Editor’s note: This article originally appeared in Franchise Times, a sibling publication to Food On Demand.
If any restaurant operator found a magic lamp with genie in tow, they’d probably wish for some kind of solution to their staffing and wage challenges or a few extra arms for their star fry cook. Alas, despite all the wishing, the staffing challenges have not disappeared and employees keep getting more expensive. That means operators continue their struggles to improve efficiency, with some technology to fill gaps, as pressures keep changing the industry.
How bad is it? Some Pizza Hut franchisees across California are switching to third-party delivery completely. Operators there laid off some 1,200 in-house delivery drivers, stating they can’t afford to pay higher wages under Assembly Bill 1228.
Signed into law last year, AB 1228 pushes wages for fast-food workers from $14 to $20. The bill will affect more than 550,000 fast-food workers. Now, I’m generally happy to see workers do well, get a living wage and grow in the industry; but holy cow. I’ll concede, the regulation moaners have a point on this sizable jump.
Another trendy option to solve staffing challenges is an oldie but goodie: child labor! Already in 2024, at least a dozen restaurants have made the news for a wide, wide range of child labor violations. While they’re not quite a toddler-at-the-fryer kind of violation, it’s not a great public relations moment.
The ethical oopsies also come with some more tangible penalties. A Pennsylvania Wendy’s franchisee will pay some $300,000 in fines for more than 700 violations. A Michigan Popeyes franchisee will pay just under $50,000 for employing more than 60 teens during school hours. While that seems cheaper than finding and paying adults—enticingly so—it’s still wrong.
It’s so bad the Texas Restaurant Association is working with a coalition of associations and business leaders to find a way to reduce the cost of childcare so it’s affordable for hourly adult workers so they can work more. Yup, it’s so bad Texas business owners are hilariously close to embracing a bit of socialism or price fixing.
Other restaurant leaders are taking perhaps a less drastic approach and leaning into technology to augment, if not replace, whatever staff they can. Those efforts have helped in the past several years, and workers are more productive—like, a lot more productive.
According to the U.S. Bureau of Labor Statistics, restaurants reported 38 percent more sales per worker. Some of that is burnt-out workers just keeping up, some is inflation. But as a whole, workers are a lot more productive than they were in 2019.
The collection of efficiency-forward technology keeps growing, but restaurant operators need to understand where to put those tools to use.
In service of problem solving
First Watch had plenty of catching up to do. The ever-busy breakfast and lunch franchise had very little technology pre-pandemic. Since then, however, it has transformed almost every touchpoint, system and standard procedure with new technology.
A key one in the store was the addition of a modern kitchen display system. It was almost a necessity to keep up with sales as average unit volume grew from about $1.2 million to $2.5 million over the last several years.
At that point, “we had to work on our box. Part of that had to do with making the kitchens more efficient and making the dining rooms more efficient,” said Chris Tomasso, CEO of First Watch, during the annual ICR Conference. He said a few screens and modern software helped staff keep up with the demand for brunch without frying staff like bacon.
At Potbelly, the C-suite that took over in 2020 shook things up, and the leaders are eager to share the success. One thing CEO Bob Wright noted at ICR: the addition of new software to empower what was traditionally a catering makeline with new technology the company dubbed the Potbelly Digital Kitchen, or PDK.
At the core of the PDK is a decision engine that routes orders to the right place—generally sending the 40 percent of digital orders to the back of the line. It can also re-order orders as they come in to ensure a quick single sandwich isn’t stuck behind a massive order, all while alleviating a surge on the in-store makeline.
“What does it do for us? It creates labor efficiency on the back line,” said Wright. “It’s worth about seven hours of labor a week.”
Kiosks are back and seemingly better than ever. The ability to take people out of a long line and keep orders flowing to the kitchen is proving useful for Shake Shack.
CEO Randy Garutti said kiosks have helped improve margins by 4 percent while alleviating cashier stress.
“We rolled out kiosks at nearly all Shacks. It’s one of the biggest things both for margin and guest experience, and it brings the highest average check,” said Garutti during the Morgan Stanley Global Consumer & Retail Conference. “It’s one of our best channels.”
A second, less techy tweak: runners now deliver food to tables at many locations. Garutti said it’s a nice touch of hospitality, but it also limits congestion at the busy Shake Shack counter and frees up the typical counter-based expo position to become a flexible role to fill gaps. Franchisors should take note.
Further toward the bleeding edge, artificial intelligence and AI voice solutions continue to spread.
Jersey Mike’s is testing SoundHound, one of a handful of AI voice start-ups targeting the restaurant space. The AI will handle drive-thru and phone orders. The former has proven beneficial in tests in quick-service settings, but the latter is a way for restaurants sans drive-thru to benefit from the tech and save some time for staff–who are probably already juggling duties.
“AI is becoming an important part of supporting restaurant staff,” said Scott Scherer, chief information officer of Jersey Mike’s.
Lastly, you’ve got the robots. I love them, and they’re getting better. But while I geek out about new truly robotic offerings, it’s abundantly clear there are lower-hanging fruits to bite at first. But hey, if you’re pondering child labor, maybe look into some robotics first.
Nicholas Upton has reported on retail and restaurant technology for more than a decade. His Tech Stack column aims to distill complex ideas into actionable insights. Send interesting tech topics to upto0013@gmail.com.
