AI in the Restaurant Franchise Industry: An Interview with James Walker of Nathan’s Famous

Artificial Intelligence (AI) continues to transform businesses in every industry, but foodservice is among those sectors most heavily impacted by this technology.

If you’re familiar with Nathan’s Famous, Inc. you may also be familiar with their Senior Vice President, James Walker. Holding an MBA from Duke’s Fuqua School of Business, certificates from Harvard and Yale, and recently having completed the”Artificial Intelligence: Implications for Business Strategy” course from MIT, James knows a thing or two about business and franchising.

Prior to his role with Nathan’s Famous, Walker served as Subway’s Vice President North America. With extensive knowledge of restaurant operations, product development, we were privileged to interview James to get his thoughts on the state of AI in the restaurant franchising sector.

Artificial Intelligence (AI) continues to transform businesses in every industry, but foodservice is among those sectors most heavily impacted by this technology. AI is a combination of automated and data-intensive technologies such as deep learning, natural language processing, and predictive analytics. From marketing to AI-driven sales to predictive customer service, Walker explains how AI is taking the restaurant franchise to the next level.

The Potential Benefits of AI in Restaurant Franchising

According to Walker, the benefits of AI in franchising boil down to combined learning: artificial intelligence and machine learning coupled with human intelligence and decision making. The success of a restaurant franchise partly depends on the relationship between the franchisor and franchisees, but it also depends on making good decisions.

Walker references an article about why the restaurant industry is dying and explains that many restaurants are closing down because they are unable to compete and make a profit. AI allows executives to gain a competitive edge and make more accurate and sophisticated decisions in the hyper-competitive environment of the restaurant business. Making the right decision can save a lot of money.

How Will AI Benefit Synuma?

First and foremost, AI can benefit Synuma by helping to focus resources on areas that really matter. For Synuma to grow, that starts with driving franchise sales (in addition to trying to bring overhead costs down and generate leads). According to Walker,”Franchisors tend to look at leads very much the same.” He continues,”You’re treating a guy who’s going to spend a million dollars with you the same as somebody who’s not going to spend any money with you.” 

AI and machine learning can help you determine which candidates are most likely to purchase, thereby making it easier to decide who you should be spending more of your time with. Not only that, but AI can help you decide who you want to sell to. Just because a candidate is interested doesn’t mean they will actually buy, or even be a franchisee that you will want to sell to. This is where AI comes in. It will help you match buying potential with successful candidates already in your system, and then choose the most suitable franchisee.

If you don’t have the means to empower your franchisees with innovative tools, the whole system is likely to suffer. Integrating AI in Synuma’s software helps with marketing, site selection, franchisee training, and product development.

How Does AI Franchising Software Work?

AI is able to factor many key performance indicators (KPIs) into the decision-making process. The more KPIs the system is able to read and analyze, the higher the predictability of the model. An AI-based software can account for an ever-increasing number of KPIs, KPIs specific to brands, as well as KPIs specific to product prototypes. The more variables and metrics that are included, the more successful the model will be. As Walker succinctly puts it,”More is better.”

ai in the restaurant franchise industry

What are some of the variables likely to be factored into the machine learning data sets and analyzed by the AI?”The educational component, financial background, where they live, where they went to school…really anything because it is going to be specific to the problem you’re trying to solve,” says Walker.”It’s not just, I want to know who is going to buy a franchise. I want to know who is going to buy my franchise.”

Take, for example, a particular brand that highly educated candidates refuse to buy. In this case, AI would show higher predictability of positive outcomes on prospects with low education. AI is about developing a model to match leads with candidates. A good model tells you who has the highest likelihood of buying your franchise and they can then be compared to existing franchisees (whether those franchisees are successful or not). If you’re thinking about selling, you can also get a predictability score for new businesses to predict what kind of franchisees they’re likely to become. In essence, the model helps to choose the right franchise leads. As Walker summarizes,”The more the details you add, the sharper the model is going to be.”

AI and the Future of the Franchise Industry

There are countless applications of AI in a variety of markets, from retail to restaurants. In Walker’s opinion,”Sentiment analysis is about understanding what’s going on, what people are thinking and what people are saying. Machine learning and artificial intelligence are about making better decisions. I’m not sure what industry doesn’t need to make better decisions.”

As AI and machine learning technologies continue to spread, franchisors will be able to get closer to franchisees, sharing information in a personalized exchange. The transformative nature of this innovation will also help companies rethink their approach to franchisee training.

How Different Are the Applications of AI in Restaurant Franchising as Opposed to Other Business Types?

Within any franchise, the image of a brand is critical. Every business has a name to uphold and whoever you choose to run your brand is very important. Walker argues that the distinguishing element in the restaurant sector is cut-throat competition. A single wrong decision can cause a huge mess for an entire company or brand. The monetary value of making smart decisions incredibly high, especially for large restaurant companies.”It’s a ripple effect. If a large brand with thousands of  restaurants makes a macro mistake, it could literally cost billions of dollars.”

Walker believes Synuma’s AI software offers two major benefits:

  • Better decision making and fewer mistakes

  • Better resource allocation, focusing on what’s important

“I think software like Synuma allows brands to make better decisions about who they sell to and who they spend their time on,” says Walker.

The Takeaway

If leveraged properly, AI allows restaurant franchisors to increase brand awareness and visibility by targeting the right markets for advertising using location-specific information. It can drive franchise sales by facilitating lead development and candidate recruitment. More than anything, it can help you make more informed, accurate and meaningful decisions.

Smart restaurateurs are looking for innovative ways to expand their franchises and increase their customer base. Contact us today to learn more about our new exciting developments in artificial intelligence and machine learning and find out how they can be used to grow your business!