Welcome to White Castle.
This is Brittany. How may I help you?
This robot named Flippy runs the fry station at a White Castle outside of Chicago.
With its mechanical arm and using computer vision technology.
Flippy can cook everything from French fries and onion rings to cheese sticks.
White Castle said it plans to add 100 Flippys to its kitchens nationwide.
We used to need two people to operate that french fry area during peak hours, and
now we are able to only have one person operate in that area.
Would you like to try the mac and cheese bites today?
All right. Thank you. If the screen's correct, it is $8.27.
Second window, please.
Fast food jobs are demanding, quick moving and sometimes even dangerous,
but not for robots.
When you look at the restaurant industry, it's a little bit late to the party in adopting automation and
robotics in particular.
So far, the restaurants that are using them or trying them out, say that this automation
really only has to do with helping relieve boring tasks from workers' plates, help make their
jobs easier, let them engage with the customers more.
But there's a lot of reports out there kind of guesstimating how many jobs could be
replaced by these robots by automation.
Up to 82% of restaurant positions could to some extent be replaced by robots.
Automation could save U.S.
fast food restaurants over $12 billion in annual wages.
And restaurants are also struggling to find workers.
American restaurants are down more than 560,000 jobs, or about
4.6% of its workforce from their pre-pandemic levels.
About a third of Americans worked in a restaurant as their first job, and half have some restaurant work
experience.
Yeah, the economics of this are very, very compelling.
If you take minimum wage, be just around the $20,000-p er-year mark.
That's the cost of one robot.
Other companies in this space include Picnic that has a robot that makes pizza and AUTEC whose
machines make sushi.
So what impact will robots have on the fast food industry and the livelihood of its
workers? CNBC got a behind-the-scenes look at restaurant robot maker
Miso Robotics to find out.
Miso Robotics got its start in 2016 with a handful of engineers in a Pasadena,
California garage.
Two years later, the company launched Flippy at a nearby CaliBurger restaurant.
Flippy's first job was turning over a hamburger patty after it was placed on a grill by a
human chef. But the company quickly pivoted to fried foods, rolling out a portable fryer
station for baseball games at Dodger Stadium.
This was really the peak throughput test for us.
Can Flippy keep up with in between innings at a Dodger game and everybody goes to the concession
stand? Can we meet that demand?
In 2021, Miso launched Flippy 2 using a mounted rail system, A.I.
and computer vision technology that can identify and track food as it moves through the structure.
Although it has a camera, tablet and robotic arm, engineers say the real tech is in the
software.
The hard thing to get right about this product is having the computer vision, the algorithms
the plan, the cook cycle and the software that manages the robotic motion to
all work together so that it's as reliable as a refrigerator and it does the job.
Food is dispensed directly from the freezer into a basket.
The robot's computer vision identifies the type of food and places it in the appropriate
fryer. Once the food is cooked, the basket is taken out of the fryer, shaken
and dumped into a holding area where it is bagged by a worker.
For those of us who have been in a restaurant, this is exactly the same process that is done today by
a human.
He's constantly playing like a multi-frame game of chess in his mind, understanding where to be
next. So his sequence of movements is precise and he doesn't undercook overcooked food.
But what about the cost?
Miso charges restaurants about $3,500 a month for Flippy 2 under its robot
as a service model.
The company charges an additional fee of about $10,000 for installation.
By comparison, the median hourly wage of fast food workers in the U.S.
is just $12.07 an hour.
There were roughly 1.7 million restaurant workers in the U.S.
in 2022.
But Flippy 2 is different.
Flippy 2 works around the clock.
We have many 24 hour locations where Flippy 2 is installed.
Flippy doesn't call in sick.
Built in Columbus, Ohio, it takes Miso about six weeks to manufacture one Flippy 2.
The current off-the-rack mechanical arm is the same type designed for car factories.
And Miso says they cost $15,000 each, plus another $5,000 to
modify with additional grippers and sensors.
Last year, Miso partnered with robotic arm maker Ally Robotics in hopes to start
producing its own arm in 2023.
The company also makes a streamlined version of Flippy 2 called Flippy Lite, as well as a drinks
dispenser named Sippy.
Flippy Lite is currently being tested in restaurants by Chipotle.
And what Flippy Lite is designed to do is to take one item that requires frying
and just cook the heck out of it all day long.
With about 25,000 shareholders, Miso has so far raised more than $70
million in crowdfunding.
The company has also announced it is testing a robot that fries chicken wings for wing zone.
