COMMENTARY

Automation doesn't have to be a dirty word in foodservice - Part 1 of 3

March 15, 2017 | by Sagi Rochman

Automation has taken on the aura of a dirty word in foodservice with its potential to inflict widespread job losses, not to mention a perception of a colder, less "human" restaurant atmosphere. But it doesn't have to be seen in that way. After all, humans lead restaurant businesses and have the power to choose what types of automation they use and in which ways and this three-part series is designed to give you an overview of what's available. 

But before delving into that and how automation can solve some foodservice industry problems, I first want to take a look at the current foodservice environment and how it's forcing this issue to the forefront. 

For instance, for more than the last half-year, murmurs of a possible restaurant recession have had just about everybody in foodservice trying to come up with new ways to save and make more sales. 

But think about it. Isn't that possibility something that is almost perpetual in the restaurant industry, where margins are excruciatingly thin and regulations are increasingly numerous. Quite often, it seems like this business really does get it from all sides. 

Here, for instance is just a sampling of the most recent struggles from the constant onslaught of market demands, regulatory concerns and even the changing workforce: 

  • The fickle nature of foot traffic: In Q2 2016, for instance, the foodservice industry watched as sales dropped between 1.5 and 2 percent. Then that was topped just two quarters later when the sector had its worse quarter in five years. Much of that decline might be blamed on menu price increases, after restaurants themselves experienced cost increases everywhere else operationally. 
  • The ever-fluctuating supply and demand equation: Though the actual number of restaurants fell about 1 percent last year, there is still in the U.S. alone about one food service establishment for every 320 individuals. Naturally, that's not enough to support all the restaurants in existence, and that is particularly true during a year when the number eating out was falling.
  • Joint-employer aggravations:The joint-employer ruling has led to a surgein operational costs just as major franchisors like McDonald’s coming under fire for labor-related grievances. Brands now find themselves needing to allocate additional funds for liability coverage as well as for the expansion of their human resources functions.
  • Minimum wage increase's maximum ripple effect: The push to increase the minimum wage is not going anywhere in the foreseeable future and as a result, restaurant brands find themselves forced to compensate for both those additional labor costs as well as the adjustments that must also b e made to other wages as a result. 
  • The mega-moving millennial workforce:Employee retention has become a major issue and cost for foodservice players who find themselves struggling to survive with an increasingly millennial-based workforce whose players DNA is almost encoded to move to new jobs constantly. 

Many chains have fought these forces in a variety of forms including everything from ditching tips to raising menu prices, but the fact is that none of these cost-balancing tactics has really taken off. In fact, many restaurants have had to reverse any changes they made earlier in the year due to lack of employee and, more importantly, customer acceptance.
 
After all, anyone in this industry knows that restaurants already operate with a very low-profit margin, so it’s clear that something dramatic has to occur industry-wide to prevent businesses from constantly teetering on  the edge of a potentially devastating recession. 

Automation's answer
A mere glance at current consumer preferences makes it clear that the market is leaning into automation overall, rather than away from it. In fact, through the well-chosen use of automation in certain aspects of our personal and professional lives, significant savings can be realized in time, money, productivity and even control of the products produced and the jobs we perform. Not to mention, automation also provides improved visibility into areas of our individual lives and businesses that we might not otherwise have access to.

For the foodservice business in particular, automation might best be thought of not as a "way of existence," but as a way to leading a more streamlined existence. For an upfront investment in new technology, business operations can start shedding layers of excess cost, time and energy that weigh down employees, functions, service and even customers. 

But that promise alone is likely not enough to assuage the overall fear many business leaders, employees and the public in general has about putting automation into the mix for foodservice, particularly in an industry already buckling under the rising costs and decreasing sales experienced of late. 

But, over the next few days on this website, I will show you how to ease pressure and increase profits in your business by walking with eyes wide open into the use of automation,  beginning tomorrow with a look at the transformative technologies available.

 

Photo: iStock


Topics: Business Strategy and Profitability, Systems / Technology



Sagi Rochman
For over two decades, Sagi Rochman experienced first-hand the challenges faced by hospitality operators as he owned, scaled, and sold businesses in the space. He has since taken that knowledge and used it to build Better Chains, the hospitality workforce operations solution. wwwView Sagi Rochman's profile on LinkedIn

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