Facing considerable competition in today’s marketplace, it is imperative that companies do whatever it takes to boost profits, especially in the food processing and restaurant industries, where speed, consistency, efficiency, and health standards are paramount, and profit margins are slim. To remain cost-competitive, food-related businesses – from large-scale processing plants to fast-food franchises – must balance quality with price, not always an easy feat.
In recent years, the issue of food costs and wages for restaurants has become a hot topic. For massive chains like McDonald’s to sell a basic hamburger at a profit — a thin beef patty topped with ketchup, mustard, onion, and pickle slices on a bun — for less than $1.50 (depending on location), there must be painstakingly precise calculations between costs of production, including ingredients and labour. With the bulk of fast-food workers receiving minimum wage, this balance was rarely an issue until 2015, when a pushback was initiated by low-income persons, many of them employed in the fast-food sector, for an increased minimum wage of $15 per hour.
Although demands for higher pay and a massive, 270-city walkout in November of 2015 raised public awareness of the need for a living wage, the movement to increase hourly pay has met considerable opposition from economists and business owners worried about the effect this will have on the economy, like driving up the cost of menu items. Customers are accustomed to paying a certain amount for fast-food items, and higher wages mean businesses need to recover money somewhere, namely from the consumer, since suppliers, landlords, and utility companies will not cut their costs. Overnight, the same Sausage McMuffin that cost less than two dollars is now five dollars, or higher.
While organizers behind the $15 an hour living wage cause believe customers will either buy less or happily pay more money than before in the name of social justice and wage equality, their argument for more money is grossly oversimplified. Indeed, the cost of everything in North America is on the rise, from public transit to gas, groceries, rent, and clothing. There is also the fact some low-wage restaurant workers, such as dishwashers, are developmentally delayed and unable to take on any other type of simple, repetitive work. By raising their hourly income from, say, $8.50 to $15 — a jump of $6.50 an hour — these individuals will be priced out of the workforce forever and forced to depend on the state rather than make a meaningful income on their own.
The $15 an hour backlash
Companies employing minimum-wage workers demanding $15 an hour across the United States and Canada are opposing the move, with many coming up with ways around the increase. Many restaurants, from local mom and pop diners to chains with hundreds of locations, state any wage hike will affect their tenuous bottom line and alienate customers, both bad for business.
Recently, the owner of two Tim Hortons restaurants in the Eastern townships of Québec — seeing minimum wages rise 50 cents per hour to $11.25 — eliminated two paid coffee breaks of 15 minutes each, resulting in employees actually making less money than before the increase. While some are advocating for increased wages, economists are stating if hourly incomes go up to $15, jobs will invariably be lost. Even the Canadian Federation of Independent business (CFIB) predicts 50,000 jobs will disappear in Alberta, calling a minimum wage hike “an ill-advised climb.”
The Harvard Business School recently issued a 33-page working paper, Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit, which states, “higher minimum wages increase overall exit rates for restaurants,” especially lower-quality restaurants. And respected U.S. business magazine Forbes has gone on record numerous times, calling a proposed $15 minimum wage “a bad idea,” even going as far as stating supporters have “drunk the ideological Kool-Aid,” and suggesting that implementing a wage increase would affect other areas, from employers charging higher prices for goods and services to cutting costs, or in drastic cases, closing entirely.
Back in 2012, prior to a proposed minimum $15 an hour wage increases, stories began appearing about the rise of automation in the restaurant industry, particularly in the area of hamburgers, which are a multi-billion-dollar business across North America. While many of us have mental images of teenagers flipping burgers as their first job, these fledgling careers may soon become obsolete. As low-wage earners demand a greater hourly rate of pay, the food industry is fighting back, using technology and automation as its weapons. For the fast-food sector, one of the greatest recent innovations comes from San Francisco-based Momentum Machines. Founded in 2009, the company describes itself as “a small collective of foodies and engineers with decades of robotics and restaurant experience,” a combination likely to intrigue some and terrify others.
