How Technology Can Help Restaurants Reduce Costs and Avoid Surcharges

In today’s challenging economic environment, a growing number of restaurants are adding surcharges to their bills to cope with increasing operational costs. These surcharges, which typically range from 3% to 5%, are often intended to cover inflation, rising employee healthcare costs, or steep credit card processing charges. This trend, sometimes referred to as ‘tipflation’, is becoming more prevalent, with a significant number of restaurants adopting this approach. However, it’s not without controversy. Many customers are expressing their dissatisfaction with these unexpected fees, viewing them as ‘sneaky’ and a cause for concern.

While it’s difficult to say the exact number of restaurants implementing these surcharges, news reports suggest it’s a widespread practice. Restaurant owners argue that these surcharges are necessary to uphold  their operations and provide fair wages and benefits to their employees. On the other hand, customers are feeling the pinch and are voicing their concerns about these additional costs.

In this complex situation, where both restaurants and customers are feeling the strain, there’s a potential solution that could help alleviate these challenges on both ends: technology. By leveraging technology, restaurants can improve their efficiency, reduce costs, and potentially avoid the need for additional surcharges. This approach respects the perspectives of all parties involved – restaurant owners, employees, and customers – and presents a forward-thinking solution to a pressing issue.

The Role of Technology in Restaurants

Technology does not just enhance operational efficiency and the customer experience in the restaurant industry. It also provides viable alternatives to manage rising costs.

Let’s take a step back and draw inspiration from the past. There are numerous examples of restaurants that have achieved massive success by being early adopters of technology. These pioneers have not only revolutionized the industry but also demonstrated how technology can lead to significant cost reductions and business growth.

McDonald’s and the Speedee Service System

In the 1950s, Richard and Maurice McDonald introduced the Speedee Service System, essentially the first assembly line for a restaurant. This system dramatically reduced service time and labor costs, enabling McDonald’s to offer a limited menu at lower prices. The cost efficiencies gained from this innovative system were a key factor in McDonald’s growth into a global fast-food giant.

Domino’s and Online Ordering

Domino’s Pizza was an early adopter of online ordering. Launched in 2007, their online and mobile ordering platforms significantly reduced order processing time and labor costs. By enabling customers to place orders directly, Domino’s could handle a higher volume of orders with less staff, contributing to increased profitability and market share in a highly competitive industry.

Starbucks and Mobile Payments

Starbucks has consistently leveraged technology to enhance the customer experience and reduce costs. In 2011, they introduced a mobile payment system, allowing customers to pay for their orders using their smartphones. This not only sped up transactions but also reduced the need for cash handling and the costs associated. The integration with their rewards program further increased customer loyalty and repeat business, contributing to Starbucks’ ongoing success.

These examples demonstrate how adopting technology can lead to significant cost reductions and contribute to success in the restaurant industry. They provide valuable lessons for today’s restaurants as they consider technological solutions to navigate current economic challenges.

Best Restaurant Technology in 2023

Let’s now turn our attention to the present day and examine the state-of-the-art technologies that are poised to bring substantial savings and success to today’s restaurants. These technologies range from streamlined  ordering and payment processing to optimizing inventory management, and from adopting energy-efficient equipment to leveraging artificial intelligence and data analytics. They all have the potential to significantly reduce costs and enhance efficiency. As we look into each of these areas, we’ll highlight the specific ways in which they could help restaurants navigate their economic challenges and potentially prevent the need to add more surcharges.

Ordering and Payment Technologies

Self-ordering kiosks, mobile ordering apps, and digital payment solutions enable restaurants to serve more customers with fewer staff, significantly reducing labor costs.

For instance, self-ordering kiosks have been a game-changer in the industry. These digital platforms allow customers to browse the menu, customize their orders, and pay, all without the need for a staff member to take their order. This not only speeds up the ordering process but also reduces the need for front-of-house staff, thereby lowering labor costs.

Similarly, mobile ordering apps have transformed the way customers interact with restaurants. These apps allow customers to place orders from anywhere, reducing the need for staff to take phone or in-person orders. This can lead to significant labor cost savings.

Lastly, digital payment solutions have streamlined the payment process, reducing the time staff spend on processing payments and giving them more time to focus on other tasks.

These are clear examples of how ordering and payment technologies can provide win-win solutions for restaurants and customers alike, potentially eliminating the need for additional surcharges.

Inventory and Supply Chain Management

Advanced inventory management systems are playing a crucial role in helping restaurants reduce waste and save money. These systems accurately track inventory and predict demand, enabling restaurants to order just what they need, when they need it.

Artificial Intelligence (AI) is being used today to optimize supply chain operations in the restaurant industry. As an example, Blue Yonder offers AI-powered platforms that help restaurants reduce waste and avoid supply-chain disruptions. These platforms can predict demand trends, optimize inventory levels, and even suggest when and what to order.

