How Could Robots Impact Jobs in the Restaurant Business

Robotics

How Could Robots Impact Jobs in the Restaurant Business

We keep hearing robots are inevitable for the restaurant industry. It is difficult to hire and retain labor in many big cities and people desire several features robots provide such as better food safety, portion control, accurate calorie information, a fun user experience and 24/7 availability. How could this disruptive technology impact productivity, jobs and careers in the restaurant business? Let’s discuss.

In the past two decades, a dozen different industries have transitioned to robots. Yes, restaurants are one of the remaining few to adopt robots. Industries that have adopted robots include mining, chemicals, textiles, electronics, metal working, construction, agriculture, transport equipment and several others. Georg Graetz of Uppsala University and Guy Michaels from the London School of Economics published a highly referenced paper which analyzed these industries to see the impact robots had on them. The Harvard Business Review had an article that discussed these findings too.

Impact of robots on productivity

Overall, Graetz and Michaels conclude that the use of robots raised the annual growth of labor productivity and GDP by 0.36 and 0.37 percentage points, respectively, between 1993 and 2007. That might not seem like a lot, but it represents 10% of total GDP growth in the countries studied, and 16% of labor productivity growth over that time period. The increase in labor productivity is comparable to other major technologies such as the steam engine and IT, as shown in the figure below. IT had five times as much capital investment as the steam engine and robots, however.

Impact of robots on jobs – for industries that have adopted them already

If robots are a substitute for human workers, then one would expect the countries with higher investment rates in automation to have experienced greater employment loss in their manufacturing sectors. For example, Germany deploys over three times as many robots per hour worked than the U.S., according to Graetz and Michaels. This is largely due to Germany’s robust automotive industry, which is by far the most robot-intensive industry (with over 10 times more robots per worker than the average industry). Sweden has 60% more robots per hours worked than the U.S. thanks to its highly technical metal and chemical industries.

By the authors’ calculations in the Harvard Business Review, there is, as yet, no correlation between the use of robots and the change in manufacturing employment. See the figure below. Despite the installation of far more robots between 1993 and 2007, Germany lost just 19% of its manufacturing jobs between 1996 and 2012 compared to a 33% drop in the U.S., Korea, France, and Italy also lost fewer manufacturing jobs than the United States, even as they introduced more industrial robots. On the other hand, countries like the United Kingdom and Australia invested less in robots but saw faster declines in their manufacturing sectors.

For their part, Graetz and Michaels also see a lot of ambiguity when it comes to robotics’ influence on the labor force. They cannot rule out that there is no effect of robot densification on national employment levels. But they do see varied skill-biased impacts. Specifically, their data suggest that the arrival of robots tended to increase the employment and pay of skilled workers even as it seemed to “crowd out” employment of low-skill workers. So, while robots don’t seem to be causing substantial net job losses, they do seem to change the sort of workers that are in demand.

Other studies and rationale for the results

General Motors installed the first industrial robot, a spot welder, at its New Jersey automobile factory in 1961. By 2000, the number of industrial robots had climbed to 92,900. Yet between 1970 and 2000, U.S. manufacturing employment held steady at around 18 million jobs. Manufacturing only saw a steep decline after the United States agreed to establish permanent normal trade relations with China in 2000.

Counterintuitive though it may seem, the conventional economic view is that labor-saving machinery need not reduce overall employment. That’s because businesses typically use productivity improvements to lower prices and increase sales, which leads to more hiring. Some job losses have been offset by new sales and support jobs. New technology also requires people to manufacture, repair and (sometimes) operate it. Most economists argue that after a new technology is introduced, employment will bounce back in the long run and perhaps even increase. This is what happened during the industrial revolution.


Our vision for how the restaurant industry will evolve as robots get introduced

Let’s first discuss Chowbotics’ vision on the type of restaurant jobs robots could do.

