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Does anyone here have experience with fast food enterprises? It would be interesting to hear about how this sort of machine could affect companies like McDonald

Does anyone here have experience with fast food enterprises? It would be interesting to hear about how this sort of machine could affect companies like McDonalds and whether or not it's the future or just a cute idea that won't scale? I have the feeling that, if this sort of idea was as value as the article implies, McDonalds (or Burger King, or any other big chain) would have put serious money into developing this sort of thing and it would already be everywhere. (I wish there was a website or publication that took businesses and profiled how they work, the challenges they face and the costs associated with parts of the business consumers might not understand, so these sort of questions were easy to answer. I would love to read how McDonalds works (as a business))

kposehn 14y ago
The question is going to be reliability in the long term. Carls Jr. uses a burger conveyor to cook burgers (stick the patty in and in a fixed amount of time it comes out perfectly cooked) for example, but they also have many moving parts and if it breaks, that is half the burger capacity gone (they have two per store usually). With a complex machine like this, keeping it from breaking is the key. If it works well though...this really could change things.
- pcl 14y ago
  it comes out perfectly cooked That's a somewhat subjective statement.
  - froo 14y ago
    Not necessarily, if you look at it from the perspective of a meat's internal temperatures.
  - kposehn 14y ago
    Temperature-wise, it does. I'd still rather eat a brick. Carl's Jr. continues to insist on using very un-marbled top sirloin and then they cook it to death, with it ending up extremely dry usually. At one point I think they must have experimented with using Gelatin to hold more of the moisture in the meat. It tasted like meat Jell-O. Ugh...
  - jonah 14y ago
    "For their next model Momentum Machines plans on ... giving it gourmet cooking abilities that seasoned chefs use such as charring the burger while retaining its juiciness."
froo 14y ago
I'm not entirely sure they could. They probably felt that simple cooking of pre-prepared ingredients and then assembly wasn't an interesting problem to solve, especially since staff can also handle the other requirements of food prep (keeping equipment clean and sanitary for example). The addition of providing a superior experience (custom meat combos? Slicing ingredients on the fly) might not have occurred to them. I think that emphasising the high output gourmet burger is the way forward. Especially since McDonald's has already proven that "Masstige" does have a spot in the food prep industry.
super-serial 14y ago
If automated movie rental machines are so popular why hasn't Blockbuster invested millions in this idea, or are these "RedBoxes" just a cute idea that won't scale? In 10 years I think your comment will look just as silly.
- citricsquid 14y ago
  I was asking a question not making a judgement.
  - super-serial 14y ago
    Your question about the economics wasn't silly... I was just pointing out that corporations like McDonalds are very unlikely to start spending money on robotics research or rethinking their entire business. It just isn't in their corporate DNA. Whether the economics make sense or not... McDonalds/BurgerKing/TacoBell etc. isn't the one to figure it out.
    - DannyBee 14y ago
      To support your point: Burger King, to take an example, probably doesn't give a crap about the restaurant sales at all. Most of their profit is from franchise fees, not restaurant sales. Company restaurant revenues in 2011 were 1638.7 million, and company restaurant expenses in 2011 were 1447.4 million. All told, profit from restaurant sales was 191 million. Franchise fee revenue in 2011 was 697 million, franchise and property expenses 97.1 million. All told, profit from franchise fee revenue was 599.9 million. Basically, I can't imagine they care if they are franchising restaurants with people, restaurants with robots, or heck, franchising robot boxes themselves. They only care that someone is paying them to call it burger king, and giving them a cut of sales
      - jamesaguilar 14y ago
        I find this comment a bit short sighted. First of all, it's obvious that the burger king org DOES care about restaurant sales, otherwise they would not be advertising constantly. Even if you ignore the contradiction between their actions and your suggestion about their priorities, applying a little logic to the situation will make it clear. If sales aren't good, how many people are going to be making new Burger King franchises? If sales aren't good, will franchises remain in business to pay them fees?
meric 14y ago
At a McDonald's store in my country that I worked in, the labor costs were only around 15% of the store's costs, whereas the cost of food (excluding wastage) is around 25%. Since the minimum wage in my country is about twice as high as that in the US, I wouldn't be surprised the relative labor costs are even lower there. McDonald's also happen to pay 20% above minimum wage over here. Burger assembly is only a small part of the labor cost. You have the cashier, the fries person, drinks, management, salad/deli assembly, cleaning (during opening hours as well as final cleanup afterwards), as well as carrying stock from the truck back to the store. Whether those machines would be profitable would depend on whether it is worth saving 5% of the cost of a burger in exchange for the capital and maintenance cost of the machine. McDonald's isn't a burger company. It is a real estate company. http://seekingalpha.com/article/73533-mcdonalds-is-a-real-estate-company http://seekingalpha.com/article/73533-mcdonalds-is-a-real-es...
- throwmeaway33 14y ago
  You could make the back room potentially a lot smaller if it was all in a machine. As for the link - I don't buy his arguments: "First, it buys and sells properties, as one might suspect." I've never seen a McDonald's close down. I'm sure they do sometimes, but they probably realize really quickly if the place will be profitable or if it needs to be sold asap. So effectively they never cash in on any long term real-estate investments. If the real-estate values goes up, more than likely you're gunna be selling more burgers too. The second point he makes is kinda semantic. At the end of the day McDonalds needs to extract money from the franchise. They can charge more for using the brand, more for the ingredients or more for rent or whatever. It doesn't really have any significance. At the end they are trying to get as much money as possible out of the franchise without running the owners bankrupt. His last point about them getting bought and all their real-estate sold.. I dunno maybe he was trying to just be cute - but net worth of assets is taken into account into the stock price. It's the kind of stuff that's on quarterly reports. Kinda scary that this guy is an investor.
  - jamesrcole 14y ago
