The Franchise Discovery: December 2023 - Embracing AI: How Franchises Are Innovating for Impact

In this December issue of The Franchise Discovery, we spotlight the transformative influence of Artificial Intelligence (AI) in the franchising industry. With the emergence of accessible platforms like OpenAI's ChatGPT and Google's Bard, AI has transitioned from a high-tech novelty to a fundamental aspect of our daily business and consumer experiences. This edition explores how AI is reshaping operational models, enhancing customer interactions, and setting new benchmarks for success in franchising.

The Onset of AI in Franchising

AI's journey in the world of franchising is marked by its unique ability to transform mundane tasks into opportunities for innovation. It's not only about replacing manual processes; it's about enhancing human capabilities, understanding customer needs, and making decisions backed by data-driven insights. This transformative power of AI is not confined to large corporations. AI is equally accessible and beneficial to small and medium-sized enterprises.

McDonald's New AI Drive-Thru System: A Cost-Saving Robot?

McDonald's has been at the forefront of integrating AI into its drive-thru operations. The adoption of AI not only aims to enhance the customer ordering experience but also represents a significant shift in operational strategy. By replacing human order takers with AI systems, McDonald's and other fast-food chains are eyeing considerable cost savings. With an average wage of around $15 per hour for a drive-thru employee, AI implementation could lead to substantial long-term savings, especially considering that these systems can operate continuously without the need for breaks or benefits.

Canopy Lawn Care: Advancing Lawn Care with AI-Enabled Solutions

Introducing Canopy Lawn Care, a trailblazer in the lawn care franchise sector. At the heart of Canopy’s innovation is its use of artificial intelligence to redefine lawn care services. Their cutting-edge approach includes utilizing AI for precise property assessments through aerial imagery. This technology allows Canopy to accurately measure turf areas, seamlessly generate customized quotes, and directly engage with customers, all in an automated, efficient manner. Led by CEO Hunt Davis, Canopy Lawn Care combines this AI-driven methodology with environmentally responsible lawn care practices, setting a new standard in the industry. Their mission goes beyond mere maintenance; it's about enhancing lawn health and customer satisfaction through intelligent, technology-enabled solutions.

The Exercise Coach: Harnessing AI for Efficient Fitness

The Exercise Coach stands out in the fitness industry for its innovative use of AI. Since 2020, this franchise has grown by 125%, expanding its presence across America and Japan. Their AI-powered approach to fitness involves:

• Personalized Workouts: Using AI technology, The Exercise Coach creates efficient, 20-minute workouts tailored to each individual's strength levels. This personalization makes fitness accessible and effective for a broad audience, including the aging population.
• Exerbotics Equipment: The franchise features Exerbotics machines, cutting-edge AI-equipped devices that provide ability-matched strength training and real-time bio-feedback, enhancing the effectiveness of workouts.
• Human Touch in High-Tech Fitness: While AI is crucial in customizing workouts, the essential role of human coaches remains central to The Exercise Coach's philosophy, combining technological advancement with supportive, expert guidance.
• Multi-Client Coaching: The integration of AI allows trainers at The Exercise Coach to effectively guide multiple clients simultaneously. With AI's assistance in monitoring and adjusting workouts, coaches can provide personalized attention to each client, optimizing their time and resources.

This franchise represents an exciting opportunity in the rapidly growing fitness sector, combining innovative technology with a human-centered approach.

AI in Franchising: A Mixed Reception

As AI technology integrates across various franchising sectors, it garners mixed reactions, particularly in the fast food industry. For example, McDonald's implementation of AI in drive-thrus has led to diverse customer experiences, some resulting in humorous and frustrating viral moments. However, amidst these growing pains, there have been notable successes, illustrating the evolving nature of AI in customer service roles. Despite initial challenges, the trend toward AI in franchising is on the rise, with companies dedicated to refining these systems for improved accuracy and enhanced customer experience.

The AI-Driven Future of Franchising

Despite its transformative potential, AI's integration into fast food franchises has been met with varying degrees of success. For instance, McDonald's AI system in drive-thrus, while innovative, has experienced accuracy rates in the low 80% range at certain Illinois restaurants, falling short of the company's 95% accuracy goal. Similarly, Wendy's, which is also pioneering AI in drive-thrus, has an accuracy rate slightly below McDonald’s, indicating room for improvement.

In the past few years, we have seen the restaurant industry grappling with the dual pressures of inflation and labor shortages, compressing margins and slowing growth. The post-COVID economic landscape has also reshaped the labor pool. A substantial portion of restaurant staff in recent years is made up of first-time employees. High turnover rates and record quit rates have forced many restaurants to increase wages, often significantly, to attract and retain staff. This has been especially pronounced in quick-service restaurants, where the need to staff back-of-house operations remains a critical challenge.

AI, in this context, offers more than just operational efficiency; it presents a practical solution to the staffing crisis. By automating tasks like order taking, AI helps address the issue of unfilled, often undesirable positions that have become increasingly hard to staff.

As we reflect on the evolution of franchising, it's clear that AI is a game-changer, offering transformative solutions across the board. From enhancing customer engagement through chatbots and personalized marketing to improving operational efficiency and tackling staffing challenges, AI is pivotal in helping franchises like McDonald's, Canopy, and The Exercise Coach adapt to the dynamic business landscape. This technology is not merely an innovation, it's a continually evolving tool that is unparalleled in its capabilities.

Team BFH