  • We believe interacting with a welcoming, friendly server is a key part of the sit-down restaurant experience. We don’t foresee robots being used in such applications anytime in the near future. Our survey of restauranteurs confirms this as well; sit-down restauranteurs feel a robot will not give human warmth or the ability to handle varied customer requests, accents and preferences.
  • We do not believe robots can handle high-skilled jobs in kitchens, like designing or creating new recipes, in the near future. We believe humans will create new recipes and cooking styles.
  • Robots are good for low skilled, repetitive tasks in kitchens. In some places like fast food restaurants, robots may be placed next to soda machines for some low-skilled, repetitive tasks.

Before we look at job impacts of robots, let’s look at sales. We believe robots could boost sales in the restaurant business. Why is that?

  • More than 25% of restaurant sales goes to pay, insurance, overtime and taxes related to workers. This will probably increase quite significantly once the minimum wage increases by 50% from $10 to $15. Robots promise to bring the total labor cost down quite significantly. In the highly competitive food industry, a good portion of cost reduction would go to end customers. Lower prices increase sales. This is similar to what happened in various manufacturing sectors where robots were introduced.
  • Robots provide new features which boost sales. For example, when a human worker makes a salad, he guesstimates the amount of lettuce, tomato, chicken and dressing. It is hard to predict how many calories come out. For people with fitness plans, this is a big challenge when eating out. Now, if you have a robot with weight sensors, which give precise portion control, you can tell how many calories would be present. You can even tune the calories on your salad by modifying the amount of dressing on a tablet placed on your table or by telling your server or with your smart phone. Robots also offer mass customization, which is important for millennials, and again would boost sales.

Whenever sales go up, restaurant workers get more jobs and pay. The human servers get more tips. Chefs and high skilled folks in the kitchen get more hours or get paid

The other thing robots will do is create a new industry of people researching, developing, making and servicing robots for food businesses. The food industry has some pretty unique requirements for robots that make their design very different from standard robots used in manufacturing.

Most people who go to culinary school dream of making tasty, trendy, creative new recipes. However, many of them spend little time doing the creative work of developing new recipes, and instead end up being cooks who do the same thing over and over again. Today, it is hard for a chef to come up with a new recipe for multiple reasons. A chef is busy since he ends up doing or supervising tedious, repetitive tasks for much of his workday. Multiple line cooks need to be trained on how to cook the new recipe. New menu cards need to be printed.

I believe future restaurant menus will be tablets, where one can dynamically change the menu and add a bunch of specials every so often (I can already buy 10″ tablets in China for $30). No extensive line cook training will be required to make a new recipe. Robots need the chefs to enter the recipe once, and voila, a new recipe is ready to serve in a bunch of restaurants. Chefs will have time to create new recipes since they will spend less time doing repetitive tasks in the kitchen. You will see chefs doing things they wanted to do when they first joined culinary school instead of doing repetitive tasks all day. Yes, robots could help cooks become chefs.

The net result of all this is shown in the figure above: robots may not lead to significant reductions in total number of jobs in the restaurant business. In fact, robots could create high-skilled jobs where people can make a living wage.

Parting Thoughts

I’d like you to leave you with one image from the Danish Technological Institute. Someone may argue there could be more jobs and more time spent by workers moving stones if they had persisted with square wheels in the figure below. But aren’t we glad humans began to use round wheels? It’s going to be really exciting for the restaurant industry when robots do come in. Sales and innovation will increase. New, high-skilled jobs will be created. Restaurant owners will need to worry less about the fact that 2 out of 3 workers quit their job every year. They will need to worry less about hiring and training replacements. Food will be consistent. Consumers will know exactly how many calories they are eating. They can get healthy food where they tune their calories. We will have far fewer cases of a restaurant worker falling sick, coughing into people’s burritos and getting 100s of people sick. Food prices will go down allowing millions of additional people below the poverty line to get a square meal a day. Won’t it be wonderful when all this happens?

 

By: Deepak Sekar