The Future of F&B: Industry 4.0’s Impact in the Luxury Hotel Segment

Written by: Varun Khannaresearch scholar

In this blog, the HFTP Middle East Research Center examines the essence of Industry 4.0 and how it is expected to impact the food and beverage (F&B) sector, and also identifies potential barriers to the adoption of Industry 4.0 solutions.  

What is Industry 4.0?

Digital transformation — or “Industry 4.0” — is on the agenda of hotels and restaurants all over the world. The hospitality industry is very diverse and highly competitive. As one of the fastest growing sectors in the service industry, hospitality has remarkable growth potential for the development of digital technologies.

With the challenges resulting from the global COVID-19 pandemic, Industry 4.0 platforms are being adopted in hospitality across a diverse range of function areas, including front office, sales, and F&B industries. The overall use and awareness of technology has paved the way for companies to experiment with robotics and AI, as well. We see a few of these applications demonstrated in online menus, self-check-in, customer service and room divisions, as well as housekeeping and F&B departments. Industry 4.0 is also utilized in facial recognition, as well as by the Department of Human Resources for recruiting procedures. In terms of their processes, the use of these technologies has made companies more effective and streamlined.  

To be competitive, proactive companies are implementing technology-driven systems. A squeeze in margins and growing competition are the key drivers. There is a need to minimize time to market with the growth of the F&B industry, and more labor reduction is also a driving force when it comes to adapting to smarter ways of working and utilizing automation.

Now, let’s have a look at the current trends of Industry 4.0 in the F&B Industry.

To follow emerging patterns, while also increasing management efficiency and decreasing costs, restaurants must automate processes and implement digital solutions.  Many major brands have already adapted, or are in the process of adapting to Industry 4.0 technology, with some of the major trends as follows:

Artificial Intelligence and IOT. Internet of Things (IoT) and smart devices have made their way into kitchens as well as other departments. In the future, IoT and AI are expected to take over the kitchen industry. The concept of IoT is to enable objects with connectivity through RFID tags, sensors, actuators, big data analysis, cloud computing, mobile phones, etcetera. This means that all sorts of things, including appliances and big kitchen equipment, can become equipped with small built-in sensors and computers which can have various applications in the market. A use case example can be seen in a restaurant where a burger-flipping machine has been installed, allowing AI to completely take over the grill. The major benefit of this type of equipment is that it can be programmed and integrated from anywhere. An added advantage of IoT and AI is the HACCP analysis aspect, where data can be collected and stored for use during inspections.

Blockchain Technology. Blockchain technology has played a major role in the F&B industry due to the growing demand of food and transparency with suppliers. Blockchain has expanded in use and has made traceability much easier, which further enhances food security and safety. This enables tracing, which precisely identifies the foods that have been grown and what they have been treated with. Using blockchain technology has made it possible to collect data for each produce item. Maintaining consistency is important for every business, and quality is another aspect that is the responsibility of the suppliers.

3D Printing. 3D food printing technology is beneficial for foods at home, small-scale production and other operations, even though the 3D printer cannot print some foods, such as rice, wheat and meat. Some of the functions of 3D printing could be very advantageous, since it is possible to print decorations, develop recipes, and implement other geometrically complex designs. The other added benefits are the time and labor factors. It is possible to save time and reduce labor costs significantly, as well as preventing food waste. FOODINI (IoT+3D food printer) is the first 3D printer used to print chocolates, icings, gels, hummus, and more.

Implementing these trends is not an easy task, and there are many barriers that may stop companies and restaurants from adopting their use. Some of these barriers include:

System Complexity.  The very first hindrance or challenge in implementing technology-based systems is to overcome the complexity of these systems, especially for blockchain technology. It involves so many factors and inputs from different people throughout the chain, thereby making it difficult for new entrepreneurs to adapt and establish these systems.

Financial Resources. Technology-driven systems or robots may be cost-effective when deployed or can help dramatically reduce labor costs. However, it is important to remember that these are costly to build and have huge initial investments costs. Implementation costs and staff development are some of the ways in which this will prove to be not so budget-friendly.

Data Security: The need to preserve data protection and ensure that there are no data breaches are some of the key issues related to the implementation of Industry 4.0 technology. Data protection is achievable using effective methods of cyber protection and data collection to avoid any leakage or violation of the confidentiality of information. Building on systems that ensure the data is protected is essential.

Staff Training. It could be possible to streamline the process of staff training with the use of VR/AR, making it easier for brands to train their staff. The proper application of these, however, remains a barrier and can fail to fulfill their function. Human resource departments are also influenced by this phase because these training courses have poor human touch/feel, which can then contribute to lower employee retention.

In Summary

Industry 4.0 technologies have seen rapid adoption worldwide and have impacted the hospitality industry, as well. Almost all hotel departments use some sort of technology such as robotics and AI. However, the F&B industry seems to be one that has witnessed a significant change from the past as it has advanced. These major trends seem very interesting and may make life much easier when implemented, even though they have barriers that can demotivate companies and restaurants, discouraging implementation and encouraging the maintenance of status quo operations. But in order to move forward with the competition and stay in the market, companies will eventually need to implement these trends.  

Varun Khanna is a research scholar with the HFTP Middle East Research Center. He is also a student at the Emirates Academy of Hospitality Management in Dubai, UAE.

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