(Bloomberg) -- Wendy’s Co. is leaning on cheeky promotions and a flurry of deals to woo customers from much bigger competitors like McDonald’s Corp. One weapon in its arsenal: Palantir Technologies Inc.
The data analytics firm, which built its reputation serving defense-focused clients, has been putting its massive computing ability to work for corporate America. For Wendy’s supply-chain group, Palantir is able to use artificial intelligence to spot shortages before they happen to make sure that, if a $1 Frosty promotion leads to droves of consumers, the fast-food chain is ready to serve them.
AI is making inroads in a restaurant industry grappling with increased costs for labor and ingredients after years of high inflation. That’s pushed a sector already operating on tight margins to look even closer at managing expenses.
Wendy’s supply chain co-op, an independent group that purchases on behalf of the chain’s restaurants, is betting Palantir’s system will do just that for the burger brand’s 6,000 US locations. Normally, stores keep extra inventory just in case, and that’s become more expensive thanks to inflation.
“Three or four years from now, if you’re not doing this, you’ll be at a distinct disadvantage,” said Pete Suerken, who leads the co-op. “This is something that, as an industry, will change the way we work.”
The co-op’s project has gained importance as Wendy’s tries to entice diners with initiatives such as a promotion celebrating SpongeBob’s 25th anniversary. The chain recently narrowed its full-year sales outlook after customer counts fell in the third quarter, so having sufficient supply to meet the demand it’s trying to stoke is key.
Wendy’s first tested Palantir’s product last fall, Suerken said. He declined to disclose the AI’s accuracy rate or how it stacks up against humans crunching numbers on spreadsheets, only saying that the return on investment is “significant” and “so much better” than the usual methods.
Palantir’s platform ingests inputs such as current and historical sales figures as well as shipping prices, said Arjun Mathur, a senior vice president at the firm. The company has reported rising demand for its supply-chain services since the pandemic disrupted logistics. Clients include General Mills Inc. and Tyson Foods Inc, the company has said.
The software can tell Wendy’s which products will run out and when. It can then suggest solutions like placing an order from a specific warehouse, based on parameters such as cost and the likelihood the items will arrive on time.
Because the information is beamed across the supply chain, suppliers can ramp or slow down production based on sales trends, Suerken said. Palantir’s technology will free up employees to focus on other tasks, while reducing monotonous work, he said.
“Nobody wants to be a spreadsheet jockey,” Suerken said. “People want to make a decision and go on to the next thing.”
$1 Frosty
This summer, the co-op used Palantir’s platform for its $1 Frosty deal, allowing it to quickly tell dairy suppliers to produce more Frosty mix to cope with elevated demand, according to Suerken.
The ultimate goal is to let the system spot and address inventory issues on its own, which should become possible as the AI learns from human input.
The Wendy’s supply chain group recently had the program find the biggest shortages it would face over the following three weeks so staff could show the program how they’re solved. It will eventually be allowed to take on tasks under certain cost thresholds without human intervention.
For example, if it the outlay to fix an inventory issue is under $500, the AI can just “go solve it,” Suerken said. “Don’t even tell me.”
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