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Friday
Oct272017

Beep: Your Hamburger is Ready

CalBar Certified Franchise & Distribution Law Specialist

by Barry Kurtz

818-907-3006

 

Analysts predict robots may take nearly 40 percent of U.S. jobs – particularly the ones that require lower education levels – in the next 15-20 years. The study was released by PricewaterhouseCoopers, and was based on anticipated technological progress, which leaves a lot of room for error.

Not all jobs can be staffed with tech though, as Microsoft cofounder Bill Gates illustrates when talking about the fast-rising trend.

He supports a robot tax on businesses that use Artificial Intelligence (AI) to replace human employees. The revenues could be used to train people to fulfill other jobs, like those in teaching or elder-care, where a human component is much more important. It would also help slow the rush to acquire AI.

Gates told Quartz news outlet:

So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers...

Taxing questions aside, many hospitality franchisors find themselves facing a dilemma: Invest in people, or invest in tech?

Some Franchises Bet Heavily on Tech

Drone Delivery RoboticsReplacing humans with AI is still relatively expensive today, and not exactly a guarantee of larger profits at this time. But some franchises are throwing down a lot of chips on AI development. Why?

For one thing, restaurant jobs, particularly those around a hot grill or spitting fryer can be dangerous. And it’s hard work that not everyone wants.

Burger bot “Flippy” developed by Pasadena-based Miso Robotics with franchisor CaliBurger can cost upwards of $60k, according to TechCrunch. But it will never report to work tired, hungover, or in any state that may result in workers’ comp claims. It also won’t demand higher wages.

Domino’s delivers, as we all know. But food delivery can also be dangerous, which is one reason the chain invests heavily in tech.

The pizza franchisor developed Domino’s Robotic Unit (DRU), a four-wheeled autonomous delivery vehicle. Though DRU will be able to navigate the best route to a customer’s door, it has not yet been activated to serve, as the robot vehicle is still being tested. The DRU Drone is also in development, and may lift off for first deliveries in New Zealand in February.

Restaurant chain (not a franchise) Shake Shack opened a high traffic location in New York’s East Village. The restaurant features kiosk-only ordering and cashless transactions. When the food is ready, the diner can opt to receive a text message to pick up a tray, or go with the old school shout out.

Shake Shack still employs humans to provide customer assistance, cook, and expedite the food at this restaurant location.

Hoteliers are also embracing a new wave in AI services. AURA is the first robot in Asia to provide room services – delivering towels, water and more. And a Marriott in Belgium deployed a bot that addresses vacationers and business travelers in 19 different languages.

What Should Franchisors Know About AI?

Hi Tech Burger

As always, when considering upgraded tech for a chain, consider the needs of individual locations. Right now there are more questions than answers:

  • Will a loyal, profitable franchisee balk at having to deploy AI?

  • Will the leased or owned property of the franchisee accommodate robot workers?

  • Will the costs for AI create substantial reductions in comparison with employee-related expenses, and more profits for the operators?

  • Will the public accept AI as a substitute for smiling wait staff and cashiers?

  • Will ordering kiosks and robotic workers be a turn-off (in locales where unemployment rates might be very high), or a draw (like the hotel mentioned above attracting millennial clientele)?

But also remember that some AI can be used behind the scenes, e.g. in certain food prep tasks, to analyze marketing trends, fold hotel linens, etc.).

Whatever the industry, don’t be afraid to embrace the tech. Just be sure to look both ways before crossing fully into the digital realm.

Barry Kurtz is the Chair of Lewitt Hackman's Franchise & Distribution Practice Group.

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