Is Automation the Answer to Reducing Labor Costs?

July 13, 2018

This July, the City of Los Angeles, minimum wage jumped from the already high $10.50 to $12.00 per hour for employers with 26 or more employees. Those with less staff have a year reprieve. By 2021, $15.00 will be the standard.  Restaurants are reporting 2-4% increases in labor percentages even with passing some of the costs on to the customers through pricing.  Some operators are feeling the pressure of an already tightening noose.

Don’t get me wrong, I see my employees as family so I want to support them with a “living wage” and the quality of life that hardworking individuals deserve.  With that being said, it is difficult to see profits diminish each year due to minimum wage increases, sick leave, rising health care Workers Compensation costs.  Is automation the answer?

Some retailers began years ago to test automation technology by introducing self-service checkout stations. I first saw it in big box home improvement stores, now Walmart. Their brave move, began the mainstreaming of the automation revolution and created a graveyard of closed check-out stands. I assume, automation also killed the jobs of the people who used to cheerfully man them.

 

My husband corrected me that gas stations were the first true self-serve checkout systems.  He may be correct. Yes, I remember when you could get your windows washed without being propositioned by a guy with a Windex bottle hanging from his pocket in need of $2, oil was automatically checked, and the smile from the attendant who you knew by name was complimentary with your fill up.  Now, it’s a lickety-split pit stop.  These days, I’m okay with that because I don’t have time for fluff.  But I appreciate the “good old days.”

When the sterile scanning stations arrived in retailers, I immediately did not trust them.  I was stubborn and stuck it out in the lanes manned by cashiers even when their lines were longer.  What if something was marked with the wrong price or it wouldn’t scan? I assumed it would take forever to get help with that issue in self check out. You see, I am the opposite of the technology geek, in fact I often feel like I float in and out of the technology Bermuda Triangle - all my devices seem to have gremlins or get lost on a weekly basis.  After overcoming some initial fears, I find my preference being the self- serve options for the more simple purchases.

For over a decade, technology for servers to take orders at the tables then transmit directly to the kitchen, has been available, but not widely embraced.  Several years ago, TGIFriday’s started automating some order taking of appetizers and desserts and processing credit cards with table top consoles. They included a gaming function which was an added treat, and an upsell to the guest check average.  I would like to know if it actually saves labor or just distract us from service delays.  A salesman suggested the same product for our fast paced, family style diner, but we were afraid that our walk outs would increase.  So, we passed, but I have to admit, I love playing me some trivia games while waiting for my Endless Appetizers.

McDonald’s, the mega star of the QSR industry, recently announced the national roll out of self-serve ordering kiosks to their 14,000 units as their response to rising labor costs from the $15 minimum wage increases bombarding the country.  They plan to have you place your own order and bring the food directly to the table.  Parking lot options with ordering stalls are available at some locations as well. Check out this video that shows the new process.   

The McDonald’s brothers were the inventors of efficiency. I am a bit skeptical, but like all things human, we’ll either adapt or go extinct like the pay phone or the Dodo bird.  Rollouts of this new equipment have already made it to my neighborhood in Los Angeles. Since I only do drive-thru, I may never be effected by this new change. Or will I?

Another company, that has taken automation to the max, is Zume Pizza in Silicon Valley.  As you can see from this video, they may come the closest to eliminating most of the staffing needs. It appears that even the two employees seen will be automated out in the near future.  Many of the common foods we eat today are made by machines, but watching my pizza being made in this manner does not look as appetizing. 

Some off-site delivery technology, unexpectedly provided my team some labor-saving