customers. Personalized experiences and communication with guests help to create lifetime customers.

Sample ROI calculation

Here is an example of the ROI that could be experienced by a casual dining restaurant with 5,000 active customers:

• Current retention rate: 60%
• Increase in retention through AI improvements: 75% (750 repeat customers)
• Average annual customer value: $400
• Annual revenue increase: $300,000

How to implement the right strategy to maximize your AI investment

While the ROI of AI in restaurants is undeniable, change can be difficult, and new technology can be intimidating. Let’s explore how to implement AI to reduce stress and immediately benefit your overall operations.

Phase 1: High-impact, low-risk implementation

Start with an AI-powered phone assistant, like Yelp Host. These systems are an easy way to begin implementing AI and ensure no phone call to your restaurant goes unanswered. These products are easy to set up, affordable, and offer immediate ROI with minimal operational disruption.

Phase 2: Operational integration

Implement AI-powered POS systems, inventory management, and staff scheduling tools. These create compound benefits across multiple areas of operation, such as allowing your back-of-house team to concentrate more on creative menu items and streamlined workflows.

Phase 3: Advanced customer experience

Deploy recommendation engines, sophisticated loyalty programs, and online reservation and waitlist solutions, like Yelp Guest Manager, to maximize the customer experience. Guests who feel valued and consistently have a pleasant experience will return, creating an increased customer lifetime value.

The time to increase your ROI is now

The restaurant industry is experiencing a rapid AI-driven transformation. Early adopters in the food service sector are establishing sustainable competitive advantages that will be difficult for others to overcome. The ROI of AI in restaurants isn’t theoretical; it’s measurable, substantial, and has an immediate impact on business operations.

AI tools represent one of the highest impact investments available to restaurant owners and managers. While the investment in different AI-powered solutions varies, the overall cost is manageable and is far less than the cost of lost business and staff inefficiencies by not using AI.

Take the first step to make a sizable impact on your business, with minimal disruption, by exploring the newest, fully-customizable, easy-to-set-up AI phone assistant, Yelp Host. Contact Yelp to book a demo today.