    > I've never seen a McDonald's close down. I'm sure they do sometimes, but FWIW, I've seen two close down. This is in Brisbane, Australia (for those who are interested, one on Roma St, and another a bit further out, near the Albion Five-ways IIRC). They'd both been around for a while. Not saying this changes anything about your point, just making an observation.
patmcguire 14y ago
All McDonald's are run by franchisers. New locations have to put up a quarter of the startup price and pay back the rest as a loan http://www.bizquest.com/McDonalds-Restaurants-franchise-for-sale/?gclid=CM-u3M_z_bQCFUOK4AodmDgAWw http://www.bizquest.com/McDonalds-Restaurants-franchise-for-... Even if it costs less in the long run, increasing their startup costs might decrease growth enough to make it now worth it. And since they demand uniformity everywhere, they'd be in the position of imposing change on their existing franchisers who might not want it, which is never fun.
- seanmcdirmid 14y ago
  Definitely not true. I worked for a corporate store during high school, and only later in College moved to a franchise for a year. At my corp store, we were one of the first stores in the country to move to the batch cooking method (with microwaves no less!), as well as the speakerless drive through (take orders directly at the window). None of those was replicated at the franchise I worked for later.
ams6110 14y ago
McDonald's is most assuredly continually doing R&D on their processes. Undoubtedly they have investigated robotics over the years and the most likely explanation for why they have not been widely adopted is the ROI is not there. Restaurant profit margins are not high, there is way too much competition. Until recently, and probably even now, the robotic technology needed to automate the kitchen would have been prohibitively expensive and likely unreliable. Restaurant kitchens are hot, greasy, steamy environments. Also anything that's used for food production has to be able to be regularly cleaned by immersion or high pressure hot water or chemical cleaning. Not great for electronics and precision mechanisms unless they are built to rugged specifications (not inexpensive). Even ordinary, manually operated restaurant equipment is very expensive compared to what we buy to use at home, and the reason is that reliability must be very high; you cannot afford to lose your production capability for even a short time, since restaurants are the ultimate just-in-time production operation. Finally, unlike more traditional factory operations (e.g. automobile manufacturing) where robots replaced highly paid unionized workers, the average McDonald's worker probably makes less than $10/hr with minimal benefits. At maximum staffing, labor costs for the kitchen staff might be $50/hr, and at most times of the day, less than that. There's just not a huge savings to be had.
- smiler 14y ago
  Especially as if you had these machines, you would have to have at least 1 on-site engineer at all times (most likely two) to be able to fix / correct them when they go wrong - who would cost you $50 / hr.
  - MichaelApproved 14y ago
    Ideally, you should be able to serve more people for $50/hr with the new system (robots and engineer) VS. $50/hr with the current staffing.
    - pretoriusB 14y ago
      People don't just come in when you can serve more of them. McDonalds are working with a certain flow of customers mostly based on location, time, etc, not on "ability to serve". Now, if they start throwing people off because they are just too many to serve, that's another thing...
sheri 14y ago
McDonalds is seemingly trying to create an image of a wholesome restaurant, serving naturally made and original food. McDonalds in Canada has a series of videos showing how their meat is natural, and their fries are 100% potatoes etc. I feel that mechanizing their burger making process would be counter productive to this image.
JumpCrisscross 14y ago
"I wish there was a website or publication that took businesses and profiled how they work, the challenges they face and the costs associated with parts of the business consumers might not understand, so these sort of questions were easy to answer. I would love to read how McDonalds works (as a business))" Not for all businesses, but for public ones, there is something pretty close: SEC EDGAR [1]. Search for the most recent 10-Q (concise quarterly filing) or 10-K (more detailed annual filing). [1] http://www.sec.gov/edgar.shtml http://www.sec.gov/edgar.shtml
- jaggederest 14y ago
  Right, but in McDonalds case, the parent company isn't the one operating the franchises most of the time, and the franchises are almost always small companies privately held. So you don't get an accurate look at how the average McDonalds franchise operates. Other businesses have their earnings obscured by different sources of retail, or inexact expense breakdown.
JulianMorrison 14y ago
The fact is that mechanization is competing against humans. And so long as the human wage can be driven down in real terms, the falling minimum cost of mechanization won't meet it. But there is inelasticity in human wages, created by things such as food and having a roof over your head. When the lines cross by enough to outweigh the political backlash, the companies switch to machines, and one more category of job disappears forever. Thus I have said: in a few years time, we are going to face the choice - either we all retire, or we'll all be sacked. To take option 1, first discard money and capitalism.
HeyLaughingBoy 14y ago
There are many such websites and publications. The "problem" is that there isn't a single one for all types of businesses (hardly surprising). But for just about any business category you can think of, there are multiple trade publications (often free) that cover that domain. One of the top 3 hits for googling "restaurant industry publications" is an answer to someone asking this question.
joezydeco 14y ago
I'm doing active work for a couple of companies that sell equipment to McD's and other fast foot joints. But we'll focus on McD's for the sake of this reply. McDonald's is heavily invested in new technologies, but they are very conservative about deployment. If something like this did appeal to them, it would take a lot of field trials and monitoring before it went out. Remember that the corporation can specify certain equipment to produce their products, but in franchised stores those store owners need to do the actual purchase and maintenance of the equipment. They need buyin as well. McDonald's also second-sources everything. If they say "this is the shake machine we recommend", there will be two competing companies making that type of machine. This is good business for a number of reasons. So something like this mega robot would never make it to the field without a duplicate style of machine being made by someone else. As far as this robot goes, it's just too complex and too critical to base an entire restaurant upon. If it goes down, your entire operation is stalled for the duration of the repair. Doesn't matter if a technician is seated on a stool next to it 24 hours a day, you still can't guarantee when it will be running again. This type of technology just won't be able to compete with semi-skilled labor and simpler cooking devices for the mid to long-term.
Datonomics 14y ago
I wonder how well it works. I could not find a video anywhere, which would be a marketing no brainer for such a cool machine.

