McRobots Coming to a Restaurant Near You

Oh the elusive perfect employee!

That employee who is never late, and doesn’t take bathroom or cigarette breaks.

That employee who is never sick, and doesn’t take vacations.

That employee who doesn’t have family, and is committed to the job.

That employee who is always consistent, and doesn’t make mistakes.

And best of all, that employee who works 24 hours a day, for free.

With rising minimum wage, fast food chains in the United States are looking to replace human employees — and their wages — with robots.

McDonalds [NYSE:MCD], Panera [NASDAQ:PNRA] and Wendy’s [NASDAQ:WEN] have already implemented some automation into their restaurants. You can now browse the menu and order through electronic kiosks.

And the kiosks are just the beginning. Fast food chains are looking to go further.

Take Pizza Hut, for example. They have teamed up with MasterCard and are experimenting with a robot waiter. Pepper can take customer’s orders, customise them and receive payments.

And robots are not just limited to the front of house. Kitchens, where consistency is key, are also becoming automated.

A group of engineers at MIT have invented an automated mini restaurant called Spyce Kitchen. Their robot chef can prepare meals in under five minutes.

First, you choose your meal on the app. Then, Spyce Kitchen will measure the ingredients and prepare them in front of you. And it will track the temperature of the food at all times with an array of sensors.

In Japan, the restaurant Fu-A-Men (Fully Automated RaMen) is already operating with a fully automated chef and kitchen assistant. The perfectly synchronised robots can prepare 80 bowls of ramen a day with precision and accuracy.

If you ask me, it seems a bit cold and clinical to me.

Maybe that’s why they entertain clients by playing a Manzai game. That is, one robot attacks with a knife while the other one picks up a pot lid to defend itself.

Yet it looks like McDonalds wants to be the one spearheading the change.

It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries,’ former McDonald’s USA CEO Ed Rensi said to Business Insider in regards to the minimum wage increase.

McDonalds has already opened a restaurant in Phoenix completely run by robots, with just a minimal amount of human employees to supervise.

The robots can work at a speed 50 times faster than the average McDonalds employee. With no chance of making an error.

In 2015, McDonalds spent about 27% of their revenues in salaries. So they are working on eliminating employees while producing food faster and with less waste.

By taking the humans out of the equation, McDonalds is expecting to make a full financial turnaround from the decline it has seen in recent years.

In Australia, Domino’s Pizza’s [ASX:DMP] stock has jumped over 900% in the last four years. And to keep growth going, they are moving into automation. They are trialling robots to cut delivery times to 10 minutes in the next 10 years.

We are only a couple of years away from seeing a big change in the fast food industry. And the move to automation will most likely affect employment for lower income workers and students.

According to a New Work Order report, 70% of people currently entering the workforce will be affected by automation. And over the next 10–15 years alone, it estimates that 40% of existing jobs will disappear.

The change is coming, quickly. And automation will increase unemployment around the world.


Selva Freigedo,
For Markets and Money

Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.

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