Home > Uncategorized > Could Fast Food Automation Replace Low Wage Workers?

Could Fast Food Automation Replace Low Wage Workers?

Millions of people hold low-wage, often part-time jobs in the fast food industry. Historically, low wages, few benefits and a high turnover rate have helped to make fast food openings relatively abundant. These jobs, together with other low-skill positions in retail, provide a kind of safety net for workers with few other options.

In the current economic environment, these jobs are, of course, much harder to get. McDonald’s recent high-profile initiative to hire 50,000 new workers resulted in over a million applications—numbers that give McDonald’s a lower acceptance rate than Harvard.

What about the future? Most forecasts assume that the fast food industry will continue to be a significant job creator. The Bureau of Labor Statistics ranks food preparation as one of the top four fastest-growing occupations, and that trend is expected to continue at least through 2018.

Is it possible that these projections miss the impact of technology? Could these jobs begin to disappear? For some insight into what could potentially happen, consider this article from the New York Times about the Kura sushi chain in Japan:

Efficiency is paramount at Kura: absent are the traditional sushi chefs and their painstaking attention to detail. In their place are sushi-making robots and an emphasis on efficiency.

Absent, too, are flocks of waiters. They have been largely replaced by conveyors belts that carry sushi to diners and remote managers who monitor Kura’s 262 restaurants from three control centers across Japan. (“We see gaps of over a meter between your sushi plates — please fix,” a manager said recently by telephone to a Kura restaurant 10 miles away.)

Absent, too, are the exorbitant prices of conventional sushi restaurants. At a Kura, a sushi plate goes for 100 yen, or about $1.22.

Such measures are helping Kura stay afloat even though the country’s once-profligate diners have tightened their belts in response to two decades of little economic growth and stagnant wages.

McDonald’s has already announced plans to install touch-screen ordering systems in over 7000 European locations. To me, it is not difficult to imagine many of the ideas being utilized at Kura eventually being deployed throughout the fast food and beverage industries.  If automated preparation and off-site store management work for sushi, then why not for burgers or lattes?

One important thing to take away from the sushi story is the way in which a stagnant economy can be a driving force behind increased automation. Almost any type of restaurant food is a discretionary purchase: if the price is too high, people can and will refuse to buy.  That presents a real problem if—as is the case now—businesses are seeing significant increases in the price of the food commodities they must purchase.  For a business that is squeezed between rising input prices and tepid demand, investment in labor-saving technology can represent one of the few viable paths to continued profitability.

Increased automation in fast food and beverage providers is likely to someday offer increased convenience, speed, and ordering accuracy. Robotic food preparation could also be viewed as more hygienic as fewer workers come into contact with food. And of course, price will ultimately be the determining factor. As one Kura sushi customer quoted by The Times notes:  “It’s such a bargain at 100 yen,” … “A real sushi restaurant?” he said. “I hardly go anymore.”

If jobs in the fast food industry start to disappear, or even if the rate of job growth slows significantly, the implications for the workers that depend on these jobs of last resort will be dire. There may be few other alternatives for workers at that skill level, especially since other low-wage retail jobs may be similarly threatened.

See Also:

Krugman and DeLong on Automation

“The Economist” on Innovation and Jobs

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Categories: Uncategorized
  1. June 5, 2011 at 11:29 am

    Pretty sure I already posted this here, but Repetition, Repetition, Repetition, is always a good thing, (Lourdes Knows that it works for our Automated Overlords), so, here it is again.

    This is me ordering, (with a American Bank Based CC), a ‘Royale With Cheese’ @ McDonalds.

    In the very heart of München, Germany’s High End Shopping District.

    Off of an Automated, Digital Components®, Touch Screen, Electronic PROTOTYPE Kiosk:

    Please kindly bear in mind that this was shot 2 years ago.

    Which means that the Tech that Mickey Deez can Implement & Deploy today to “Displace” those 7K Human Workers is now, at the very least, 2 times better and more sophisticated than what you see in the above clip.

    It gets better.

    This is only the beginning, yo.

  2. June 5, 2011 at 12:37 pm

    Martin, I agree this robots-displacing-low-to-medium-skilled-workers trend is only going to accelerate from here on forward. And complementary to it is a trend for manufacturing process redesign to reduce the need for many high-skilled workers (by design-for-assembly, for example, or by rethinking complex tasks as a series of simpler automatable ones).