kposehn 14y ago

The question is going to be reliability in the long term. Carls Jr. uses a burger conveyor to cook burgers (stick the patty in and in a fixed amount of time it comes out perfectly cooked) for example, but they also have many moving parts and if it breaks, that is half the burger capacity gone (they have two per store usually). With a complex machine like this, keeping it from breaking is the key. If it works well though...this really could change things.

pcl 14y ago
it comes out perfectly cooked That's a somewhat subjective statement.
- froo 14y ago
  Not necessarily, if you look at it from the perspective of a meat's internal temperatures.
- kposehn 14y ago
  Temperature-wise, it does. I'd still rather eat a brick. Carl's Jr. continues to insist on using very un-marbled top sirloin and then they cook it to death, with it ending up extremely dry usually. At one point I think they must have experimented with using Gelatin to hold more of the moisture in the meat. It tasted like meat Jell-O. Ugh...
- jonah 14y ago
  "For their next model Momentum Machines plans on ... giving it gourmet cooking abilities that seasoned chefs use such as charring the burger while retaining its juiciness."

froo 14y ago

I'm not entirely sure they could. They probably felt that simple cooking of pre-prepared ingredients and then assembly wasn't an interesting problem to solve, especially since staff can also handle the other requirements of food prep (keeping equipment clean and sanitary for example). The addition of providing a superior experience (custom meat combos? Slicing ingredients on the fly) might not have occurred to them. I think that emphasising the high output gourmet burger is the way forward. Especially since McDonald's has already proven that "Masstige" does have a spot in the food prep industry.

super-serial 14y ago

If automated movie rental machines are so popular why hasn't Blockbuster invested millions in this idea, or are these "RedBoxes" just a cute idea that won't scale? In 10 years I think your comment will look just as silly.

