Restaurants’ adoption of automation could hit a “tipping point” in the next 12 to 18 months as restaurants’ labor problems intensify, according to a new analysis by the investment bank Cowen.
Restaurants have had a hard time hiring and affording workers coming out of the pandemic. That has already generated significant interest in things like AI voice bots and automated fry cooks, a trend that could be accelerated by labor threats like California’s Fast Act and the ongoing unionization of Starbucks, said Cowen restaurant analyst Andrew Charles.
“It seems inevitable that we’re going to have to do something that helps at the very least the restaurant employee job in the kitchen,” he said in an interview.
Charles compared the simmering automation trend to the adoption curve of third-party delivery, positing that restaurants are currently “looking over their shoulder” to see what others are doing. He believes one or two big chains will make the leap in the next year or so, creating a domino effect across the industry.
The technology itself is already available, and it keeps getting better thanks to machine learning, Charles said. It has also gotten more affordable.
In a report published earlier this month, Cowen was particularly bullish on the prospects of voice bots that can take orders in the drive-thru or over the phone. And they may be more helpful for sales than labor.
Cowen estimated that the technology could increase McDonald’s drive-thru sales by 11.4%, for instance, mainly from upsells and a 10-second increase in ticket times. At Wingstop, it predicted that bots taking orders over the phone could increase average check by 15% by encouraging customers to order more food.
Suggestive selling “is a big piece of this,” Charles said. “It’s essentially the best employee, the best customer service representative, asking the same questions all the time.”
In other words, a voice bot will keep asking “Do you want fries with that?” long after a human employee has given up.
There are also labor savings to be had, of course: Phone bots could save Wingstop $16,000 per store annually, Cowen estimated. But the biggest boost will be along the top line.
“I feel comfortable saying suggestive selling is going to be the main benefit before we talk longer-term about replacement of employees,” Charles said.
A few large chains have already begun rolling out voice bots. McDonald’s itself has been one of the biggest adopters, with voice ordering in place in about 100 drive-thrus. Checkers and Rally’s is using the technology at about 260 restaurants, and Panera Bread recently started testing it at three drive-thrus in New York.
Spyce's automated Infinite Kitchen, acquired last year by Sweetgreen. / Photo courtesy of Spyce
Robots that actually cook are also poised to make an impact, Charles said, though they will be limited to specific restaurant types, like Sweetgreen.
“Sweetgreen has an absolute business case,” he said. The fast-casual salad chain plans to start opening automated locations using technology from Spyce, a robotic restaurant concept it acquired last year. Sweetgreen’s menu is almost entirely bowl-based and therefore easier for a robot to work with, Charles said.
Cowen concluded that Spyce’s automated assembly line could be “game-changing” for Sweetgreen, reducing total labor costs by 22% per store and increasing restaurant-level margins by 690 basis points.
Robots like Miso Robotics’ Flippy, which automates the fryer station, could also be ready for a bigger role. Cowen noted that Flippy, which costs $36,000 a year, is “very close to becoming break-even at the restaurant level” assuming a $15 hourly wage. Plus, it noted that the robotic arm can improve employee satisfaction by taking on the messy and dangerous work of frying food.
Flippy is currently in test at a number of chains, including White Castle, Chipotle and Jack in the Box.
But software-based automation, like voice, is likely to spread faster in the near-term, in part because software scales more easily than hardware, Charles said. He also pointed out that consumers are already familiar with voice technology thanks to things like Siri and Alexa.
Restaurant automation has faced some resistance from those who worry that robots will hurt the experience or take human jobs. But Charles emphasized that automation will supplement existing workers rather than replace them, at least initially.
“We’re not going to see anything sudden here,” he said. “You will not see mass layoffs at restaurants.”
Instead, robots will handle menial, repetitive tasks that human workers don’t enjoy doing. And given restaurants’ already limited staffs and high turnover, “what you’re going to see is that this will fill vacancies.”