    Some of this trend is also being driven by an military imperative to automate the battlefield. As you have mentioned, it is strange that military planners think they can build robots to work in an unstructured battlefield in the next decade or two, but mainstream economists think it essentially impossible to build robots that can do most of the work required in structured warehouses or structured factories. Something does not add up here. :-)

    Mainstream economics is based on an income-through-jobs link (except for the very wealthy who can live off interest as a private “basic income”). Underlying assumptions of mainstream economics include:
    * that most human labor will have significant value in the exchange marketplace;
    * that the wealth from production will be widely distributed; and
    * that there will be infinite demand for goods and services (or demand will at least always keep pace with supply).

    All three of these assumptions are proving to be more-and-more problematical in the USA (even as other countries going up the same curve as the USA may be a little different for a time, although even China is starting to automate over price and quality issues).

    Robotics (like the example), AI, better design, and voluntary social networks are reducing the value of much paid labor, which can be substituted for in other ways. Also, advanced tools also allow fewer people to do more, which reduces the need for labor and has a depressing effect on wages. A negative spiral of fear takes hold and workers are afraid to ask for raises or even decent salaries if they find new jobs after being laid off from previous jobs.

    The gains from production efficiencies are not being distributed to the workers (at least in the USA). Thirty years of stagnant wages shows that, despite productivity doubling and tripling (or more in some areas). The benefits are going upward in the social hierarchy, as Marshall Brain mentions in “Robotic Nation”.

    The environmental movement of “reduce, reuse, recycle”, as well as social movements towards “voluntary simplicity” also reduce demand. There is in general a saturation of demand and a law of diminishing returns for more stuff and services. People only have so many hours in a day. Maslow’s “Hierarchy of Needs” suggests as humans advance psychologically, they tend to focus on self-actualization, which often can be fairly inexpensive — things like Yoga, or painting, or gardening, and so on. (Not all self-actualization is inexpensive, but much is, and that trend also couples with the previous two about environmentalism and voluntary simplicity.)

    So, three supporting pillars of mainstream economics are all crumbling.

    A fourth pillar of mainstream economics is that people need “incentives” to do creative work. That too has been shown to be false. While people can’t usually do creative work when they are homeless and penniless, when people have the basics (like a reasonable income), research, including by the US Federal Reserve Bank, shows more money as “incentives” actually leads to worse performance on creative tasks. But in the information economy, more and more tasks are creative. So, again, the logic of mainstream economics begins to crumbles. See:
    “RSA Animate – Drive: The surprising truth about what motivates us”

    I really like “The Lights in the Tunnel” as far as it goes in laying out the problem and suggesting one solution, essentially a tax-funded “basic income”. And I know that was a huge step for an entrepreneur deeply enmeshed in the US system to take conceptually. So, Bravo for that. :-) Listening to your Fast Forward Radio interview from a while back, it is clear how reluctant you were to come to a conclusion that goes so against what is mainstream financial conservative wisdom in the USA that lower taxes promote prosperity and job creation. That mainstream fiscal conservative wisdom might have been correct if there was no automation and if the society has roughly equal wealth across households, but neither of those assumptions are very true anymore, even if they were more true a hundred years ago.

    I think if there was one big area of disagreement I have with your solutions, it is that point from the Federal Reserve research mentioned in the linked video: research shows that despite conventional wisdom, based on paying people for hard manual labor where pay-for-performance makes a big difference, external incentives are generally counterproductive in an information-age economy based on creativity. When one stops thinking primarily in terms of external incentives, then other options start to open up for designing a 21st century high-tech economy that works for pretty-much everyone.

    There are at least five types of economies (or economic transactions), and we will see their balance shift with these trends. They are:
    * The exchange economy, for which a “basic income” through taxes is something of a improvement given the problems listed above;
    * The gift economy, like GNU/Linux and Wikipedia and blogging;
    * The planned economy, like when governments tax and give out grants, subsidies, build infrastructure (including public roads and even housing like in prisons) and establish regulations with penalties;
    * The theft economy (whether theft of attention via spammers, or identity theft, or armed robbery, or white-collar crime like Enron, conquest of other countries for their resources on a large scale, or whatever else).

    Broader solutions need to look into the balance of these economies.

    I’ve been thinking of writing a simulation game about this balance, inspired by your “Lights in the Tunnel” example, Chris Crawford’s “Balance of the Planet” game from long ago, and other things as well. Somehow we need to get more people thinking about these things and coming up with solutions that work for a high-tech 21st century society. It would be great if we could figure out how to work together on something like that. But even if we don’t, the more such information out there in different ways to get people thinking about all this, the better.

    Anyway, we may both be on Fast Forward Radio in the near future (I was on that program before a couple years ago), and if so, it will be fun to talk more about this.

