Technology is not a “silver bullet” for work

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McDonald’s has made a number of investments in automation and has looked into robotics. CEO Chris Kempczinski says the automation economy is “not fading”./Photo by Jonathan Maze.

Chris Kempczinski, CEO of McDonald’s, has bad news for restaurant owners who think automation will save their labor.

“There’s a lot of interest around what you can do from an automation perspective,” he said on the company’s second-quarter earnings call on Tuesday. “We spent a lot of money, effort, watching this. There will be no magic bullet to solve this problem for the industry. »

Robotics, he said, is good for “grabbing headlines,” but “it’s not practical in the vast majority of restaurants.”

“The economy is not in pencil,” he said.

Automating restaurants is easier said than done and isn’t just about buying a few robots and AI software.

Also, many restaurants weren’t built for this sort of thing. “You don’t necessarily have the footprint,” Kempczinski said. “And there’s a lot of infrastructure investment you need to make around your utilities, around your HVAC systems. You’re not going to see this as a large-scale solution anytime soon.

Add those costs and there’s not enough labor savings to justify the investment.

Robotics and artificial intelligence have been all the rage in the industry over the past couple of years as operators see them as a potential solution to their work problems. Restaurant wage rates are up double digits this year. And many operators cannot find enough workers to staff their sites.

More and more restaurants are adding technologies such as AI voice control in drive-thru, robotic fry makers, and even robot waiters.

And yet, delivery service DoorDash shut down automated robot Sally the salad.

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McDonald’s, meanwhile, has made substantial investments in various technologies, only to resell them. The company sold Dynamic Yield to MasterCard for $271 million this year, just two years after buying the Israeli company. Dynamic Yield hasn’t quite had the sales impact the company hoped for from a company that automates suggestive selling.

This deal followed an earlier sale of Apprente, an automated voice command company, to IBM, as well, two years after the company was acquired.

McDonald’s has lots of restaurants and lots of customers in each of the restaurants, as well as resources to invest in ideas like the aforementioned tech companies. There is also a strong incentive to add this type of technology, as it would potentially allow franchisees to get by with fewer workers, which could reduce store closures or service reductions due to labor issues, which could increase sales.

It should therefore be noted that the general manager of the largest restaurant brand in the world does not believe that the economics of these technologies are “in pencil”, at least not yet.

To be sure, Kempczinski thinks there are things companies can do to save on labor, like using data and scheduling software, for example.

“You’re not going to see robots in the restaurant,” he said. “We need to continue this the old fashioned way of making sure we’re a great employer and giving our team a great experience when they walk into the restaurant.”

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