When staffing challenges arose across Galardi Group’s Wienerschnitzel restaurants, Chief Operating Officer Rusty Bills said he sought out tools to maintain efficiency despite the tightened labor conditions.
Pre-pandemic, 15 to 20 people would be scheduled to operate a restaurant per shift. But, as dining room restrictions ceased, Wienerschnitzel could muster only four to six employees at a time to work the front counter, kitchen and drive-thru window.
“We needed something that was more advanced that no one in our office knew about,” Bills told the Business Journal.
That’s when he came across Presto whose firm provides voice artificial intelligence (AI) technology for chains such as Carl’s Jr., Taco John’s and Yoshinoya. Its virtual bots take drive-thru orders and upsell menu items, allowing fast-food employees to work on other tasks.
“We’ve always been a heavy drive-thru company. We’ve traditionally been about 75/25 drive-thru,” said Bills, referencing the breakdown of transaction revenue. “We have 125 restaurants that don’t even have a dining room.” He added that now it’s about 82% drive thru and 18% dining room.
The timing was right for Presto.
Presto three years ago was shifting away from making tabletop tablets for casual dining chains like Applebee’s because the growth potential had become limited, said Gee Lefevre, CEO of the San Mateo-based food tech company.
“It wasn’t going to revolutionize the industry,” Lefevre said.
After hearing the firm’s pitch, Bills decided to put the tech to the test among its restaurant partners in 2023.
“Let’s hear it from the franchisees. Because running a brand that’s 100% franchisees, we have to listen,” he said.
Bills deployed the Presto Voice program in six to seven stores across four states and set a goal to go through 10,000 drive-thru orders.
“Presto was diligently making sure that all the challenges that were happening at our particular brand, versus some of the other customers, were being remedied in-house,” Bills said.
Wienerschnitzel piloted the technology with Presto for a year, receiving feedback from a range of markets and applying updates simultaneously. As of June, it is in 60 of the company’s 330 drive-thru locations.
In May, Irvine-based Galardi Group said it plans to quickly expand the technology to the rest of its portfolio this year, which generates average unit volumes (AUV) of $1.2 million. Bills said it could add another 75 to 100 restaurants in the next few months.
The technology has alleviated the pressure of the drive-thru, allowing employees to tackle other more customer-centric duties – a reallocation of labor which “is really what hit home with us,” Bills said.
“We might have somebody doing something in the back, and then someone comes to the drive-thru and they would have to run up to take the order,” he explained. “Now there’s someone automatically greeting them no matter what you’re doing.”
“That’s ultimately the goal, to streamline the customer experience, streamline the employee’s experience back in the kitchen, as well as the franchisee’s profitability,” he added.
Market Testing and Franchisee Anxiety
Bills knew since the beginning that the technology wouldn’t be a “one-size-fits-all” model.
“This is a different animal, because you’re out here, you’re talking to people that need something right now and you’re having a conversation,” he said. “We want to make sure that different people with different styles of ordering can adapt to this changing technology.”
COO Bills made sure to put the AI to test in different stores, which included a market populated with older crowds, a heavy Spanish-speaking area in Albuquerque and even one of the highest volume restaurants in its portfolio.
“I wanted to know what happens when people get frustrated,” he said.
The COO also noticed a lot of skepticism among store employees when the company started to test the AI program. He found that the hiccups early on were when Wienerschnitzel employees on shift would cut off the voice AI while it was taking an order.
“A lot of the stores were anxious,” Bills said. “While the AI was greeting, if there was any conflict whatsoever, they would just jump on the drive-thru.”
He said he had to explain that “technology always gets better as you use it.”
Bills also had to alleviate concerns about the program taking away jobs as the technology was added to more restaurants.
“Especially our Orange County stores, because they were the ones that were (saying), ‘I don’t want to pull someone off staff,’” Bills said. “I’m not trying to remove jobs. I’m trying to work in the labor conditions that we have put in front of us.”
Still, store managers reported they could bring in one less person during an opening shift and can save time with the voice AI directing the drive-thru.
“We’re able to navigate our labor scheduling to where it impacts the bottom line in an appropriate way.”
Bills knew that cost would be another big question from franchisees when approached about Presto Voice.
