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Yes, robots can now take your orders at restaurants, prepare your food, and deliver it to you. And although this new technology harkens back to plenty of science fiction lore, no, the robot workplace ascendancy is not imminent. Bank of America<\/a> analyst Sara Senatore said that retail robots aren\u2019t here to steal jobs\u2014they\u2019re going to make them better.<\/p>\n \u201cIt\u2019s not that they are necessarily reducing the number of people,\u201d Senatore told Fortune<\/em>. \u201cIt\u2019s more that they\u2019re making those people more productive and happier.\u201d<\/p>\n Senatore wrote in a March 11 note that back-of-house robots in restaurants are the \u201cvanguard of automation\u201d and have the potential to not only make a company money, but make jobs more enjoyable.<\/p>\n At Kernel, a vegan fast-food restaurant in New York, the benefits of automation are already coming to fruition. The store\u2019s three staff members work alongside a robot arm<\/a> that places food in the oven, then puts it on an assembly line for employees to prepare. Employees work with the team\u2019s software engineering team to code the robot to maximize the team\u2019s efficiency, including timing the arm to retrieve a burger from the oven the same time a brioche bun is finished toasting.<\/p>\n \u201cTeam members are enjoying the experience, and automation is creating a better working environment for them and not a worse one,\u201d Stephen Goldstein, Kernel\u2019s president, told Fortune<\/em>.\u00a0<\/p>\n The restaurant began hiring four months ago and has been open for only a month, but so far it has a 100% employee retention rate, Goldstein said. The fast-food industry\u2019s average turnover rate was 144%<\/a> in 2021. Staff have a starting wage of $25 an hour and have paid vacation and sick leave. The company is developing a stock-option plan. And the customers don\u2019t appear to be paying for Kernel\u2019s hefty investments in its workers and technologies. Its plant-based burger is $7<\/a>, over a buck cheaper than Shake Shake\u2019s Veggie Shack<\/a>.<\/p>\n Kernel shows the potential for putting robots at the forefront of a fast-food joint. But is it just too early to tell if restaurant robots are too good to be true?<\/p>\n Restaurants<\/a> with automation aren\u2019t inherently new\u2014think the Horn & Hardart Automat<\/a> of 1902 that revolutionized the dining experience by essentially creating a massive vending machine for customers\u2014but the proliferation of AI-powered robots<\/a> certainly is.<\/p>\n \u201cTo some extent, the restaurant industry is a microcosm,\u201d Senatore said. \u201cSoftware has become pretty pervasive: relying on computers to predict things, to plan things, to certainly aggregate and quantify and analyze data. But the bigger challenge, then, is actually integrating them or incorporating them from a physical process.\u201d<\/p>\n Though online ordering was introduced in the mid-2000\u2019s, innovation and implementation of technologies from robot couriers<\/a> to in-app ordering were fast-tracked or expanded because of the pandemic, which saw a massive decline<\/a> in employment in the retail and restaurant sectors.\u00a0<\/p>\n Shoppers\u2019 continued use<\/a> of online ordering and automation after the pandemic inspired retailers to pursue omnichannel strategies<\/a>. The model appeased consumers wanting to return to brick-and-mortar stores while keeping the efficiency that pandemic-era technology created. Some analysts are crediting automation with the economy\u2019s surprise productivity boom\u2014in the first months of 2021, productivity surged 5.4%<\/a>.<\/p>\n \u201cIt\u2019s been really, really important for retailers to be able to address the needs of the consumer at any point during the day or or during the evening,\u201d Mark Mathews, executive director of research at the National Retail Federation, told Fortune. <\/em>\u201cThe retailers need to be able to cater to what the consumers want. That has also created this need for retailers to invest in technology.\u201d<\/p>\n Restaurant automation, particularly the introduction of robots, has helped the bottom line of fast-casual restaurants like Sweetgreen, which has struggled for years with profitability. It introduced the Infinite Kitchen<\/a> automation system in two suburban locations in 2023 and has already noted the benefits.<\/p>\n Sweetgreens with Infinity Kitchen reported 10% higher ticket sales than other stores in the surrounding market, according to its fourth-quarter earnings<\/a>. Despite development and installation for Infinite Kitchen costing about half a million dollars, Sweetgreen is expanding the model in more stores. It expects a seven-point margin benefit for locations with the system.<\/p>\n \u201cThe Infinite Kitchen continues to deliver many benefits to our operating model, such as higher throughput, better order accuracy, portioning consistency and substantially lower team member turnover,\u201d CFO Mitch Reback said in the earnings call.<\/p>\n The technology to improve productivity is expensive, but so is replacing employees. On average, replacing an hourly worker who quits costs a company about $1,500, per People Keep<\/a>. High turnover also weakens employee morale and may leave them with burnout as they shoulder the responsibilities of their former coworker.<\/p>\n There\u2019s also a less-tangible argument to be made to keep employees around, even when robots take over some of their rote tasks: Employees are still able to provide a human touch that robots just can\u2019t, Mathews said.<\/p>\n \u201cEmployees can be a difference maker for retailers,\u201d he said. \u201cRetailers recognize that you still need to invest in your workforce despite the fact that consumers are wanting to interact or transact in a variety of different ways with you.\u201d<\/p>\n Just because employees are working hand-in-hand with robots now doesn\u2019t mean the relationship won\u2019t sour.<\/p>\n Labor costs make up 36% of average restaurant\u2019s costs, per the BofA note by Senatore, and 98% of restaurant operators identified higher labor costs as an issue for their business, according to the National Restaurant Association\u2019s 2024 State of the Restaurant Industry<\/a> report. Senatore admits that with more efficient systems and employees no longer needing to complete more menial tasks, it makes sense for employees to begin cutting hours.<\/p>\n Retail employees are still worried that the presence of robots could cost them their jobs down the line, Marc Perrone, United Food and Commercial Workers International Union\u2019s international president, told Fortune<\/em>.<\/p>\n \u201cAt this point in time, it\u2019s kind of ambivalent,\u201d he said. \u201cWhat we\u2019ve seen is a reduction of workforce in the front of the stores, and that is a direct result of the technology that\u2019s been moved in the stores.\u201d<\/p>\n Most of the rank and file of UFCW are workers at food retailers like grocery stores, not necessarily restaurants, but Perrone said that the union was down 100,000 members over the last 15 years as automation has taken hold of those spaces.<\/p>\n Hershey<\/a> said in a February SEC filing<\/a> that it would lay off workers as part of a restructuring which includes changing recipes to include less chocolate<\/a> among soaring cocoa prices, as well as an investment in automation. Automated pizza-making startup Picnic<\/a> laid off an undisclosed number of workers last year, with CEO Clayton Wood citing a challenging economic environment.<\/p>\n Perrone isn\u2019t naive to the future of retail incorporating more automation, but he asserts that technology can\u2019t help employees if it costs them their jobs.<\/p>\n \u201cTechnology can be utilized to benefit all parties,\u201d he said. \u201cI do believe that before technology is introduced, there should be some conversation about it.\u201d<\/p>\n<\/div>\n\nThe rise of the retail robot<\/strong><\/h2>\n
When will the perks run out?<\/strong><\/h2>\n