BRYCE ON TECHNOLOGY
– Get ready for major changes at the fast-food franchises.
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Back in the 1960’s, teens gravitated to drive-in restaurants with “carhops,” who delivered food to your car, sometimes on roller-skates. This all changed with the burger chains, yet young people still showed up for shakes, burgers and fries. When I lived in Chicago, there was a local McDonalds where you went to hang-out and be seen with your friends. It was one of the original McDonalds, complete with the big golden arches out front and the “number served” sign updated regularly. More than anything, it was a social venue which propelled the restaurant.
Such fast-food franchises have changed over the years and I’m not sure young people look upon it as the Baby Boomers did. Whereas such restaurants back then required a crew of people to operate it effectively, it is finally giving way to a hi-tech approach.
Robotic-like kiosks have been in the experimental stage since about 2006, but with the recent push to raise the minimum wage to $15/hour, the fast-food industry has accelerated its plans. Although many people embrace the idea of raising the minimum wage, industry executives realize there is limit to what the public will pay for service, hence the need to automate.
Today, virtually every major fast-food chain is either in the experimental stage or in the process of rolling out automation to speed up the processing of orders while minimizing the need for manual labor. This includes McDonalds, Burger King, Wendy’s, KFC, Taco Bell, Arby’s, Panera Bread, Starbucks, Pizza Hut and many more. Even my beloved white Castle, home of the original “sliders,” is embarking on such automation.
McDonalds recently reported they have implemented automation in nearly 2,600 of their restaurants around the world with hundreds more planned for 2017 in urban areas such as San Francisco, Boston, Chicago, D.C. and Seattle. Approximately 500 have already been implemented in Florida, New York, and Southern California.
Wendy’s has announced they will place kiosks in about 1,000 locations by the end of the year at a cost of about $15,000 for three kiosks, according to the Columbus Dispatch. This is cheap when compared to McDonalds where a single kiosk is said to cost between $50K-$60K. Even at this rate, a franchise can realize their return on investment in as little as two years based on the labor savings.
In China, a KFC restaurant is experimenting with a kiosk featuring facial recognition to predict a customer’s order. The company plans to roll out this technology to 5,000 stores throughout China. If successful, look for it to migrate to America.
Fast-food automation comes primarily in three forms:
1. Self-ordering – using touch screens, the customer can quickly make their selections, and tailor the product to their tastes. After watching a demonstration of this, it appears to be user friendly, but I still believe you can place an order faster with a human-being.
2. Order by App – using smart phones, you can quickly find a local franchise, and place an order ready for pickup.
3. Mobile payments – again, using a smart phone, you can pay by credit or debit card. McDonald’s claims “you can pay with your card at the kiosk or use mobile pay options like Apple or Android Pay. We’re even testing Google Hands Free payment options in the San Francisco Bay area.” I suspect PayPal is another option. The companies will still accept cash, which requires a human to process and make change, but the lion’s share of business will inevitably be conducted by smart phone.
There are two benefits related to fast-food automation, a reduction in labor costs and stimulating sales, particularly by young customers imbued with such technology. Older people may shy away from it.
The point is, through their protests, the “Fight for $15” activists are cutting off their noses to spite their faces. Even if they are successful, the pace of fast-food automation will accelerate, thereby reducing the number of employees. They may get their raise, but at a price of replacing workers with automation.
Like it or not, fast-food automation is here to stay and we will have to adapt to it. One thing is for sure, there won’t be any attractive “carhops.”
Also published in The Huffington Post.
Keep the Faith!
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Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 40 years of experience in the management consulting field. He can be reached at [email protected]
For Tim’s columns, see: timbryce.com
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Copyright © 2017 by Tim Bryce. All rights reserved.
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