Similarly, cold storage supply chain infrastructure is becoming increasingly important, especially for restaurants that rely heavily on frozen food. Advanced inventory management systems can monitor temperature levels, ensuring food is stored safely and reducing the risk of spoilage.

These technologies not only help restaurants save money by reducing waste and improving efficiency, but they also help prevent the need for surcharges by keeping costs under control.

Energy-Efficient Equipment

Energy-efficient kitchen equipment, from refrigerators to ovens, can significantly reduce a restaurant’s utility bills. While these appliances may require a larger upfront investment, the long-term savings can be substantial.

For example, the use of energy-efficient appliances is becoming increasingly common in the restaurant industry. A case in point is the shift towards induction cooking. Induction cooktops, which use magnetic fields to heat pots and pans directly, are more energy-efficient than traditional gas or electric stoves. They heat up faster and lose less heat in the cooking process, leading to significant energy savings.

Another example is the use of energy-efficient refrigeration. Modern refrigerators and freezers are designed to minimize energy use, with features like improved insulation, more efficient cooling systems, and smart technologies that adjust the temperature based on the amount of food stored inside. These appliances can significantly reduce a restaurant’s energy costs, helping to offset the need for surcharges.

In addition, the use of energy management systems can further enhance energy efficiency. These systems monitor and control energy use in a restaurant, adjusting lighting, heating, and cooling based on occupancy and time of day. By optimizing energy use, these systems can help restaurants save money and reduce their environmental impact.

By investing in energy-efficient equipment, restaurants can significantly reduce their utility bills, helping to offset the need for surcharges and making their operations more sustainable.

AI and Data Analytics

Artificial Intelligence and data analytics are another way the restaurant industry is becoming more efficient today. Let’s take a look at the use of AI-based systems to analyze customer data and predict trends. These systems can analyze a wide range of data, including past orders, time of orders, and customer feedback, to predict customer preferences and trends.

For instance, an AI system might notice that sales of a particular dish increase significantly on certain days of the week. Using this insight, a restaurant could offer special discounts on that dish on those specific days, leading to increased sales and customer satisfaction.

Moreover, AI and data analytics can also help in optimizing menu pricing. These systems can analyze various factors such as ingredient costs, preparation time, and popularity of dishes to suggest optimal prices. This helps restaurants balance their profits while ensuring the prices are acceptable to their customers.

In addition, these systems can also predict the busiest hours of the day and suggest optimal staffing levels. This helps restaurants avoid unnecessary labor costs during off-peak hours and ensure efficient service during peak hours.

Overall, the implementation of AI and data analytics can help restaurants improve their profitability and customer satisfaction, thereby reducing the need for surcharges.

Restaurant Point-of-Sale System

One comprehensive solution that brings together most of these technologies is a restaurant POS system like Mercury POS. This system provides an all-in-one solution for restaurants to improve cost efficiency. By integrating ordering and payment technologies, advanced inventory management systems, and data analytics, Mercury POS helps restaurants optimize their operations, minimize costs, and potentially avoid the need to charge additional surcharges.

Case Studies

Let’s look at two real-world examples of how restaurants are leveraging technology to improve their operations and potentially avoid the need for surcharges:

Brooklyn Dumpling Shop

This automat chain in the United States, created by Stratis Morfogen, is bringing back a style of dining that gained popularity during the Great Depression. Automats feature food vending machines that allow diners to pay for their meals and receive them from cubby-like compartments. This model significantly reduces labor costs as it requires fewer staff members to operate. It also provides a contactless dining experience, which was particularly appealing in the context of the COVID-19 pandemic. The use of vending machines also improves efficiency, allowing the restaurant to serve more customers in less time.

Korean Public Schools

In Korea, cooking robots are being trialed in public school cafeterias to address a shortage of cafeteria workers. The Korea Institute for Robot Industry Advancement has signed a memorandum of understanding with the Seoul Metropolitan Office of Education to put robots to use on a trial basis. These robots will fill positions left vacant after many school cafeteria workers quit due to health issues brought on by labor-intensive catering and meal preparation work. This is a clear example of how automation can help manage labor costs and improve efficiency in the food industry.


The restaurant industry today is facing many challenges regarding costs. However, the adoption of technology presents a promising way forward. By embracing technology, restaurants can enhance their efficiency, curtail their expenses, and elevate the dining experience. This progress benefits not just the restaurant owners, but also their employees by creating a more efficient and less stressful work environment. In addition to this, customers stand to gain from smoother service, innovative dining experiences, and the elimination of additional surcharges. Thus, the technological transformation of the restaurant industry creates a win-win scenario for all involved parties.

Further Reading

Curious to learn more about the future of the restaurant industry? Check out our article about How to Use AI in Restaurants! Or, check out our blogs on 5 Food Delivery Robots that Help Restaurants Reduce Labor Costs and 5 Drone Delivery Companies Helping Restaurants for the latest trends in food delivery technology!

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