The Rise of Robots (Fast Food): How Labor Shortage Is Accelerating Automation
When you think of innovative industries, fast food may not be the first business type that comes to mind. However, as an investor, the opportunities for innovative companies are not limited by new areas such as electric vehicles, online gambling or space stocks. Innovation is also the driving force behind the seemingly banal fast food business. In many ways, innovation has shaped the fast food we know today. A quick look at the early days of the world's largest fast food restaurant shows just how much potential new ideas can have for shareholders.
Innovation - Fast Food Supersizer
McDonald's first opened in 1940 in San Bernardino, California. The McDonald brothers have achieved local success with their own operating innovations, fast food production lines (referred to as "speed service systems").
Harry Sonneborn hasn't had much pop culture recognition in McDonald's history, but the financial innovations he implemented are still shaping the company today. Whenever you hear a claim that McDonald's is real estate, not hamburgers, think of Sonneborn.
The company is so well known that many readers have already thought about other innovations like the Big Mac or FiletOFish-like menu items, the introduction of Happy Meal, and of course the creation of Ronald McDonald. Recently, the restaurant has changed significantly due to COVID19. Haunted Kitchen appears to fulfill orders with delivery and takeout. However, as vaccination rates continue to rise globally and the delta wave diminishes, more customers are looking to sit down and eat. This means that opening a kiosk and hiring more employees is not an easy task given today's global workforce shortage. One year after
COVID-19 was declared a pandemic, the U.S. restaurant industry was short of 1.2 million workers compared to the previous year. There is no particular reason. Incentive checks and unemployment benefits may have kept some workers at home. Others may have spent this time retraining for other jobs.
Even so, a tight job market remains strong. The level of economic activity in the United States is the lowest since the 1970s. McDonald's made headlines earlier this year by offering job seekers $50 in return for interviewing.
Employment is one of the problems. The other is maintenance. Several companies have witnessed organized employee strikes as workers lobby for better working conditions. The photo of the Burger King sign became a hot topic when the employees and CEO resigned in July. A sign outside the restaurant reads: We are all going and we apologize for the inconvenience. Paying higher wages to attract employees is not a long-term solution. Most restaurants operate on gross margin. Moreover, they suffer from high employee turnover. A low-cost workforce, typically prepared in the form of young, unskilled workers, is essential to the success of the fast food industry. Rising wages and labor shortages are causing companies to replace machines that were once the exclusive domain of humans.
The future has already arrived Depending on where you live, you may have already witnessed the early stages of the potential for significant changes in the way food is ordered, prepared, and delivered.
Who Doesn't Have It: You're driving, shouting food orders into a crackling mic, the speaker hissing some kind of feedback with a human voice repeating the spell to you... and you After all, a bag of food is a bit like what you ordered.
This sad experience may soon be over. In Chicago, 10 McDonald's offices use artificial intelligence software to take travel orders. The race to unify automation and operations goes far beyond the Golden Arch. Flippy is a burger maker made by Miso Robotics. White Castle, an American hamburger chain, announced last year that it plans to roll out Flippy to more than 10 sites after successful trials. Around the same time, Hyundai Robotics announced that it was working with KFC to develop a chicken cooking robot. In the
delivery space, Grubhub has partnered with autonomous vehicle developer Yandex to deploy food delivery robots on US university campuses.
Ohio State University currently has 50 self-propelled off-road vehicles that deliver food to hungry students. There are plans to expand the OSU campus to 100 rovers and send an army of delivery robots to universities across the United States.
ChickfilA has partnered with Kiwibot to begin test delivery of fried chicken sandwiches. Domino, now referred to as a "pizza tech company," has invested in a self-contained pizza delivery machine. These are just a few examples of the fast food arms race. Many others should follow.
There doesn't seem to be a better term... it's natural. Many tasks in the restaurant business are monotonous and easily automated. Sharp knives, hot oil, and slippery floors do not create a safe working environment. Using robots for work increases efficiency and productivity. They don't strike, they don't call sick people. They can run for a long time and will not run away from the ship in search of a more favorable opportunity.
Of course, this would require significant capital expenditures. Emergen Research estimates that the global food technology market will reach $342 billion by 2027. So the company will have to spend a little bit, but it will always offer more efficient and predictable operations, more stable products and something fun for shareholders. Ear: Improved profitability.
Of course, all of this raises the question: What about the workers being replaced? In the United States alone, the fast food industry employs about 5 million people. Not all workers want to give Flippy a spatula, but if the advent of fast-food robots encourages people to expand their skills and find more opportunities elsewhere, the world will be doubly better.