“Those are heavy lifts for a franchisee to pay for,” he said. “When I ask them to spend ‘x’ amount of dollars on a new program, I have to hope that it really works. So, when it does work, that helps to cascade to other franchise communities.”
Upselling Every Time
Bills said that with voice AI, he could guarantee that the technology would upsell during each order.
“The bonus points came with higher check average because it upsells every single time,” Bills said.
He had Presto program the technology to try upselling specific menu items, from Coca-Cola to Wienerschnitzel’s jalapeño poppers.
“Automatically, if you have not ordered through the program, the AI senses,” he said. “And we found a significant uptick of that product just because it was brought up.”
The automation also increases order accuracy and check averages. According to Presto, an upsell test with Wienerschnitzel’s all-beef hotdog yielded a 5% average increase in total sales when its voice bot consistently upsold the hotdog.
Bills said stores are also testing a drive-thru model where employees can turn off the upselling feature to push more cars through during busy hours.
Presto’s Lefevre believes Wienerschnitzel will benefit from being an early adopter of the voice AI program.
“They joined at a point where it still needed some development…but they will be in a position where all of their stores will already have it, and it’s going to take everybody else six to 12 months to go and get those benefits,” Lefevre said.
“Things are challenging to advance in a technological world for a legacy brand, but we’re doing the best we can to make sure that franchisees see the benefits,” Bills added.
Growth at Airports, Walmarts
This year, Wienerschnitzel is building a brick and mortar footprint in a new part of the food industry.
The hot dog franchise will open restaurants in six Walmart stores in different states by the fall. These are in addition to another six franchised locations opening by the end of 2025, according to COO Rusty Bills.
The collaboration with the big box retailer marks a move into more nontraditional locations for Wienerschnitzel.
“We’re looking into military bases, airports now. We’ve got a deal that we’re looking forward to capitalizing on in an airport, which would open up a whole new level for us,” he said.
“The traditional brick and mortar building, the cost has skyrocketed so much that if your AUVs don’t match the cost of building, then you’re going to be left behind,” Bills added. “We have to be versatile.”
As for the company’s international plans, which were part of CEO J.R. Galardi’s expansion goals for 2022, Bills said Wienerschnitzel took a step back.
“We extended our net too far,” he said, citing international bumps like distribution. “I think our neighboring friends in Mexico and Canada are the next best steps for us to take.”
—Emily Santiago-Molina
Other OC Fast Food Chains Embrace Automation
Wienerschnitzel isn’t the only Orange County chain embracing bots.
Irvine-based Taco Bell began replacing the human order takers at its drive-thrus with AI-powered bots a few years ago.
Last year, the chain, which has more than 8,500 restaurants, said it would integrate voice AI technology in hundreds of its drive-thru locations in the U.S. by the end of 2024. The chain told the Business Journal that the technology has been implemented in the drive-thru at more than 500 locations nationwide as of July 1.
Taco Bell’s Chief Digital and Technology Officer Dane Mathews told the Business Journal last year that it is expanding its use of AI to “complement and enhance the roles of our team members, not replace them.”
“We’re looking for thoughtful ways to incorporate automation and believe there’s a powerful opportunity to leverage technology to elevate restaurant team members’ experiences,” he said.
Newport Beach-based Chipotle Mexican Grill (NYSE: CMG) has invested in automation and robotics to boost digital sales, improve in-house operations and make prep even more efficient.
In 2019, Chipotle rolled out voice AI to all restaurants for phone orders. A year later, the company extended its digital ordering to Facebook’s messenger platform and the Chipotle app as a bot named Pepper. The company is also testing automated ways to build burrito bowls and cut, core and peel avocados for guacamole using robotics.
Presto Phoenix Inc. Chief Executive Gee Lefevre said that about three years ago, there was a lot of pushback to voice AI in the restaurant industry.
“Quite rightly, because the technology was not ready for prime time,” Lefevre told the Business Journal.
“There are brands where this is an obvious solution right now. It is going to increase upsell, it is going to reduce labor, and it’s going to give you an immediate ROI,” he said. “There are other brands where it will absolutely be the answer probably in 12 to 18 months, but for various reasons, is not quite right.”
“But I think over the last two years, those objections have dried up,” he added. “If you now look at the industry, nearly all the big players are doing it or assessing it or planning it.”