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As automation increases, so are jobs

It seems counter-intuitive, but the introduction of widespread automation at some high profile quick service and fast casual restaurants chains have not led to a decrease in the number of employees. On the contrary, the number of workers on their payrolls is on the rise.

Panera Bread, which made an ambitious push toward automation, in 2014, has seen an increase employment since it introduced mobile and kiosk ordering in all 2,000 of its stores.

So, how can this be?

Digital ordering leads to increases in order volumes, order sizes and customization. In turn, requires extra labor for production and quality control in Panera’s kitchens. The chain’s table service also requires employees, and in Panera outlets that offer delivery, drivers have been added to the payroll.

“In the early transition, we pretty dramatically increase the staff hours in the café,” Blaine Hurst, Panera’s president, said. “We want to increase sales — that’s the ultimate mission.”

McDonald’s, too, has jumped on the automation train. Earlier this year, McDonald’s announced that mobile order-and-pay technology would be accepted at 20,000 of its restaurants by the end of 2017. The company also announced that by 2020, the majority of its 14,000 U.S. outlets would be equipped with its ambitious “Experience of the Future” upgrade, including kiosk ordering, estimated to be at least $100,000 per store.

Although McDonald’s does not release detailed labor-cost information, there are indications that its automation push is having a similar effect on employment as the picture that’s emerging at Panera.

“A visit to one of its locations operating the ‘Experience of the Future’ suggests similar staffing levels [to Panera], reporter Elizabeth G. Dunn wrote in Entrepreneur magazine. “A bank of large, inviting kiosks has replaced most of the cash registers, but a small army of McDonald’s employees circulates through the dining area delivering orders, wiping down tables and coaching customers on the kiosks.”

Then there’s Starbucks’ experience. Since 2015, when it launched a mobile order-and-pay app, Starbucks has had widespread difficulty keeping up with all the orders coming in through the app. Recently, the company announced it will add extra baristas at existing locations and experiment with new stores without cashiers and seating, thus maximizing production.

“You generally get a faster order flow coming off digital platforms,” said Hope Neiman, chief marketing officer at Tillster, a technology vendor for quick service restaurants including Burger King, KFC and Pizza Hut. “We’ve had to work with franchisees after they unplugged kiosks because orders were coming in to the kitchen faster than they could handle them.”

Academic research also bears out that automation does not necessarily lead to a decrease in employees. According to a study profiled in the Harvard Business Review, there is no correlation between the use of robots and the change in manufacturing employment. Although Germany introduced many more robots between 1993 and 2007, it lost only 19 percent of its manufacturing positions between 1996 and 2012 in comparison to a 33 percent drop in the U.S. France, Italy and South Korea also lost fewer manufacturing jobs than the U.S., despite introducing more industrial robots. By contrast, countries like Australia and the U.K., which invested less in robots, saw faster declines in manufacturing.

Interestingly, the study also suggests that robots tended to increase the employment and pay of skilled workers even as they appeared to “crowd out” employment of low-skill workers. In other words, robots don’t seem to cause substantial net job losses, but do seem to change the kind of workers that are in demand.

Author: MRA
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