When it comes to job automation, it’s not about if it will happen but rather when it will happen.
The benefits that come with automation are being explored by companies across a variety of industries today, but none more anticipated than the food and beverage industry. As the cost of living and minimum wage rises nationwide, corporations are beginning to look for more cost-effective ways to manage overhead.
Let’s take a deeper look into the food industry, where automation could be just around the corner. Take the situation of Wendy’s CEO Bob Wright as an example.
Wright expects wages to rise company-wide by 4% in 2017, which leaves the company with a decision on how to cover these increased costs. A decision that could be coming sooner than you think for many owners like Wright in the foodservice industry. As wages rise, Wright is left with three options to offset Wendy’s rising costs.
- Reduce margins
- Raise menu prices
- Cut employee hours
Given the tight margins that the food industry works with from day-to-day, option one proves to be difficult. Raising prices is also challenging because consumers today are becoming increasingly price sensitive. This leaves Wright, and many restaurant owners like him, with only one viable option: to cut employee hours in order to manage costs.
Wendy’s is cutting 31 labor hours per location each week. In addition to these cuts, Wendy’s will be installing automated kiosks so customers can order without interacting with any employees at all. Wendy’s is planning to roll out these kiosks to at least 15% of their locations nationwide by the end of 2017.
Simply put, automation is becoming more cost-effective and is increasingly capable of performing the tasks of many minimum wage jobs on the market today. Based on a report by McKinsey, looking at the current ability of machines to replace human labor, 73% of tasks in the foodservice sector could be automated today. Because of the increases in minimum wage in many states across the country, automation is proving to be a more viable option for companies like Wendy’s and McDonalds, who now see this as an investment in which costs can be recovered in a matter of a few years.
Assumption: A $1 Million piece of equipment can cover the annual workload of 5 people
- With a 50% increase in minimum wage, the payback period on a $1 Million piece of equipment goes from 10 years to 6 years. Making the financial impact of automation much more reasonable.
The race to robotics is being seen beyond the Food and Beverage industry. Agricultural labor has been on the decline for years and farmers are starting to explore robotic alternatives for seasonal labor. Abundant Robotics, a startup company out of California, is in the process of testing a commercial system that could drastically change farming labor. “Our commercial system will pick apples at rates matching crews of tens of people,” says CEO Dan Steere. Although currently in the prototype phase, Abundant Robotics aims to have their commercial systems available to growers in 2018.
At Jobalign, as a leader in putting hourly workers in jobs, we believe that robotics and automation have already begun to impact the job market. We are seeing changes in manufacturing, wholesale and shipping, as well as now seeing the food and beverage industry make investments pushing for automation. Although robotics and automation are coming to the forefront, we believe that robots will not take over all hourly jobs, but instead, compliment the work of hourly employees and help companies run more efficiently. Robotics and automation are trends we’ll be keeping a close eye on in the coming years. Stay tuned!