Digital Twins in the QSR Industry – a Disruptive Force

10th November, 2022

The QSR (Quick Service Restaurant) industry has been growing at an exponential rate in the US and has shown a sharp revival amid robust demand post-pandemic, with more stores opening as well as aggressive ad spending. The rising presence of international brands, increasing disposable incomes, consumers’ increasing propensity to eat out & lifestyle changes, and reduced time for going out/cooking are fueling the growth of the QSR industry.

Important consumer trends in the QSR industry:

1. Quality is an absolute measure that cannot be compromised. This includes contactless delivery & payments, digital menus, hygiene & overall safety.
2. Today, people need the convenience of multi-channel ordering, delivery, multiple modes of payments & easy ordering process that includes facets like smooth UX.
3. There is a lifestyle shift towards health-conscious food that QSR companies should keep in mind while designing menus.
4. The expectation for unique, personalized experiences has increased. Tech enablers like AR/VR and DTs support the dining-like experience at home.
5. Factors like sustainability, packaging & cutlery, and carbon footprint have found their way into the minds of conscious consumers who look for these in the players’ operational metrics. QSRs need to be mindful of this as well as implement corporate governance around it.
6. People, especially millennials, are value-conscious & look for bundled deals. Affordability plays a critical role in their purchase decisions.

Challenges in the QSR industry

The inability to service a high number of orders at a particular time of day is a major problem affecting brand image, revenues, and customer retention. Better store layouts and processes can potentially help address this challenge. Procurement, inventory management & high working capital are massive but necessary impediments in this industry. If not handled efficiently, losses can start piling up fast. Delivery costs have always been a factor affecting margins in QSRs. It is paramount to reduce these costs as many customers rethink ordering if these seem too high, directly affecting profits. Staffing is a crucial business problem and needs optimization, as handling peak loads whilst maintaining efficiency, standardization & least time-to-serve is essential.

Digital Twins Use Cases 

This is where Digital Twins – as technology disruptors – can come as a strong solution. Recently, CKE restaurants used DTs to simulate restaurant & kitchen floor assets. They also tested new equipment and predicted a new kitchen layout with the highest efficiency possible. The experiment successfully found the most optimized layout, reducing the workload on employees, and thus improving retention rates.

1. Making a digital twin of the front desk & kitchen to streamline operations: Store telemetry data in conjunction with real-time data as well as simulated models can help optimize in-store experience, capture & analyze buying patterns, customer personas, and traffic patterns & analyze fault points in kitchen operations.

2. Inventory Management: The optimization of high-quality raw materials vis-à-vis low procurement costs & working capital. DT helps identify gaps between what is possible in extreme low/high footfall situations, and the process that handles it and the outcome on the digital twin can help make real-world solutions fool-proof.

3. Staffing: DT is well positioned to overcome challenges in staffing and operations. Optimizing orders serviced per server/hour or per chef/hour & staff during peak load is possible too. Another business case of DTs includes helping manage kitchen equipment like ovens and fryers without leading to failure & keeping wait times low even during peak load. Based on the information from the twin, managers can make staffing & process improvement decisions.

The Road Ahead 

Many major companies in the QSR industry have taken cognizance of and are on the road to adopting this technology. Still, to make Digital Twins a low-cost, highly efficient technology, more companies need to adopt it and increase strategic investments in DTs’ R&D. Leaders must be made aware of the benefits, cost savings, process improvements, increased CX & RoI, as well as competitive advantages that come with Digital Twins to ensure higher adoption within the QSR industry.