California is pushing Automation by Raising Labor Rates

[Arthur Hanson]

With California setting a fast food wage of twenty dollars an hour, this will do more than anything to push automation of not only fast food businesses but starting a trend that will end up being applied to all businesses as automation both vertically and horizontally throughout corporate labor structures throughout California and ultimately the rest of the nation. This should be a major factor in advancing the semis needed to power automation forward, which will only lower the price of automation, but increase the penetration. Once this trend gets traction, it will provide a major tailwind for the tech industry at all levels. Any thoughts or comments appreciated.

 

[cliff]

The state is allowed to dictate an minimum wage for a particular industry for a non-essential/government entity? Really?

Arthur, perhaps you should invest in designer lunch boxes.

 

[Arthur Hanson]

The state is allowed to dictate an minimum wage for a particular industry for a non-essential/government entity? Really?

Arthur, perhaps you should invest in designer lunch boxes.

I'm already invested in the companies that provide the brains and sensors for automation. California as a leader is doing me a favor by accelerating the demand for automation and robotics. Automation has been in the professions for decades and now will push into areas that have been dominated by cheap labor as the costs come down due to technology and actions like this that push scale will only increase the demand and the advancement of robotics by definition.

 

[peter]

That's what our company is trying to address with service robots, but you'd be surprised...or not...at how resistant American restaurants and food establishments are at adopting technology and just resisting change in general. The market size for automation equipment in restaurants is about 50-100 times bigger each in Korea and Japan vs the entirety of the US, and when we discuss with potential customers, their plans to adopt automation technologies are still years out. Despite the fact many of these decision-makers have seen these tools deployed when they visit food establishments overseas, there's a lot of factors that are crippling their ability to rapidly react, some that are actually valid, and others that are largely a figment of their imagination.

For fast food establishments, it should be a no-brainer to adopt automation technologies. You don't go there to chat up a storm with the wait staff and just want to get your food, quick in and out. But I've seen countless times visiting fast food restaurants how many guests have complained about the ordering kiosks and the laziness of patrons in general when it comes to ordering their food. The level of service is already low so owner/operators are reluctant to bother with service robots, though some have adopted automation more on the back-end.

AB1228 changed the requirement from 100 locations nationwide from AB257 to just 60 locations, so if there's a fast food chain with 60 locations nationwide and even one happens to be in California, that particular location would have to abide by the regulations. You'd think it'd impact these larger chains the most, but every mom and pop restaurant owner I've spoken to says this will impact them even more. Why? Unless they match or pay more, their workers will just go over to the fast food chains that pay better. They're already struggling and this will just hurt them more. But they're also very reluctant to adopt these new technologies too because it requires making changes to their floor plan to better accommodate these tools.

On that note, the Asian restaurant owners were very agile and accommodating, we've had several remodel and rearrange their layout to accommodate our tech and they're quick to grasp the benefits. But non-Asian restaurants...forget about it. Zero attempt and zero effort to make changes. The cultures are so far apart in their dining experience and expectations. Many don't even adhere to ADA requirements in aisle width requirements and again, no effort to comply, it's incredibly frustrating to see. This extends to the back-end as well, robots and food processing automation systems save tremendous costs but they take days to implement, pull permits, prepare construction for changes needed, install new equipment and most restaurants, when they see the initial cost to make those changes, they just balk and continue business as usual.

There's tremendous resistance from the labor/workers and unions as well. When we speak privately with them, they obviously see the benefits, but they're not going to go out publicly and admit that. So despite California mandating these smart/stupid policies, it's not having as much of an impact as expected. It will change inevitably, I'm sure, but the pace is snail like vs the rest of the world.

 

[cliff]

Peter has a point. The Flowbee never took off. What are the odds of 5 Robots (burger joint) succeeding?

 

[milesgehm]

Some Stanford engineers started Mezli last year. It is now closed. Might be reopening next year. I don't see the fast food wage as having any impact soon.

"
As a customer, you make your selections — like a bowl of falafel, or spiced lamb and tzatziki with vegetables, turmeric rice, hummus and a cookie and drink on the side — from one of the digital screens on the side of the box. Inside, machines heat, mix and plate the ingredients associated with your specific order.

Minutes later, the restaurant dispenses your order from a pickup window at the end of the box. Mezli can currently churn out roughly 75 meals an hour, which Kolchinski says is on par with most large-scale fast-casual restaurant chains.

There’s still an important human element in Mezli’s process. Minnich, the founding chef who devised Mezli’s adaptable menu to work with the restaurant’s robotic tech, leads a team of cooks in an off-site kitchen who prep ingredients that get delivered and loaded into the refrigerated Mezli restaurant."

 

[peter]

I've worked with a company that can make bowls of ramen without human intervention, we also have a beverage robot and a whole suite of cleaning robots, but again, the disparity in adoption here in the US vs RoW is astounding. Restaurants in America, both from the management/ownership standpoint and the laborers themselves, suffer greatly from a perception problem. For one, the culture of tipping is almost exclusively American; outside of the US and Canada to a lesser degree, the only countries that practice any form of gratuities are countries where a lot of American tourists visit (and typically limited to just the areas where those tourists visit within their respective countries). For workers, they're afraid deploying robots will cut in their take on gratuities, but every restaurant we've actually deployed robots at, that's never been the case and it's almost always the case they end up taking more since there are fewer workers needed to split table service with. The workers also view the robots in an antagonistic light initially, but once deployed and the workflow protocols are refined, they come to appreciate how helpful they are and how less strenuous their work becomes. Compare that to anywhere else in the world where they don't have gratuities to deal with, the feedback we get is the robots are readily accepted and embraced by the workers from the get-go.

The other perception issue we encounter from management/owners is the thinking that robots will somehow be viewed negatively in how patrons perceive the customer service at their establishment. Again, we've never had restaurants even bring up such concerns outside of the US, but here, they're worried about it even before trying it. And the reality is, patrons don't really care if a restaurant has robots or not as long as there are human workers that are attentive. For human workers to be wasting time going back and forth running food and bussing, it takes away from the time they can use to interface with guests so customer service always improves with the use of robots, but that perception issue is extremely hard to overcome. Every mom and pop restaurant thinks they're running a Michelin restaurant or something! ChatGPT and the like can't completely displace humans, just as these robots aren't designed to completely replace all human workers in a restaurant, it's merely a tool, and a pretty useful one at that, to reduce the most laborous aspects of working at a restaurant, or floor cleaning or insert-any-repetitive-task-better-served-by-automation.

It's also interesting to see restaurant owners get more worked up about concerns that California might ban natural gas connections in new construction. Couple cities in California tried and the federal appeals courts reversed them, but the notion that the government can restrict a method to heat food for restaurants is raising more concern than a rise in labor costs. It's insane to restrict the use of natural gas to heat up food, do these guys in Sacramento really think a wok or a pizza oven can be retrofitted with electric heating elements and perform the same? They're going to need at least a 600A 480v connection to the utility for a small Chinese take-out joint, I can't begin to imagine what the power requirements for a full fledged restaurant would look like to power the kitchen with electricity!