The law of unintended - or is it intended? - consequences coming to a restaurant near you.
Beginning in April this year, California will require fast-food chain restaurants with at least 60 national locations to start paying a minimum of $20 an hour. This is $41,760 a year plus benefits! Many recent graduates from 4-year colleges in many states do not enjoy salaries like these.
This new rule will impact tens of thousands of franchisees of all national and regional fast-food chains like Starbucks, Subway, McDonalds, Jack in the Box, Taco Bell, Domino’s, Pizza Hut, Burger King, etc.
Who will be the losers?
Consumers, especially from disadvantaged communities who frequent these fast-food restaurants, will be one of the biggest losers since the restaurants will have to increase prices to accommodate this minimum wage increase.
Restauranteurs of any size will be affected negatively as well by this new rule: if the McDonald’s nearby is paying $20/hour, what should your restaurant pay to retain employees? Prices at these restaurants will go up as well, in addition to the nearly 30% price increases since the start of the pandemic, which means that they will lose customers and revenues as well.
These same employees the new California law is intended to help will be the other category of biggest losers since many of them will be layed off or replaced by technology.
So what is the solution?
In my view, fast-food and other restaurants that do not close shop due to this new mandate can achieve significant payroll and efficiency cost savings via technology innovations, augmenting or outright replacing expensive human employees.
The food and beverage industry in the US installed 25% more robots last year, according to a robotics report by IRF. Indeed, many robotics companies, like Miso Robotics, Bear Robotics, Peanut Robotics, Knightscope, SoftBank Robotics and Makr Shakr, say they’ve seen huge spikes in inquiries for their robots since the pandemic hit.
This new law in California will, undoubtedly, increase the adoption of technology: robots, automations, cloud applications for back-of-house efficiencies, procurement, HR, training, tips disbursements, etc.
Here are just a few examples of such human-augmenting and replacing technologies being implemented on a large scale at restaurants and hospitality F&B:
Self-ordering: Self-ordering kiosks like Olea and Kiosk are already widely used by fast-food restaurants. Table ordering screens or ordering via QR code-triggered menus on customer’s own smartphone are other popular way to introduce efficiencies in the food-ordering process.
Waitstaff: Robot waiters by Keenon Robotics are deployed in over 10,000 restaurants worldwide and replace 100% of the waitstaff. Bear Robotics offers similar robots. American Robotech makes four types of robots that can perform functions including delivering food to tables, clearing dirty dishes, escorting diners to their seats, and even singing "happy birthday."
Kitchen staff: Robots like BurgerBot and Flippy, made by Miso Robotics, are already flipping burgers and preparing French fries at CaliBurger and White Castle Restaurants. A salad-making robot, based on robotic kitchen startup Spyce, is already preparing signature salads at Sweetgreen at quadruple the human pace. RoWok, a robot wok kiosk, is already being implemented at Chinese restaurants.
Vending Machines: We will be witnessing a real resurrection of the vending machine serving breakfast, snacks, hot and cold drinks, naturally in a much more sophisticated interpretation. Marriott is already testing giant vending machines it calls “grab-and-go marketplaces” that can dispense everything from coffee to breakfast sandwiches and cereal.
Bartending: Robot-bartenders like Tipsy Robot by Makr Shakr makes 120 plus drinks per hour, replaces up to 4 human bartenders and saves 25% of the drink waste/spillage. Other bar tending robots like Barsys 2.0 by New York-based startup Barsys, Barney by Baronics and the DrinkBot by Botrista are also being deployed across the nation.
Hilton has selected PourMyBeer as its provider of automated beverage dispensing systems as part of its new brand standards for several of its select-service hotel brands.
Fully-automated Restaurants: Self-contained, fully automated restaurants are no longer a thing of science fiction novels.
- CaliExpress in Pasadena is set to open as the world's 'first operating restaurant where both ordering and every single cooking process are fully automated.
- Piestro robotic pizza station can deliver high-quality artisanal pizzas within 3 minutes and offer zero contact food preparation, zero food waste, consistent quality, and a much lower cost of operation.
- Picnic Pizza Station robot makes 130 artisanal pizzas an hour and require a single employee.
- Hyper Robotics is pushing the limits with a near fully-automated Pizza Hut restaurant, etc.
The list goes on and on. The moral of the story is: beware of government regulations and their unintended consequences that do more harm than good. The only good consequence of such regulations like the one in California is that they serve as accelerators for the adoption of technology.
