Big food automation is making its way to Main Street’s menu
Tally 3.0, an autonomous mobile robot scans stock in grocery stores.
Robotics and automation are often associated with multimillion-dollar budgets in multi-billion-dollar businesses. But as the cost of technology has come down, it’s become more affordable to smaller companies — even small businesses.
THEY Burger Spot!, an Atlanta-based burger and wings restaurant with four locations in Jonesboro, Georgia got fed up of slowing down because of phone orders.
You can choose from beef burgers or turkey burgers. You can also customize the patties with sauces or other toppings. With all these options, it took seven to eight minutes for a phone order. That’s if staff was available to process those phone orders.
Cedric Pool (president of THAT Burger Shop Franchising, Inc.) stated, “Our menu’s a bit complex. There are a lot more options.”
“Staffing . . Pool stated that “it was a major problem, and it will continue to be so.” Pool said, “We thought we’d be able automation of the order-taking process and not have to pay someone to do that.”
Grubbrr was the solution. It sells kiosks, freestanding, that are able to accept in-store orders, integrate them with online orders, and even have a point of sale system. Two kiosks were installed in Pool, and they cost $14,400. That’s about the price that a company would pay to have them take phone orders for one year.
The average order for a restaurant ticket increased by $19 to $21. Pool stated that the average sales per hour rose from $50 to $85, while Pool claimed that it was in the upper 50s.
Technology has been a notorious problem for restaurateurs. Grubbrr chief executive officer Sam Zietz stated that this is largely because of their access to low labor costs.
A recent survey by the National Restaurant Association found that seven out of 10 restaurants don’t currently have sufficient employees to meet customer demand. Restaurant industry has grown 1.7 million jobs in 2021But, there are many restaurants that still have a shortage of staff and they expect this to continue to limit their growth.
This is the latest CNBC|SurveyMonkey Small Business Survey for Q1, 17% of respondents in the accommodation and food services industries cited labor shortage as the biggest risk to their business.
Dirk Izzo is senior vice president of NCR Hospitality and general manager. NCR Hospitality provides technology for restaurants. Customers in Denver and Jacksonville have reported that their kitchen costs are 20%-40% more than they were a year ago.
Izzo stated that automating things can make a huge difference in reducing costs if you are taking on these expenses.
Contactless ordering is one of the most common technologies that restaurants can use to pay their bills. Customers can order from the restaurant using their mobile phones by scanning QR codes placed at tables. It saves time for employees who otherwise would have to place the order manually at the point-of sale.
Technology is becoming cheaper
Robotics’ cost is falling due to larger investments in the global smartphone market and the self driving car industry.
Brad Bogolea is co-founder of Simbe and the chief executive. Simbe uses computer vision to monitor inventory levels in grocery stores, hypermarkets, or drugstores.
Simbe works primarily with big retailers at the moment, however Bogolea stated that Simbe also has relationships with small retailers with between 50 and 100 shops. Simbe can scan an entire shop’s inventory up to three times per day. It also allows customers to place orders when stock runs low. Bogolea stated that it is not possible for humans to scan these items at such a high frequency and fidelity in these settings. Traditional retail stores spend between 30 and 100 hours per week in inventory.
Technology providers often offer automated services. Companies pay a monthly fee instead of paying large upfront equipment costs. GreenSeed Contract Packaging is a Chicago-based company that uses robotics for repetitive packaging tasks such as moving boxes from one line to another onto pallets or packing baby snacks in a container. Monthly billing is determined by the hours that the robot has worked.
GreenSeed’s chief executive David Gray stated, “Instead of hiring a temp worker through an agency, you can have a robot come in.” Based on the contract structure, robotics costs are 40% to 50% lower than hiring a worker. A person would cost at least $17 to $18 per hour. Benefits and the costs of a temp agency will not be included. Gray stated that you can reduce costs while achieving better consistency.
While the cost of technology has come down, smaller companies — lacking economies of scale — still need to spend more as a percentage of their revenue than their larger counterparts. Accounting is a good example of this, even if you’re not in the food industry. A recent survey by Ernst & Young70% of big companies that have revenues over $30 billion plan to spend $2m to $6m on tax automation technology. By comparison, 81% of smaller companies with less than $1 billion in revenue plan to spend between $1 million to $3.99 million — less, but not that much less.
“That’s a pressure on the smaller companies where they’re almost spending as much,” said David Helmer, global tax and finance operate leader at Ernst & Young.
Small business economics and inflation
Small businesses are now seeing the costs of automation in relation to increasing costs in core business areas.
Nana Joes Granola in San Francisco has faced higher raw material and labor costs. The company is looking for ways to reduce the cost of premium granola as more consumers consider their financial decisions. Michelle Pusateri of Nana Joes Granola suggested that the company could reduce the bag volume by some ounces or change the recipe in order to lower the ingredients cost. Or, use automation to increase the output.
Whole Foods is one of the company’s retail partners. The company is now facing high competition in a market that is highly competitive. While it was able pass on some sales booms to its customers in 2021, higher prices during inflation makes it more difficult to be a granola maker.
Covid EIDL Loan was granted to the company. It mostly used it for stocking up on higher-priced ingredients. Inflationary factors meant that the company had to make larger purchases to obtain better deals. Nana Joes Granola also has a portion for automated packaging and may need to borrow equipment loans.
I don’t believe inflation will go away anytime soon. “We will remain stuck in this,” Pusateri stated.
Pusateri stated that while she is supportive of the high wages earned by workers in the economy, adding that it would not mean reducing staff, investing in automation will also help to increase productivity. She said that the women who have been working with us since 2016 do the same thing over and again, and it is exhausting.
Click here to learn more or sign up for CNBC’s Small Business Playbook. here.