More Fast-Food Chains Invest In Automation Amid Labor Shortages, Minimum Wage Increases
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Major fast-food chains like White Castle and Chipotle have started employing restaurant robots as labor shortages continue to impact the industry while the price of food increases in the aftermath of COVID and crippling inflation.

According to a report, automated machines will grill burgers, brew coffee, and welcome customers for a fraction of the cost compared to paying human workers — as governments nationwide imposed draconian lockdown orders, forcing restaurants to close down temporarily and, in some cases, permanently.

The National Restaurant Association said in a report reviewed by the Daily Mail that four out of five operators have been understaffed since the pandemic hit in 2020.

White Castle reportedly has begun testing at 100 locations a robot named Flippy, a kitchen robot built by a California-based tech company called Miso Robotics. The AI-powered machine can cook 300 burgers and deep fry potatoes for about $3,000 a month. On the other hand, Chipotle hired one-armed robots to make tortilla chips at 73 different sites for the same price.

“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.

Starbucks has spent $18,000 on AI-powered espresso machines in at least 1,200 locations.

David Henkes, a principal at restaurant research firm Technomic, told CNBC the automation experimentation would lead the industry “somewhere at some point.”

“But we’re still a very labor-intensive, labor-driven industry,” Henkes said.

Jamie Richardson, vice president of White Castle, told the outlet that other changes, like 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.

McDonald’s revealed a test restaurant last month that replaced positions formerly held by employees with automation technology near Fort Worth, Texas.

“The technology in this restaurant not only allows us to serve our customers in new, innovative ways, it gives our restaurant team the ability to concentrate more on order speed and accuracy, which makes the experience more enjoyable for everyone,” Keith Vanecek, the franchisee operating the test restaurant, said in the blog post reported by CBS News.

Vanecek’s comment comes after McDonald’s CEO Chris Kempczinski dismissed in an earnings call last summer the idea of total automation any time soon.

“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 any time soon.”

Casey Warman, an economics professor at Dalhousie University in Nova Scotia, told CNBC he expects automation to permanently shrink the restaurant industry’s workforce.

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

Other restaurants, such as Taco Bell, Popeyes, and Panera Bread, have also installed AI to take orders, while Dominoes has started testing robotic technology to add sauce, cheese, and toppings to its pizza.

Implementing automation in restaurants also comes as states like California have increased minimum wages.

The Golden State increased its minimum hourly wage last year to $15 for employers with 26 or more employees and $14 for employers with 25 or fewer employees — the highest hourly wage in the nation. The increase comes as part of the law that has raised the wage from $10 per hour in 2017 to $15.50 in 2023.

The California Department of Industrial Relations said in a news release that “after the state minimum wage reaches $15 an hour for all employees, the rate will be adjusted annually for inflation based on the national consumer price index for urban wage earners and clerical worker.”

Governor Gavin Newsom (D-CA) signed the Fast Food Accountability and Standards Recovery Act three months ago, creating a Fast Food Council empowered to raise minimum wages for the industry up to $22 per hour, representing an increase of over 40% from the $15.50 per hour minimum wage slated to take effect this year.

A report published last year by the Congressional Budget Office found that a nationwide minimum wage of $15 per hour would result in 1.4 million job losses, even as 900,000 workers are lifted from poverty.

Such a wage hike would affect 17 million workers whose pay would otherwise be below the threshold.

Ben Zeisloft contributed to this report.

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