Fast food is in the crosshairs, and the industry is very nervous. Everyone wants something from fast food. Most customers want quick service, often 24-hour service, from happy and enthusiastic workers. Foodies want higher quality ingredients and new menu items. Parents want “clean” and “natural” food for their children. Most customers want the prices low that define fast food. What does the Fast Food industry want? They want to meet all of these goals and find a way to pay for an increase in the minimum wage. Shall we dive right in and see how happy our future meals will be?
Typically, when the economy is good and income rises, families spend more money on food. For fast food customers, that means ordering fewer items from the value menu or moving upscale to a different restaurant, perhaps moving from fast food to full service. Fast food tries to keep up with these trends but often fails. McDonald’s, for example, has tried adding steak and even lobster, but customers always return to burgers and fries. Customers may switch from burgers to steak, but not a steak from McDonald’s.
All day breakfast is McDonald’s latest food innovation, and it seems to be working. Breakfast items usually cost less but are still quite profitable. However, offering two meals at the same time requires quite a bit of engineering genius, since even fries and hash browns are cooked in slightly different ways. The same is true of burger vs. eggs, and hamburger buns vs. english muffins. Changing settings on deep fryers and other equipment slows the kitchen. McDonald’s may revolutionize breakfast, but every new option comes at a cost.
Seemingly minor tweaks can have surprisingly high costs. The “clean” and “natural” trend is focused on items like… eggs. Customers have started to demand cage-free eggs. However, few customers understand that moving away from caged chickens requires extensive changes to the entire egg industry. Because the “cage free” movement is also happening in supermarkets, this double squeeze is creating high demand for cage-free eggs. The egg industry needs 10 years to change to cage-free, but to meet all commitments, it has to be done in just 2 years. That’s a classic formula for expensive eggs and “counterfeit” cage-free products. Removing preservatives, artificial coloring, antibiotics and other ingredients will similarly increase costs.
McDonalds, by far the largest of the fast food chains, consistently ranks lowest in customer service surveys. McDonald’s usually gets top ranking for breakfast items and fries, but when it comes to worker attitudes, queue times, order errors, special orders, addressing customer issue… they rank at or near the bottom. There is a solution that can address customer service problems AND offset most of these new costs and customer demands. But before we look at solutions, let’s understand the problems.
At a typical McDonalds or any similar establishment, there is a front counter with 5 or 6 (or more) cash registers. Customers pile-up by the counter as they wait to place their order, and then they wander around awkwardly in this “pile-up” (or at the edges) waiting to grab their finished order. When it’s slow, not all cash registers are manned. When it’s busy, workers mysteriously disappear from the cash register. When crowds are small, it’s easy to know which is “your” register. When the pile is 5 deep or more, you just following the customer in front of you… to an empty register. Should you jump to the left, to the right or wait until someone returns? The next step you take is almost assured to irritate some customer (or some customer will irritate you). Fast Food means you’ve got to be fast too, and a special order makes everyone grumble.
If you want a worker that is always consistent, never gets tired or flustered, can’t be irritated, is never angry… doesn’t that describe a robot? Interestingly, while McDonald’s does have at least one fully automated restaurant, the CEO of McDonalds (Steve Easterbrook) said that there are no plans to replace workers with robots if the minimum wage rises to $15. Of course, the former CEO of McDonalds (Ed Rensi) said that it made more financial sense to buy a robot than pay $15 per hour for a human being to bag french fries. Hmmm… that’s is a bit confusing.
What’s even more confusing is that in New York City and other locations, McDonald’s has rolled out walk-up robotic kiosks at McDonalds that let you place your order. With a robot. You can still go to the front counter, but the kiosks take your order and keep you out of the “pile-up” by the counter. Apparently, these robots don’t replace counter staff, they merely allow you to “create your own taste”, by requesting a special order. However, the kiosks take your complete order, not just special orders. Each restaurant typically installs 6 to 8 kiosks, which provides enough coverage to take all of the orders that are currently handled by counter workers.
Looking at these kiosks, they will definitely improve service. You have a much better chance of getting a Big Mac without pickles with a robot than with the counter workers. The robots will never get tired and cranky, or irritate you by paying attention to another customer or co-worker. Even if every kiosk does not turn on every feature on day one, in tourist heavy areas, these and similar kiosks can communicate in multiple languages. That’s not only a great “free” feature, but it is something that you just can’t “turn on” with human workers!
McDonald’s already has kiosks in 2,000 restaurants and is now headed towards a massive rollout. Wendy’s has introduced similar kiosks and expects many of their 6,000 franchise operators to adopt them by the end of 2016. Panera has done likewise and expects to have kiosks in all of its locations in a year or two. At Panera, customers place up to 60% of their orders via kiosk.
The kiosk trend has moved into full-service restaurants like Olive Garden and Chili’s. Here, the kiosk is a tablet that stays on your table. You can order what you want, add items to your order, add a coffee or request a refill of your soda and pay for your meal. All without that often difficult problem of getting the waitstaff’s attention when it’s busy. That little bit of extra difficulty means that dessert doesn’t get ordered, customers skip that extra side-dish and revenue walks out the door. These table top tablets improve customer satisfaction, lower operating costs and may generate additional revenue.
As the economy improves a higher minimum wage is inevitable. The new wage may not be $15 per hour, but it will be higher than it is today. Service and performance problems could be handled by hiring staff that is more proficient at certain tasks. But more requirements means higher pay and cost for testing and training. That makes this staff even more expensive than a robotic replacement.
Robots are headed to a restaurant near you, but probably not too a family owned restaurant. Not for a while. Robot suppliers and consultants will work best with big chain restaurants. Family owned operations will be late adopters. Besides, while big chains may have a technological advantage in serving up your breakfast order, old fashioned, slow paced human waitstaff may be an important differentiator for mom and pop restaurants.
Something similar happened with bookstores 25 years ago. Barnes and Noble and other regional bookstores chains went national and undercut the prices in small bookstores. Half of America’s small bookstores were wiped out. But a decade later, book buyers realized how much they liked the traditional small bookstore experience. After that, the small bookstore returned, although in more recent years the ebook has challenged the small bookstore, AGAIN. It’s hard to say if the human touch will save family owned restaurants, but in a few more years the experience you get from a typical small restaurant and a super automated fast food restaurant will be larger and clearer.
One thing that is already abundantly clear, is that the 3.6 million fast food jobs today will shrink dramatically over the next few years. By 2020, as many as 2 million of these jobs will be automated. After 2020, a robot arm to hand completed orders to customers, more automated kitchen equipment, and soda machines operated by customers will eat away at employment until it drops below one million workers.
We want a lot from our fast food. If the robot revolution overtakes McDonald’s and other big chains, they can afford to provide the better ingredients we want while finally tackling their most intractable customer service problems. Customers say they want fast food workers to be treated fairly and be well paid, but is that your top concern when we’re waiting in the pile-up? Even though the economy is improving and customer tastes are moving upscale, a lot of families depend on the value menu and will strongly resist price increases.
The robots moved slowly into place and now they are on our tables and in our favorite fast food hangouts. Deep down, we want more robots. When you order your McBreakfast, you want your coffee now and then you want to get out. Few of us bother to make any connection with the people who work hard… VERY hard.. to meet our expectations. But we want what we want, and we want it the same every time. We don’t want excuses that people are out sick or late because of the weather. We want superior service from the first minute a worker arrives until their last hour of overtime. We say we want workers to be well treated, but we mean we want robots. Which is exactly what we’re going to get. And that my Niccolls worth for today!