The restaurant industry, and retail in general, are in the midst of a monumental move toward more technology as they look for greater efficiency, more convenience and adapt to ever-evolving consumer desires. But is the true cost really worth it?
More than 74 percent respondents to Duke’s latest survey of CFOs said they would be spending more on technology in the next 12 months. In the Fuqua School of Business survey that reaches beyond the franchise space, those CFOs said they would spend nearly five percent more on technology in the coming year, adding to big bumps in all of the past three quarterly surveys.
But it’s not all sunshine and gumdrops when that new kiosk arrives or the new scheduling software gets implemented or the robot starts flipping burgers.
“There are a lot of ways people are trying to increase speed of service while sometimes reducing labor count. What you find that when you take a person out, you now have a CTO at each restaurant,” said Cristin O’Hara, the managing director and head of the restaurant group at Bank of America Merrill Lynch.
She has a unique view into the P&Ls of various restaurant operations large and small. She said thinking out the true cost and all the potential issues with that new piece of technology is necessary. When you do the math, it might not add up.
“You might be hiring someone more expensive to keep that technology from breaking down. Either someone to keep the burger bot working or getting someone to fix it really fast,” said O’Hara.
As for the communication, it can get out of hand fast when every employee, manger and area leader gets dropped in a Whatsapp channel.
“Part of the problem organizations face is because they didn’t have tools to give to their employees, managers or employees would put in their own tools,” said Stephen Kramer, president and CEO of WorkJam. “They cause and continue to cause liability issues, people complaining about overtime, or lead to HR related issues because they’re not monitored. But also they are very noisy and there is no structure to it.”
He’s trying to solve such issues with industry-specific, monitored communications, but said some of his clients show a glimpse of the chaos out there.
“One client showed me a WhatsApp conversation in their store, in about an hour, there were 100 conversations. Nothing gets logged, someone was locked in the back room. People asking about a new sale, it was chaotic,” said Kramer.
And it’s not just the constant vibration in employee pockets or distracted managers, simple tools like company chat can lead to some serious legal exposure. If a manager is chatting from their couch, for example, they legally might be working and trigger overtime violations. And there are numerous sensitive issues when a whole bunch of young, possibly hormonal, people are given open communication to each other.
As for the results, certainly quick texts can help get that person locked out back freed quick, and sending schedules digitally is vastly preferable to a printout and endless phone calls from employees, but not all of it is actually pushing the business further.
A writer with Vox wrote a very interesting article about how all the technology has made fast-food work even more stressful, it’s worth a read but one nugget of that article encapsulated what it’s like to be in the back of a modern McDonald’s.
“For one thing, everything is timed and monitored digitally, second by second. If you’re not keeping up, the system will notify a manager, and you will hear about it,” wrote Emily Guendelsberger.
One of her coworkers put it simply; workers are never “allowed to have one moment to chill.”
For operators, that is damning in this era of incredible labor pressures. All those beeps and real-time reports (and interventions) may be driving your people away.
And for all the technology investment, the results don’t always match the investment or the potential fallout.
“I don’t think throughput is getting all that faster when you’re taking one person off the labor line and increasing technology spend,” said O’Hara. “I think it’s all very incremental, so to say one platform or one training module or whatever is really making a difference, it’s very small increments that are making the difference.”
So before singing on for that sexy new SaaS or the sleek new kiosk, it’s important to think though what that impact will be and if that incremental bump is really worth the cost.