Australian restaurants can use AI and technology to overcome cost of living woes: SevenRooms

Struggling Australian restaurants are sitting on a hidden asset that could boost margins and drive customers back — if they use it wisely, a New York tech group says.

SevenRooms co-founder and chief technology officer Kinesh Patel says AI and technology is a key arsenal in any hospitality venue looking to grow revenue in a challenging climate.

Australia’s hospitality sector could survive record insolvencies, soaring costs, and weakening consumer spending by harnessing untapped customer data, says New York-based restaurant technology group SevenRooms.

SevenRooms co-founder and chief technology officer Kinesh Patel says the industry is “data-rich but data-dumb,” with many businesses leaving money on the table by failing to integrate information.

Mr Patel, in Australia as part of the group’s Shift conference, says restaurants collect vast amounts of customer information, from reservations and order history to spending habits and dining preferences. Yet many fail to use this data strategically and could stave off insolvency by doing so.

“One of our customers described themselves as ‘data-rich but data-dumb’ — drowning in information but unable to use it effectively,” he said.

“(Operators) have sales data in one system, menu data in another, customer data in a third, and none of it talks to each other. If you can stitch it together, you can identify your top 50 customers, tailor marketing, and drive repeat visits — which is far cheaper than finding new diners.”

Cafes, restaurants, and small retailers are facing one of their toughest periods as households cut back on dining out amid cost-of-living pressures while businesses struggle with higher wages and soaring power bills.

Monthly household spending data from the Australian Bureau of Statistics shows that apart from the summer holiday period, spending at cafes and restaurants has retreated for much of the past year.

Many hospitality venues have gone out of business thanks to a storm of weak consumer spending, high labour and energy costs.

SevenRooms provides hospitality management software to venues including Merivale, Australian Venue Co, and Crown Resorts. Mr Patel said the best-performing operators are embracing technology to optimise efficiency and boost margins.

Many restaurants are turning to AI-driven tools to extract more value from their existing customer base. These tools enhance efficiency, cut costs, and drive revenue through personalised experiences — such as pre-ordering a favourite wine or assigning a preferred table to a repeat customer.

“It’s expensive for operators to answer phones, but 30 per cent of bookings still come this way. AI can handle 90 per cent of calls, freeing up staff to focus on service and preventing missed reservations,” he said.

“Technology can transform walk-ins into loyal customers. Many restaurants now ask for a phone number at check-in — if they’ve been before, their profile is pulled up, allowing for a personalised experience, which over time will allow an operator to track spending habits and encourage return visits,” he said.

Tim Christensen, owner of Alma and St Alma on the Northern Beaches said identifying ways to streamline operations behind the scenes has been crucial, and AI has proven valuable so far by summarising correspondence and communicating with guests.

The co-owners of the Alma Mexican restaurant at Avalon Beach, Tim Christensen and Jack Leary. Mr Christensen (left) says AI is enhancing guest experience and profitability. Picture: Supplied

“Running a restaurant has been a challenging endeavour lately, with rising costs and increased cost-of-living pressures,” he said.

“We’ve used AI to compile all our customer feedback and pinpoint key areas for improvement with the idea that this will not only enhance our guest experience but also contribute to our profitability.”

The integration of AI-powered software is reshaping how restaurants operate, ensuring tables are optimally used while staff focus on delivering hospitality. Despite the potential, many hospitality owners hesitate to invest in technology, often due to a greater passion for food than for data. Mr Patel said those who leverage AI and customer insights stand to gain a competitive edge.

“Restaurants are being squeezed by rising labour, rent, and food costs, which are compressing margins,” Mr Patel said.

Mr Patel says that the use of data can drive customers into making more frequent trips or creating repeat visitors through curated experiences. Picture: NCA NewsWire / Mark Brake

“AI helps operators reduce costs and increase revenue, ultimately expanding margins — critical as economic pressures squeeze the industry.”

Hospitality insolvencies have surged 70.2 per cent to 1,312 in the six months to December 31, ASIC data shows. Other services saw a 70.1 per cent jump, while retail trade insolvencies rose 14.2 per cent.

While some operators worry about the cost of AI-driven solutions, Mr Patel insists the investment isn’t prohibitive. “Many assume AI-driven solutions are expensive, but they’re often affordable and about the price of what venues spend on napkins,” he said.

Even small businesses can take advantage, he adds. “If you know next Friday will be slow, you can send targeted promotions to your existing customers instead of relying on expensive third-party platforms.”

The broader shift toward AI-driven operations is expected to reshape the way consumers experience dining out by putting more decision-making power back into their hands, according to Mr Patel.

“Ten years from now, we’ll look back and think it’s crazy that servers had to walk back and forth to take orders,” he said. “We want to empower diners while helping operators run smarter, more profitable venues. AI isn’t about replacing hospitality — it’s about enhancing it.”

Originally published as Australian restaurants can use AI and technology to overcome cost of living woes: SevenRooms