While the company’s equipment is state-of-the-art, its objective is simple: use technology to replace humans to cook and assemble burgers using what some are calling a “burger bot.” And not just any old hamburger, but even entire meals made-to-order. For restaurants, the advantages are many. No longer requiring legions of workers, food-related labour costs — almost $10 billion a year in the United States — would be slashed. Momentum’s burger-making machines are relatively compact at only 24 square feet, saving restaurants considerable space. And they are fast.
Once the order is placed, meat is freshly ground, with burger patties instantly stamped out. Likewise, toppings such as tomato and lettuce are sliced by the machine to order, ensuring peak taste and freshness. Large industrial griddles are no longer required, since the machine’s internal oven does all the cooking. And once the burger is complete, it is placed on a conveyor belt and automatically bagged for the customer. Easy to clean, with the company claiming its devices are more sanitary than human hands, the machines are capable of creating a staggering 400 burgers an hour. For employers, the machines also eliminate human time-wasting activities such as checking up on social media, texting, chatting on the phone, or being upset and unproductive at work because of personal issues.
Targeting markets ranging from restaurants to vending machines and food trucks, Momentum Machines says their products can pay for themselves in less than a year. Evolving considerably from the 2012 prototype, newer generations can even custom-blend meats (pork and beef or bison, for example), and make different thicknesses of patties. Once up and running, the machines are efficient, fast, and cheap, and promise to save businesses thousands of dollars a year in training and wages, since they replace at least two to three line cooks. Of course, humans will still be required to perform cleaning and maintenance, and to supply raw ingredients.
Promising new technologies are in the works to produce other food favourites, including sandwiches and salads. The question remains: will consumers embrace food prepared for them by robots? The answer, very likely, is yes. While some will pay more out of pocket to support restaurant workers, others don’t care about how their burger was prepared or by whom, as long as it is hot, fresh, and reasonably priced.
While there has yet to be a massive roll-out of burger-making machines, with the new kid on the block, the Flippy – created through a partnership between Cali Group and Miso Robotics – Momentum Machines has pledged to take their technology one step further, opening its own burger restaurant sometime soon in San Francisco. Some, such as Bar Rescue host Jon Taffer, say the battle of man vs. machine in the restaurant industry is inevitable, and comes down to dollars and cents. “If it’s more cost-effective to put a machine in to cook a hamburger, slice a French fry, cook this, do that, wash this, mow this, then that’s the move that’s made. It’s sheer economics,” said Taffer recently on the FOX Business Network. “We run our businesses based on a percentage of revenue. If I can only spend 30 percent of revenue on labour, then it’s less bodies now that equals that 30 per cent.”
Have it your way
With fast-food machines now a reality, McDonald’s fired the first volley over a year ago when it started rolling out self-service kiosks in many locations. A “create your taste” touch screen allows hungry patrons the ability to customize their burger meals, including different sauces, cheeses, toppings, choice of bun, beverage, fries, and dessert. While some customers are reluctant to use these devices, preferring instead to speak to an actual person, there is no doubting that they are fast, convenient, and completely accurate: what the restaurant patron orders is what he or she receives.
The process is simple: order what you’d like to eat at a kiosk, pay at the kiosk, receive a slip of printed paper, wait until your order is prepared, and pick it up at the counter. Other chains, such as Panera Bread, have also embraced the self-serve system, and fast-food outlets like Wendy’s are on board. While the kiosks themselves represent an investment in technology, many food companies are embracing these and other devices as labour costs continue to rise. Instead of front-line counter staff, these kiosks will allow for more staff in the kitchen.
When the kiosks were introduced, McDonald’s Canada Chief Executive Officer John Betts famously remarked, “We’re basically blowing up the front counter,” stating that the move will actually result in more staff being hired, not fewer, with 15,000 new positions across the country.
While technology is inevitable and will almost certainly put some restaurant workers out of business, new jobs will be created, included human greeters who welcome customers and guide them on how to use the machines which are taking over roles once filled by actual people.