Raising prices isn’t a viable option since fast food is such a price-sensitive segment. On the other hand, we’re already seeing mobile apps that let customers order their food ahead of time, and then pick it up at the counter, potentially making cashiers redundant.
Imagine if the assembly line at your local McDonald’s was as automated as the ones that make cars in Detroit.
Farfetched? A new report from financial services firm Cornerstone Capital Group makes a solid case that humans behind the counter may be going the way of the McD.L.T. The chief factors are a climate change-induced spiking of food prices, the uncertain consequences of Obamacare — which could boost the costs of employees — and income distribution trends, which are “increasingly a point of social and political contention.”
Since labor and food costs account for 60% to 70% of industry revenues, those factors threaten a category that already operates on slim profit margins. Raising prices isn’t a viable option since fast food is such a price-sensitive segment. Still, John Wilson, head of corporate governance, engagement and research at Cornerstone Capital, said we shouldn’t expect to see automated kitchens for another decade or so. On the other hand, we’re already seeing mobile apps that let customers order their food ahead of time, and then pick it up at the counter, potentially making cashiers redundant.
Such technology can help cut costs by making the business more efficient. “When possible, technology used in ordering (kiosks, mobile, online ordering) can speed the process, improve accuracy and decrease labor cost to the operator, allowing them to maintain their current cost margins,” according to Darren Tristano, executive vice-president at Technomic, a firm that tracks the fast-food industry.
However, Tristano was less sure about robots taking over the kitchen.
“With regards to the back of house, automation in the kitchen — which can help improve labor efficiencies — will also reduce cost, but to some extent, takes away the personal touch of a cook or chef,” he said. “These changes may be less desirable by consumers. Overall, automation today will likely save a few dollars, but likely will not be a big impact on restaurant operators who have and will continue to focus on service, hospitality and a friendly smile.”
Have something to add? Share your comments on Facebook.