The autonomous mobile Tally 3.0 robot scans furniture in a grocery store.
Automation and robotics technology are typically associated with multi-million budgets of multi-billion dollar companies. But as the price of technology has fallen, it has become more affordable for smaller businesses – even small businesses.
Outside of Atlanta in Jonesboro, Georgia, THAT Burger Spot !, a burger and wings joint with four locations, got tired of being slowed down by phone orders.
There are beef burgers, turkey, Impossible, black beans, fish, chicken and more. Then there is the question of how many steaks, sauces and other adjustments. Given all the options, a single phone order took an average of seven to eight minutes. And that is only if there were staff ready to take on these orders.
“Our menu is a bit complex, there are many options,” said Cedric Pool, president of THAT Burger Spot Franchising, Inc.
“Staffing … it was a problem and continues to be a problem,” Pool said. “We figured we would be able to automate the process of order receipt, we would not have to pay anyone to do that.”
After a search, they found a solution in Grubbrr, which sells stand-alone kiosks that can take orders in the store and integrate them with online orders and a point-of-sale system. Pool started with two kiosks in just one place, costing $ 14,400, which is about how much the company would pay someone in a year to take orders over the phone.
After facilitating customers to use the kiosk and online ordering, the restaurant’s average ticket order increased from around $ 19 to over $ 21. The average sales per working hours rose from the high $ 50 range to $ 85, Pool said.
“Restaurants have been notorious laggards when it comes to technology. And they’ve done this largely because they’ve had access to extremely low labor costs,” said Sam Zietz, CEO of Grubbrr.
According to a recent report from the National Restaurant Association, seven out of 10 restaurant operators said they currently do not have enough employees to support customer demand. The restaurant industry added 1.7 million jobs in 2021, but many restaurants are still heavily understaffed and expect labor shortages to continue to curb growth.
In the latest CNBC | SurveyMonkey Small Business Survey for the 1st quarter, 17% of respondents in the housing and food industry mentioned labor shortages as the biggest risk to their business.
Dirk Izzo, president and general manager of NCR Hospitality, a technology provider for restaurants, said in cities including Denver and Jacksonville, Florida, customers mention costs for kitchen and front-of-house staff running 20% -40% higher than a year ago.
“If you take on these costs, all you can do to automate things is a big saving,” Izzo said.
An example of technology that has become common and affordable for restaurants is contactless ordering and payment. Several restaurants use QR codes at the table that force customers to order and pay from their phones. This is a time saving for staff who would otherwise have to take the order and then enter it manually into the checkout system.
Technology is getting cheaper
The cost of robot technology is being driven down by broader investments from the global smartphone industry and the self-driving automotive industry.
“The cost of this technology has dropped quite drastically,” said Brad Bogolea, co-founder and CEO of Simbe, which supplies an autonomous robot that uses computer vision to track inventory in a grocery store, pharmacy or hypermarket.
For now, Simbe works primarily with large retailers, but Bogolea said the company also works with smaller retailers with 50 to 100 stores. Simbe’s robotic inventory can check an entire store’s inventory three to four times a day and place orders directly when items begin to run out. “It is not humanly possible to scan with that frequency or fidelity to human labor in these environments,” Bogolea said. Retailers traditionally spend anywhere from 30 to 100 hours per day. store per week in stock.
In many cases, technology providers offer automation as a service. Instead of being burdened with large upfront equipment costs, companies pay a monthly fee. GreenSeed Contract Packaging, located outside Chicago, implemented robotic technology to automate some particularly repetitive packaging features, such as packing baby snacks in a box or moving packed boxes from the line to a pallet. The company is invoiced monthly based on the number of hours the robot works.
“Instead of using an agency to get a temp, you can get a robot in,” said David Gray, CEO of GreenSeed. Depending on the structure of the contract, the price of the robot technology is 40% to 50% of what he would pay to hire a person, which costs at least $ 17 or $ 18 per hour, excluding benefits or the cost of a temp agency. “So you can really reduce your costs and get better coherence,” Gray said.
Although technology costs have fallen, smaller companies – lacking economies of scale – still have to spend more as a percentage of their revenue than their larger counterparts. Outside the food sector, a telling example comes from the accounting world. According to a recent study by Ernst & Young, 70% of large companies with $ 30 billion or more in revenue plan to spend between $ 2 and $ 6 million on tax automation technology. By comparison, 81% of smaller businesses with less than $ 1 billion in revenue plan to spend between $ 1 million and $ 3.99 million – less, but not so much less.
“It’s a pressure on the smaller companies, where they spend almost as much,” said David Helmer, global tax and finance manager at Ernst & Young.
Inflation and the economy of small businesses
Inflation affects how small businesses view the cost of automation relative to rising costs in other core areas of their business.
San Francisco-based Nana Joe’s Granola has faced higher costs for raw materials and labor and is trying to figure out how to bring the cost of its premium granola down as consumers take a closer look at wallet decisions. Michelle Pusateri, owner of Nana Joe’s Granola, said the options include reducing the amount in bags by a few ounces or reformulating the recipe to cut down on ingredient costs or figure out how to use automation for its production process and equipment that can make it easier to pump out more volume.
The company, which has Whole Foods among its retail partners, faces a highly competitive market, and although it was able to pass on some costs to customers in 2021, when sales boomed, it’s more challenging to be a more expensive granola under inflation, said Pusateri. .
The company received a Covid EIDL loan, which mostly went to store ingredients that have risen in price, an inflation factor that required it to buy in larger quantities to secure better deals. But Nana Joe’s Granola has also set aside a small portion of that loan for automation on the packaging side of production, and it may also be necessary to take out business loans for equipment.
“I do not think inflation will go away soon. We will be stuck in this, and having more volume to pump out with the same staff and the same overhead is what we are looking at now,” Pusateri said.
Pusateri, who said she supports the higher wages workers receive throughout the economy, adds that investing in automation would not mean staff cuts. “The women who have worked for us since 2016 are doing the same things over and over again and there is fatigue in that,” she said.
–CNBC’s Eric Rosenbaum contributed further reporting.
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