Home Business The year of the restaurant robot: Why invest in automation and what...

The year of the restaurant robot: Why invest in automation and what it means for workers (Video)

https://www.vecteezy.com/photo/6802625-robot-arm-serving-hot-coffee-in-a-coffee-shop

By Amelia Lucas 

Chipotle Mexican Grill is testing whether a robot can make tortilla chips in stores. Sweetgreen plans to automate salad making in at least two locations. And Starbucks wants its coffee-making equipment to lessen the workload for baristas.

This year brought a flurry of automation announcements in the restaurant industry as operators scrambled to find solutions to a shrinking workforce and climbing wages. But the efforts have been spotty so far, and experts say it will be years before robots pay off for companies or take the place of workers.

“I think there’s a lot of experimentation that is going to lead us somewhere at some point, but we’re still a very labor intensive, labor-driven industry,” said David Henkes, a principal at Technomic, a restaurant research firm.

Even before the Covid pandemic, restaurants were struggling to attract and retain workers. The global health crisis exacerbated the issue, as many laid-off workers left for other jobs and didn’t return. Three-quarters of restaurant operators are facing staffing shortages that keep them from operating at full capacity, according to the National Restaurant Association.

Many restaurant operators hiked wages to attract workers, but that pressured profits at a time when food costs were also climbing.

Automation startups pitch themselves as a solution. They say that robots can flip burgers and assemble pizzas more consistently than overworked employees, and that artificial intelligence can enable computers to take drive-thru orders more accurately.

The year of the robot

Many of the industry’s buzzy automation announcements this year came from Miso Robotics, which has raised $108 million as of November and has a valuation of $523 million, according to Pitchbook.

Miso’s flashiest invention is Flippy, a robot that can be programmed to flip burgers or make chicken wings and can be rented for roughly $3,000 a month.

Burger chain White Castle has installed Flippy at four of its restaurants and committed to adding the technology to 100 as it revamps locations. Chipotle Mexican Grill is testing the equipment, which it calls “Chippy,” at a California restaurant to make tortilla chips.

“The highest value benefit that we bring to a restaurant is not to reduce their expenses, but to allow them to sell more and generate a profit,” Miso CEO Mike Bell told CNBC.

At Buffalo Wild Wings, however, Flippy hasn’t progressed out of the testing phase after more than a year. Parent company Inspire Brands, which is privately held and also owns Dunkin’, Arby’s and Sonic, said Miso is just one of the partners it has worked with to automate frying chicken wings.

Another startup, Picnic Works, offers pizza assembly equipment that automates adding sauce, cheese and other toppings. A Domino’s franchisee is testing the technology at a Berlin location.

Picnic rents out its equipment, with prices starting at $3,250 a month. CEO Clayton Wood told CNBC that subscriptions make the technology affordable for smaller operators. The startup has raised $13.8 million at a valuation of $58.8 million, according to Pitchbook.

At Panera Bread, automation experiments have included artificial intelligence software that can take drive-thru orders and a Miso system that checks coffee volume and temperatures to improve quality.

“Automation is one word, and a lot of people go right to robotics and a robot flipping burgers or making fries. That is not our focus,” said George Hanson, the chain’s chief digital officer

But success is far from guaranteed. In early 2020, Zume pivoted from using robots to prep, cook and deliver pizza to focus on food packaging. The startup, which did not respond to a request for comment, received a $375 million investment from SoftBank in 2018 that reportedly valued it at $2.25 billion.

The labor question

Automation often faces pushback from workers and labor advocates, who see it as a way for employers to eliminate jobs. But restaurant companies have been touting their experiments as ways to improve working conditions by doing away with tedious tasks.

Next year, Sweetgreen plans to open two locations that will largely automate the salad-making process with the technology it acquired by buying startup Spyce. The new restaurant format will cut down on the number of workers needed for shifts, Sweetgreen co-founder and Chief Concept Officer Nic Jammet said at the Morgan Stanley Global Retail and Consumer Conference in early December.

Jammet also listed an improved employee experience and lower turnover rates as secondary benefits. A representative for Sweetgreen declined to comment for this story.

Casey Warman, an economics professor at Dalhousie University in Nova Scotia, expects the restaurant industry’s push for automation will permanently shrink its workforce.

“Once the machines are in place, they’re not going to backwards, especially if there’s large cost savings,” he said.

And Warman noted that Covid reduced the pushback against automation, as consumers got more used to self check-outs at grocery stores and mobile apps to order fast food.

Dina Zemke, an assistant professor at Ball State University who studies consumer attitudes about automation in restaurants, also noted that consumers are getting tired of reduced restaurant hours and slower service that have come with labor shortages.

In a Technomic survey conducted in the third quarter, 22% of roughly 500 restaurant operators said they are investing in technology that will save on kitchen labor and 19% said they’ve added labor-saving tech to front of house tasks such as ordering.

Long-term skepticism

At this point, it’s unclear if or when any cost savings will materialize.

More than a year and a half ago, McDonald’s began testing software that could take drive-thru orders after acquiring Apprente, an artificial intelligence startup. Several months after revealing the test, the fast-food giant sold the unit to IBM as part of a strategic partnership to further the technology.

At the roughly two dozen Illinois test restaurants, the voice-ordering software had an accuracy in the low 80% range, well below the target of 95%, according to a research report from BTIG analyst Peter Saleh this June.

And on an earnings call this summer, McDonald CEO Chris Kempczinski threw cold water on the feasibility of total automation.

“The idea of robots and all those things, while it maybe is great for garnering headlines, it’s not practical in the vast majority of restaurants,” he said. “The economics don’t pencil out. … You’re not going to see that as a broad-based solution anytime soon.”

In the meantime, automation may have more potential in less noticeable tasks. Jamie Richardson, vice president of White Castle, said less flashy changes like installing Coca-Cola Freestyle machines have had a more outsized impact on sales.

“Sometimes the bigger automation investments we make aren’t as earth shattering,” Richardson said.

CNBC, posted on SouthFloridaReporter.com

Republished with permission

This article originally appeared here and was republished with permission.