Emerging Trends: Automated Food

In the last couple of years a number of startups have appeared in the restaurant industry that seek to automate completely the process of preparing and serving everything from casual meals to beverages.  Several of these startups include:

  • Eatsa - A new restaurant concept that is mostly automated and defined by customers having zero interaction with the employees.  Food is ordered online or via in store ipads and when completed appears in electronic cubbies that show the customer's name on them when ready.
  • Cafe X - A startup that has built and opened in San Francisco a fully robotic coffee shop.  The actual coffee itself has been reported to be higher quality and half the cost of nearby coffee shops.
  • Momentum Machines - A team of roboticists building robotics for restaurants including a high end fully autonomous hamburger machine that can replace 3 workers per machine.  Their mission is explicitly not to build machines to help restaurant workers but to completely replace them.  The startup has plans to launch a burger chain in the next several years.  

As cool as these technologies are, it is critical to keep in mind that they will dramatically replace low skilled human labor.  The US government estimates there are currently half a million people employed at fast food and fast casual eateries.  It is looking like over the next 5-10 years almost all of these jobs will be automated away.  Critics say that consumers prefer human interaction but in my experience a number of people actually prefer not having to interact with another human to purchase a product, especially if an automated system is faster.  In fact, to a number of people (myself included) having no human social interaction when getting food is a feature, not a bug, and something some might even pay an additional amount for.  Larger chains that have kiosks in stores report younger customers will actually wait in line to order from the automated kiosk rather than order from the completely available human cashier next to it.

It is obviously impossible to know without seeing their financials but my guess would be the unit economics for a Cafe X like store are great per order served with faster service, more accurate orders, and less management once the store is setup. Automated produced food has already proven to be faster at dealing with lunch rush hours, sanitation, and food quality consistency.  Simultaneously, some of the labor savings costs can be reinvested into the food itself with higher quality ingredient meals available at lower prices.

Large chains such as Chipotle, McDonalds, etc are certainly watching these startups with keen interest to see consumer reactions and salivating at the chance to cut their rising labor costs.  My prediction is within the next 4-8 years lower end eateries will be 80%+ automated for more efficiency at lower cost.  Human service and interaction will be one of the selling points of mid and high end more formal restaurant dining and even that part of the industry will likely become heavily automated.