The U.S. restaurant industry is reaching a critical inflection point as consumers pull back on discretionary spending and rethink how often they dine out. A recent analysis from McKinsey shows that food away from home now accounts for more than 50% of total U.S. food spending, but that growth is beginning to level off. Inflation, tariffs, and broader economic uncertainty are weighing on household budgets, particularly among Gen X and Baby Boomer consumers. Lower and middle income households are feeling the strain most acutely, reshaping demand across the dining landscape.
While traditional dining faces pressure, technology is emerging as a key lifeline for operators. To unpack how innovation is changing the industry, Saleem Khatri, CEO of Lavu, joined a discussion at the New York Stock Exchange to explain how artificial intelligence is poised to transform restaurant operations and customer experiences.
Khatri emphasized that most restaurant owners do not enter the business to manage complex systems and spreadsheets. They do it to serve food, families, and communities. Yet operational inefficiencies continue to erode profitability. According to Khatri, between 8% and 12% of restaurant profits are lost each year due to inefficiencies. In an industry worth roughly $900 billion in the United States and growing at 3% to 4% annually, that represents an enormous amount of wasted capital. Lavu’s platform analyzes roughly 50,000 signals per day, allowing operators to identify problems quickly and recover lost revenue without adding administrative burden.
To illustrate the impact, Khatri shared a case study involving a major global fast casual restaurant chain. In just 48 hours, Lavu’s technology identified and helped recover $2.3 million across five locations. That figure equaled the total projected profit for those locations for all of 2026. The recovered funds can be redirected toward higher wages, better ingredients, improved training, and enhanced service, creating a positive feedback loop that benefits both staff and customers.
Khatri said artificial intelligence is no longer a luxury for restaurants but a necessity. As operators deal with rising labor costs, supply chain disruptions, and tariff related pressures, AI allows them to focus on hospitality rather than paperwork. The technology connects operational data points that traditionally live in separate systems, an increasingly important advantage as economic headwinds persist.
Most restaurants rely on eight to twelve disconnected tools to manage scheduling, inventory, sales, and staffing. Lavu’s AI integrates that fragmented data into a single system. Khatri explained that the platform can forecast staffing needs based on traffic patterns, recommend when to add shifts, and even automate inventory decisions to ensure high demand items, like ribeye steak, are consistently stocked. This level of predictive insight improves efficiency while reducing waste.
Beyond operational gains, Khatri noted that smarter restaurant management has broader economic implications. Efficient staffing supports job stability, while improved service draws more customers back into restaurants, strengthening local economies. Increased foot traffic and spending help sustain small businesses during a period of economic uncertainty.
Looking ahead, Khatri expects personalization to become a defining trend in restaurants and hospitality. AI-driven insights will allow staff to recognize repeat customers, tailor menu recommendations, and anticipate preferences based on past visits. In an increasingly competitive environment, this level of personalization can deepen customer loyalty and differentiate brands. Achieving that goal requires intelligent use of the large volumes of data restaurants already collect.
Before wrapping up, Khatri joked that AI may soon know what diners want before they do, whether that means recommending a favorite dish or remembering a preferred pillow at a hotel. The comment underscored the broader vision of AI-powered hospitality built on convenience, familiarity, and personalization.
As restaurants navigate tightening consumer budgets and economic uncertainty, technology may prove to be the deciding factor between survival and decline. The shift toward AI-driven, data informed management is not simply about efficiency. It represents a fundamental change in how restaurants operate and how dining in America evolves in the years ahead.