Several years ago, I wrote a series of articles explaining how automated and self-service technology will replace most workers in the service industries over the coming decades. The cost savings and efficiency gains are simply too massive for hospitality companies to ignore. It’s simply a matter of time for self-service technologies to develop to the point of being cheap enough, user-friendly enough and reliable enough to be viable in ubiquitous rollout.
Now, it seems that time has come for McDonald’s restaurants – at least for the front of house. In Fort Worth, Texas, McDonald’s just unveiled a new concept for automated food production and takeout. At this new robo-restaurant concept, there are no tables, no play place for kids, no cash registers and no customer-facing employees.
Instead, customers can order their food through the McDonald’s smartphone app or a touch-screen kiosk located inside the restaurant. From there, food is produced by traditional employees in a kitchen that is almost completely concealed from customer view in the back of the store.
When the food is ready, it is placed on a pickup rack (for customers waiting in the front of the restaurant) or sent down a robotic conveyor belt. The conveyor belt feeds the order through a drive-thru window (for customers picking up from their vehicles).
McDonald’s Could Save Significant Money in Employee Costs
If customers warmly receive this new type of restaurant service, this change to almost fully contactless order fulfillment has the potential to save McDonald’s a tremendous amount of money. Primarily, the cost savings will come from the reduction of labor. McDonald’s has not released any details on the way this new model changes staffing needs for the operation, but we can do some quick math to estimate the savings based on industry averages.
According to IBIS World, the average fast-food restaurant in 2022 has approximately 17 employees. The next question is what percentage of that total count would be unnecessary in McDonald’s new model, where customer-facing staff are unnecessary and kitchen employees are the only requirement.
Publicly available data on this point is harder to find. However, I have several colleagues and friends who have worked in and managed fast-food restaurant operations. I made several calls to ask this question, and the general consensus seems to be that roughly half of all the employees of any given fast-food restaurant could be eliminated under these circumstances.
So let’s assume that half of the staff at a traditional McDonald’s would be unnecessary with this new robo-fulfillment concept. That would leave us with 8.5 employees, but we’ll be conservative and round up that number in favor of human staffing needs. An extra employee might be necessary to do the occasional bathroom cleaning or resolve customer problems.
Consequently, our new restaurant would have just nine employees. But what does that mean in terms of actual cost savings for a restaurant?
In a previous article, I broke down the math on the true cost of a hypothetical full-time, non-industry-specific employee making $10 per hour. However, the Bureau of Labor Statistics reports that the national average for fast-food worker pay is about 25% higher than this at $12.53 per hour, so we can adjust our base pay accordingly.
In my article, I calculated the non-salary employee cost at 56.5% of employee pay (this number accounts for benefits, paid time off, insurances, and other overhead expenses for employers). So applying this calculation to our $12.53 hourly pay rate, we arrive at a fast-food restaurant employee total cost of $19.61 per hour, or an annual cost of $40,789 per employee.
We can now use this number to calculate total savings in the new McDonald’s robo-restaurant concept. If each employee costs the employer $40,789 per year and the new concept allows the average restaurant to eliminate eight employees, then that’s an annual cost savings of approximately $326,312 at each restaurant location.
However, there is obviously a cost to the technology and infrastructure that makes these automated self-service restaurant models possible. But as I discussed in my previous article series on self-service, the return on investment (ROI) timeframe on these kinds of investments is typically incredibly short.
For example, opening a brand-new McDonald’s is reported to cost anywhere between one to two million dollars on average, according to Mobile Cuisine. So the savings from this technological innovation could actually pay for an entire restaurant’s initial investment cost within three to six years.
It Seems Likely That Other Restaurant Chains Will Adopt This New Technology
In time, it will be interesting to see if McDonald’s customers respond favorably to this new self-service concept. If there isn’t significant pushback and severe drops in patronage, I think it’s safe to assume this new model will likely catch on through the fast-food industry and all around the world. The financial benefits are just too substantial for companies not to adopt it.
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