- Restaurants are evolving as higher costs and the labor shortage transform the industry.
- Meals at high-end spots will likely get pricier as businesses raise wages to attract workers.
- At more casual venues, robots will do more menial work, boosting human workers’ productivity.
- See more stories on Insider’s business page.
The playbook that worked for restaurants before the pandemic isn’t cutting it today.
Owners faced a flurry of issues as they reopened after more than a year of restricted business. A shortage of available workers hindered rehiring efforts and soaring food prices cut into profits. Reopening brought a wave of demand in the spring, but most restaurants weren’t equipped to service the boom.
Solutions are emerging, but they’re likely to leave the industry permanently altered. Think fewer waiters, more robots; fewer $10 appetizers, more $15 ones. The gap between upscale dining and more casual venues stands to become wider than before, but overall much-needed change should be coming to the space.
Restaurant owners have long relied on workers pushed to their limits. Low wages and cheap ingredients have been necessary to compete throughout the sector, but high-end restaurants also excuse abuse “as necessary to create a superlative dining experience,” Peter Hoffman, operator of New York City restaurants Savoy and Back Forty, wrote in a recent New York Times essay. Calling out sick is seen as a sign of weakness, while verbal abuse is deemed critical to keeping kitchens punctual.
Owners are now dealing with the consequences of such treatment. Restaurant workers quit the industry at a record pace through the spring, and owners have struggled to rehire them. With job openings at record highs, it’s no surprise restaurant employees are rethinking how they work, Hoffman said.
Casual venues and fast food spots are also having a hard time hiring, and intense competition makes wage hikes less feasible. Stronger inflation for ingredients has also pressured profit margins.
Some businesses seem to be taking a sneaky approach to the issue. Several Chipotle customers took to social media in June to complain about smaller burritos than usual. The chain already announced it would raise menu prices, but the items’ sizes suggest a classic case of shrinkflation, or the selling of smaller quantities for the same price.
Others are turning to more permanent solutions. Restaurant automation is on the rise, and it’s bringing tangible benefits for owners, staff, and customers alike.
Take Flippy, a fry-cook robot working at a White Castle in Indiana. The machine works 23 hours a day does its job with minimal risk of spills and workplace injuries, and helps other workers be more productive.
McDonald’s is currently testing AI software for drive-thru ordering. Dave & Buster’s is expanding its contactless ordering system. And Cracker Barrel now allows patrons to pay for meals with an app. Starbucks is rolling out an automated inventory ordering system at 1,500 stores, it announced in a recent earnings call.
Almost every American wants to avoid menial fast-food jobs, Stephen Klein, CEO of robotics company Hyphen, told Insider. The firm recently rolled out automation that can make 350 meals in a single hour, replacing a whole team of makeline staff. The system takes care of the mind-numbing work long relegated to minimum-wage workers and lets people pursue more gainful employment, Klein told Insider.
“It’s freeing up the repetitive tasks, just like you did with ATMs in bank branches or the grocery check-out aisle at your local Safeway,” he added.
Automation also solves the consistency issue Chipotle customers ran into this summer. Robots can be programmed to make every meal or drink exactly as planned. That efficiency saves money for owners, stress for workers, and annoyance for customers, Klein said.
“The one thing that baristas and chefs have in common is they want everything perfect,” he said. “They want the recipe followed line-by-line to the gram … whether it’s an espresso shot or any meal.”