Last week, global fast casual chain Caliburger unveiled its newest employee: "Flippy," a cutting-edge robot that can grill, flip, and plate burgers, thanks to computer vision and heat sensors. It'll start behind the stoves in early 2018. On the heels of this announcement, the restaurant also rolled out automated ordering at its Pasadena, California location.
Caliburger is just one of a cluster of food industry innovators redefining customer experience with AI. Others include Cafe X, which employs a robotic arm barista, and Eatsa, where made-to-order quinoa bowls appear in Gattica-like cubbies. The future is now. What everyone's talking about, however, is how this going to impact the 3.8 million Americans currently employed in the fast food industry.
The answer: not in the way you think.
Let's step back for a minute, though, and confirm that the beating drum of automation is louder than ever, and unstoppable.
Even Wendy's, of all places, announced to investors last month that it's rolling out self-service kiosks. In an email, spokesperson Heidi Schauer confirmed that they're currently in 30 restaurants; 1,000 more high-volume spots are set to receive them eventually, although the timeline isn't clear. McDonald's is rolling out similar kiosks, like this one in New York City; Panera already has mobile and iPad ordering at more than 400 stores, which have raked in impressively higher sales than stores without digital options.
While automation in fast food is nothing new—indeed, it's inherent to its working model—we're increasingly seeing this technology move from back-of-house to the front, completely revamping the customer experience. Touchscreen technology and responsive AIs are redefining quick-service restaurants in the same way that drive-thrus did in the 40s and 50s.
So far, the proven benefits for customers are obvious: quicker turnarounds, easier customization, and the inherent appeal of digital—at least for Millennials, who have strong preference for mobile and kiosk ordering, as acknowledged by Wendy's and Panera leadership.
The benefits for fast food companies are also predictable, if problematic in their anti-labor implications. "Improved accuracy" of orders is a big one, according to Blaine Hurst, Panera Chief Transformation & Growth Officer.
Machines, as it turns out, are also just easier to work with. Andrew Puzder, Carl's Jr. and Hardee's CEO and former Trump labor secretary nominee, put it bluntly last March: "They're always polite, they always upsell, they never take a vacation, they never show up late, there's never a slip-and-fall, or an age, sex, or race discrimination case."
By far the biggest incentive for automation, however, are various states' proposed wage increases. While a pay hike hasn't been mandated on a national level—and is unlikely to be, given Trump's views and those of a Republican controlled Senate and House—California, for example, is scheduled to increase its minimum wage to $15 per hour by January 1st, 2022.
As Puzder told Business Insider in 2016, "If you're making labor more expensive, and automation less expensive—this is not rocket science." He added, "With government driving up the cost of labor, it's driving down the number of jobs."
So, does that mean widespread job loss in the fast food industry? Dr. Chris Tilly, a director at UCLA's Institute for Research on Labor and Employment, says probably not. At least not in the long run.
"Historically, in the US economy, there's always been new resources in employment," he explains. "Now, things can always change. But I would say over the last 200 years, since industrialization started in this country, the overall trend is that automation eliminates some jobs, but opens up new opportunities as well."
Cue the drive-in bellhops who went of style, and the drive-thru workers that took their place. While AI technology is being posited as a exponential shift in our culture—and it indeed may be—our economy probably isn't going to crash because of Uber's driverless cars and barista-less coffeeshops.
Dr. Tilly also points out that, in fast food, "automated kiosks will create some other jobs—people to stock the kiosks, fix broken machines or computerized controls, [and] provide security," for example.
So, while worries about the decreasing quantity of total jobs is perhaps unfounded, the quality of these future jobs is another matter altogether—and the future's not looking too bright there. Fast food workers—a generally undereducated, socioeconomically disadvantaged demographic with little in the way of technical skillset—have few bargaining chips when it comes to finding jobs that pay well and don't treat them like shit.
"There are not many [jobs] left where skill requirements are modest, but you can earn a decent wage," Dr. Tilly says. "But they do tend to be in industries where unions are still relatively strong." He points to UPS warehouse workers, as well as certain enclaves of retail jobs—Costco, for example, which "offers higher wages and better benefits, and in return enjoys lower employee turnover and higher productivity." He adds that some service workers within large institutions have this stability as well. Think janitors and cafeteria workers at universities, for example.
But, he's quick to point out, "for every high-wage example, there is a low-wage alternative that has been gaining ground: FedEx and Amazon, Wal-Mart, outsourced cleaning and cafeteria workforces."
There's also growing industry of healthcare and personal care workers that's open to receive overflow from other industries. Nannies and home health aides, while often doing intensive and necessary work, aren't well-compensated. Many of these positions don't require certifications (compared to, say, a phlebotomist), and are usually offer limited benefits, making for high turnover.
So what's the solution to be able to bring better, higher paying, and more stable jobs to workers?
Well, in a nutshell, it's government regulation (yes, a higher minimum wage), and stronger unions—exactly what fast food giants like Andrew Puzder are so vehemently against.
In his research, Tilly and his team looked at how employees fared in several other countries. Predictably, Western Europe kicked our ass.
Golden child Denmark, for example, enjoys a robust retail labor market because it has virtually universal collective bargaining. Basically, everyone is in a union. This empowers workers to strike and demand higher wages without the fear of being fired. The country's retail market has many similarities to fast food, too: Increasingly, it's a high-turnover industry due to a workforce that's undereducated (maybe without a college, or even high school degree) and not necessarily possessing a technical skill set. Denmark, however, has been able to make the industry more or less pro-worker.
Workers in France reap similar gains—more stable, higher paying jobs—because their government has taken it upon itself to regulate wages. What this means is that French employees enjoy higher minimum wages.
Yes, it's true: People can earn living wages without sending the economy into collapse —even in the United States, despite what conservatives like Puzder have been threatening.
"Research from the 1990s forward," Tilly explains, "has generally shown that there has not been job loss associated with incremental minimum wage increases," he says. Basically, if our economy stays relatively healthy (without, say, another recession), an incremental wage increase to $15 per hour might slow job creation, but it wouldn't cause job loss.
Don't get too excited, though, because $15 per hour in 2023 (as California is on track for) will still be a shitty wage in most areas. "It'll still be below the historical level of the minimum wage as it was in the 60s and 70s after taking into account inflation," Tilly says. "The minimum wage has gotten so low in inflation-adjusted terms, that there's room for it to go up without any negative effect on jobs. Now, how much room—that's where the debate starts breaking out."
Even if workers were to win the Fight for $15 on a national level, most companies would probably just bake that extra labor cost into higher prices. "Historically, when a McDonald's or a Wendy's or a Taco Bell encounters a minimum wage increase, a lot of that gets passed down to the customer in price," Tilly says. In general, fast food customers are more solidly middle class than the employees behind the counter—so this natural redistribution of wealth, even if it doesn't flow from the profits of the One Percent, is something we can be OK with.
So, clearly, when it comes to automation, the wage debate, and fast food, things are complicated. At the end of the day, however, it's not robots and mobile interfaces that are taking fast food workers' jobs. There will always be work, even though the nature of it might change. The shitty pay probably won't, though. Ultimately, it's up to government entities to regulate corporations to make these existing jobs better paying and more stable.
Of course, given the current administration, good luck with that.