The global fast food industry is a $273 billion business, including more than
280,000 fast food restaurants in the U.S.
alone. At this White Castle on the outskirts of Chicago, staff in the busy lunch hour
shift face a barrage of orders coming from drive-thru customers as well as the main
counter.
Would you like to try any mac and cheese bites today?
I think if the screen's correct, it is $10.42 second window, please.
It's very fast paced.
We're all in our positions, but we do move around, jump about to help out, to get the orders
out.
But meager salaries, fewer teenagers in the workforce and fear of COVID have been a
drain on fast food restaurants.
Job openings at restaurants and hotels reached 1.3 million in November 2020
to the 20th consecutive month, with over a million vacancies.
Bars and restaurants make up about 90% of those positions.
A typical fast food worker makes about $26,000 a year compared with a
concierge at a hotel who can earn more than $37,000.
During the pandemic. We faced a lot of staffing challenges and things are better, but there are
still challenges with staff in many locations.
To assist workers.
White Castle added Flippy to take over its fry station.
The robot cooks food more consistently and doesn't require time off.
And I think some restaurants are also looking at this as a way of, 'Well, this robot is expensive, but
is it cheaper than however many employees I would need to hire?
Especially because a lot of workers have not been sticking around as long as they're used to.'
This is one of the positions that is the hardest to fill and hardest to retain for restaurant
operators. There are dozens of positions back of house.
This one is a really demanding one.
It's hot and it's very, very fast paced.
Robots like Flippy solve other problems for restaurants, too.
For starters, fast food work can be dangerous.
In California, the state with the highest number of people employed in the fast food industry, workers face
health hazards ranging from overflowing sewage, smoke inhalation and extreme heat,
according to one study.
Turnover is another headache for the industry prior to the pandemic.
The restaurant industry faced a workforce turnover of 130%, according to Panera
Bread CFO Michael Bufano.
At the same time, low wage workers made up 43% of the U.S.
workforce.
As you look at the labor allocation within the restaurant, that's being able to shift one human from
that station somewhere else, and that's saving every single month, probably somewhere around
$700 to $900 in actual profit.
Another incentive for restaurants hard-to-fill positions have forced chains to push hourly
wages to new highs.
The wages have been very low in these industries.
They've really been very much pegged to the minimum wage so that when the minimum
wage has been allowed to decline in real terms,
that is, it hasn't kept up with inflation, then those jobs get progressively less
and less attractive.
Labor is one of the biggest costs restaurants face, averaging about 25 to 30% of
sales. McDonald's said it would reach an average of $15 an hour by 2024
at all company owned restaurants.
Starbucks said it was bringing its pay floor for U.S.
baristas to $15 an hour.
Gen-z consumers made 5 billion restaurant visits in the year, ending July 2022,
including 4.3 billion trips to fast food eateries.
Restaurants often have thin margins, which is one of the reasons why adoption of automation has been slow.
But that could be changing as the cost of robots has declined by 50% over the last three
decades. Industrial robot usage has tripled over the past decade, from about
a million in 2010 to 3 million in 2020.
The auto industry, by far the largest segment in the market, is followed by electronics,
food and beverage and metals and machinery.
The industrial robotics market is expected to reach $81 billion by 2028, up
from almost $42 billion in 2021.
But will those trends impact Miso's business?
Robots are hard to develop and they're expensive to develop.
It takes a lot of time and money and frankly, a lot of engineers to get all the technology working together
smoothly. Miso makes money by having more and more robots in the field.
In 2021, Miso spent $1.5 billion in R&D, $7.8
million on salaries, $6 million on sales and marketing, and a little over $6
million on overhead and administrative expenses.
Revenue was just $36,000 in 2021, mostly from the deployment of
one Flippy.
Right now it seems like Miso robotics is probably the biggest and best-known player
in the space.
Competitors is a pretty small pool at the moment.
We've been on the forefront of this for a long time.
But they are coming and we know the ones that aren't here today will be here tomorrow.
Robot adoption could come quickly in a similar fashion to the way delivery apps
revolutionized the restaurant space.
The global food delivery app business is over $150 billion, triple the amount it
was in 2017.
And that would be welcome news for fast food restaurants who face pressures ranging from rising food
costs to staff turnover.
Americans spent $2.1 trillion on food in 2021, with more than half of that money going
to food-away-from-home purchases.
The tide has turned. This is a there's no longer a question of 'Are robotics coming to the
industry?' It's a foregone conclusion.
The question is 'At what pace and in what form?'
And what you will see in the months and years ahead for the foreseeable future is more and more
automation solutions like Flippy 2 being deployed in everyday restaurants, including some of
the best known brands in the world.