    • June 5, 2011 at 12:47 pm

      Oops, I forgot in the five types of economies to list a fifth one:
      * The subsistence economy, where people produce stuff for themselves, like in home organic gardens, or in home shops, or using home 3D printers. Although in general, subsistence starts to shade into exchange or planned economies in somewhat large social units, like extended families or neighborhoods can also engage in subsistence production for the group, sometimes coupled with things like local record keeping of local exchanges, including even local currencies.

  3. hello
    June 6, 2011 at 5:14 pm

    Some of this has already happened/been happening for a while now. To wit–Sysco.

    For many restaurants, “cooking” merely is thawing/heating/ripping open a bag of pre-made Sysco products.

  4. June 7, 2011 at 3:48 pm

    Having just read “Let their people come: breaking the gridlock on international labor mobility” (Pritchett, 2006), artificial labor scarcity is causing capital misallocation. Hundreds of billions of dollars are being invested in labor-saving R&D and into labor-saving devices themselves. IF we had a free market in global labor, it wouldn’t be cost-effective to make these investments in the first place. Who needs a car that drives itself in India when a rental car comes with it’s own Indian Driver?

    • Dblade
      June 12, 2011 at 2:28 pm

      That’s not an international labor mobility issue though. A better example would be Google making self-driving cars in the US, and you saying “Who needs a car that drives itself in the USA when you can import Indian drivers at Indian wages?” That type of labor mobility can only depress wages, and as Martin writes in his book, is often a precursor to automation anyways.

      Automation almost always makes sense in terms of productivity benefit. That’s the problem. It doesn’t even need to be automation. I worked receiving for a large retailer that managed to slash productivity so much that we went from 20+ hour weeks to 4 hour weeks.

      I worry though. The service industry already has transitioned into a part/flex/salaried dominated industry. Anything more and it simply will make no sense to work at it for anyone, last resort or no.

    • Bill Wood
      June 14, 2011 at 5:53 pm

      How would an Indian Driver, or any other human driver equal a fully self-driving vehicle for cost, convenience, safety, reliability or any other metric you care to think of?

      Mass production would quickly lower the total cost of the self-driving car below that of the human driver. And you don’t have to worry about them needing to eat, sleep, getting sick, care for their family, or be concerned about them being intoxicated, sleepy, thieves, kidnappers, or be available when and where needed? If anything else, their body weight reduces the efficiency of the vehicle they are operating!

      This is true for a vast multitude of other occupations and tasks. Lifting international labor restrictions will NOT solve anything in the long run, even if I happen to agree that they should not exist as they currently do.

  5. mack - FL
    June 13, 2011 at 2:46 pm

    What will all those illegal immigrants do for work then?

    • Itzalk
      October 4, 2011 at 1:22 pm

      The illegal immigrants will ride in the passenger side of the truck that delivers and picks up the machines. They will unload and carry the machines to the installation points. They will carry the Sysco ‘ingredients’ from the back room and load them into the machine. They will pick up the trash that the fast food eaters leave behind on the tables and the floor. They will wipe down the tables. They will guide the machine repairmen to where the machine is located.

      They will emigrate to less developed countries, like Alabama..

  6. Dblade
    June 13, 2011 at 6:31 pm

    http://techcrunch.com/2011/06/13/aislebuyer-raises-another-7-5-million-to-make-checkout-lines-a-pain-of-the-past/ I’ve been following Techcrunch recently, and it seems this may come sooner than you think. Also to mack-FL, I hear rioting is a fast-growing segment of the job market.

  7. August 10, 2011 at 1:58 pm

    subtract illigals and add jobs

  8. August 22, 2011 at 3:45 am

    mack – FL :
    What will all those illegal immigrants do for work then?

    They could become president!

  9. Kevin
    July 31, 2012 at 5:06 pm

    Definitely agree that we should eat less fast food as a country. I think the biggest reason most of us resort to fast food places like McDonald’s, Burger King, Wendy’s and the likes is that we don’t have time to get food anywhere else. There is a solution, though! Food Trucks! Food trucks serve better food, serve MUCH healthier food, at a cheaper price, and are just as quick getting the food to you. For those of you who have negative preconceptions of food trucks, give them a try, I bet you’re pleased. Oh, and for fellow New Yorkers, check out Foodtoeat.com, NYC’s new online ordering site that allows users to place orders for pick up from food trucks, saving even MORE time and saving you from standing on line! Enjoy, ladies and gentlemen, and stay away from all those nasty “burgers” and “fries.”

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