The Job Report: Robots On The Rise

Hey, we all feel the Bern (good or bad), but I have one thing to say to Larry David: “be careful what you wish for.” Raising the federal minimum wage to $15 will only exasperate the robot takeover of America’s dull, dirty, and dangerous jobs. I am typically the first person to defend robots against the choir of paranoid economists, but the facts on the ground relative to the fast food and retail industry speak otherwise.

When the first retail robot was introduced, the Automated Teller Machine, in 1969 at Chemical Bank in New York, the media heralded it as the killer of bank tellers. Today, there are more bank branches than ever. Banks decided that the dull job of cash management could be relegated to machines, while bolstering its services beyond the 3pm closing bell.

Fast food workers need to think differently, too. According to Ed Rensi, the former CEO of McDonalds, robots offer both more services and bang for the buck compared to human fry-cooks at $15 an hour, “if you look at the robotic devices that are coming into the restaurant industry – 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.” Rensi, who was criticized this week for speaking too frankly, continued to state that the proposed national minimum wage of $15 an hour would lead to “job loss like you could not believe.”

Rensi’s prophecy is being fulfilled already in Asia. Just this week, Pizza Hut and MasterCard announced that Softbank’s humanoid robot, Pepper, will be replacing servers in select restaurants by the end of the year. Pepper will be able to take orders, make recommendations and accept payments using MasterCard’s digital payment service, MasterPass.

“Pepper can replace a digital kiosk experience, so instead of putting a bunch of tablets or display units in your restaurant, you would have the ability to put a robot in its place and have that cognitive experience,” says Tobias Puehse of MasterCard. “Approach the restaurant, order some takeaway, and Pepper would take you through that ordering experience.”

Mr. Puehse said in a statement that the partnership aims to “provide customers with more memorable and personalized shopping experience beyond today’s self-service machines and kiosks.”

“Pepper has the ability to do emotional sensing,” he said. “It gets a sense of whether the consumer is happy or sad. That can help to make it engaging. Pepper would potentially adjust the ordering process for a customer who is happy or [excited]. Pepper could potentially make some jokes, etc. It actually responds to how the consumer is feeling. It’s almost like digital empathy.”

Robots are also being implemented in other Asian fast food brands. For example, at KFC’s concept store in Shanghai robots help take customers’ orders. KFC enlisted Chinese tech company, Baidu, to build robots for its store in an effort “to bring a fun and high-tech element to the dining experience.” In addition, Baidu offers an alternative to Softbank’s Pepper, enabling the parent company (Yum! Brands) to properly test out competing technologies as it looks to replace human labor in the future. 

Unlike Pepper, the Baidu robots are stationary, turning their bodies and heads when interacting with customers (like a giant Jibo). Today, Baidu’s robots do not physically accept cash or credit cards from restaurant guests, instead the robot displays a QR code that the customer scans with a mobile payment app (similar to the Starbucks app).

To the pedestrian robot observer, these robot trials may seem like innocent attempts to spice up the experience, but it is no coincidence that KFC and Pizza Hut are owned by the same parent company – Yum! Brands. Yum! is also one of the world’s largest restaurant companies with nearly 43,000 restaurants in more than 130 countries and territories. If these tests are successful, one wonders how quickly Rensi’s predication will come true with raising labor costs. 

Unlike previous marketing gimmicks, such as noodle cutting robots and customer service bots, the Yum! foray into robots represents the first mainstream implementations of a major global brand. Today, the Shanghai store is still largely run and staffed by humans who prepare food and take orders, but the robots are gaining popularity. KFC China said the reaction from customers has been enormously positive. The robots are attracting millennials into the store by offering a novel way “to engage with young, tech-savvy customers.” KFC has not yet decided if it will install the robots in other locations.

If one thinks that Yum!’s experiment is limited to Asia, where robots are culturally more popular, think again. Last month, Taco Bell (another Yum! brand) announced Tacobot as a new way for ordering online via Slack (and attracting the elusive millennial consumers).  

According to the company, “Tacobot is a new friend and should be treated as such upon a quick install. Start asking it questions about our menu, see how it’s feeling or find out what its favorite movie is. From there connect your ta.co account, choose your pickup location and order up your favorite Taco Bell item. Tacobot is ready to serve!… “

While Tacobot is currently in private beta mode, Yum! promises it will be “ready for prime time.” with a waiting list of users.  Already, the corporate website has a page dedicated to it  and is  asking users of Slack “to contribute to TacoBot’s artificial intelligence.”

While this is not my first post about robots replacing hourly employees, particularly the numerous examples in the hospitality industry, this is the first concerted global test across multiple markets and brands. Maybe its time for all of us, politicians included, to listen to industry experts and save human jobs?