citricsquid 14y ago
I was asking a question not making a judgement.
- super-serial 14y ago
  Your question about the economics wasn't silly... I was just pointing out that corporations like McDonalds are very unlikely to start spending money on robotics research or rethinking their entire business. It just isn't in their corporate DNA. Whether the economics make sense or not... McDonalds/BurgerKing/TacoBell etc. isn't the one to figure it out.
  - DannyBee 14y ago
    To support your point: Burger King, to take an example, probably doesn't give a crap about the restaurant sales at all. Most of their profit is from franchise fees, not restaurant sales. Company restaurant revenues in 2011 were 1638.7 million, and company restaurant expenses in 2011 were 1447.4 million. All told, profit from restaurant sales was 191 million. Franchise fee revenue in 2011 was 697 million, franchise and property expenses 97.1 million. All told, profit from franchise fee revenue was 599.9 million. Basically, I can't imagine they care if they are franchising restaurants with people, restaurants with robots, or heck, franchising robot boxes themselves. They only care that someone is paying them to call it burger king, and giving them a cut of sales
    - jamesaguilar 14y ago
      I find this comment a bit short sighted. First of all, it's obvious that the burger king org DOES care about restaurant sales, otherwise they would not be advertising constantly. Even if you ignore the contradiction between their actions and your suggestion about their priorities, applying a little logic to the situation will make it clear. If sales aren't good, how many people are going to be making new Burger King franchises? If sales aren't good, will franchises remain in business to pay them fees?

meric 14y ago

At a McDonald's store in my country that I worked in, the labor costs were only around 15% of the store's costs, whereas the cost of food (excluding wastage) is around 25%. Since the minimum wage in my country is about twice as high as that in the US, I wouldn't be surprised the relative labor costs are even lower there. McDonald's also happen to pay 20% above minimum wage over here. Burger assembly is only a small part of the labor cost. You have the cashier, the fries person, drinks, management, salad/deli assembly, cleaning (during opening hours as well as final cleanup afterwards), as well as carrying stock from the truck back to the store. Whether those machines would be profitable would depend on whether it is worth saving 5% of the cost of a burger in exchange for the capital and maintenance cost of the machine. McDonald's isn't a burger company. It is a real estate company. http://seekingalpha.com/article/73533-mcdonalds-is-a-real-estate-company http://seekingalpha.com/article/73533-mcdonalds-is-a-real-es...

throwmeaway33 14y ago
You could make the back room potentially a lot smaller if it was all in a machine. As for the link - I don't buy his arguments: "First, it buys and sells properties, as one might suspect." I've never seen a McDonald's close down. I'm sure they do sometimes, but they probably realize really quickly if the place will be profitable or if it needs to be sold asap. So effectively they never cash in on any long term real-estate investments. If the real-estate values goes up, more than likely you're gunna be selling more burgers too. The second point he makes is kinda semantic. At the end of the day McDonalds needs to extract money from the franchise. They can charge more for using the brand, more for the ingredients or more for rent or whatever. It doesn't really have any significance. At the end they are trying to get as much money as possible out of the franchise without running the owners bankrupt. His last point about them getting bought and all their real-estate sold.. I dunno maybe he was trying to just be cute - but net worth of assets is taken into account into the stock price. It's the kind of stuff that's on quarterly reports. Kinda scary that this guy is an investor.
- jamesrcole 14y ago
  > I've never seen a McDonald's close down. I'm sure they do sometimes, but FWIW, I've seen two close down. This is in Brisbane, Australia (for those who are interested, one on Roma St, and another a bit further out, near the Albion Five-ways IIRC). They'd both been around for a while. Not saying this changes anything about your point, just making an observation.

patmcguire 14y ago

All McDonald's are run by franchisers. New locations have to put up a quarter of the startup price and pay back the rest as a loan http://www.bizquest.com/McDonalds-Restaurants-franchise-for-sale/?gclid=CM-u3M_z_bQCFUOK4AodmDgAWw http://www.bizquest.com/McDonalds-Restaurants-franchise-for-... Even if it costs less in the long run, increasing their startup costs might decrease growth enough to make it now worth it. And since they demand uniformity everywhere, they'd be in the position of imposing change on their existing franchisers who might not want it, which is never fun.

seanmcdirmid 14y ago
Definitely not true. I worked for a corporate store during high school, and only later in College moved to a franchise for a year. At my corp store, we were one of the first stores in the country to move to the batch cooking method (with microwaves no less!), as well as the speakerless drive through (take orders directly at the window). None of those was replicated at the franchise I worked for later.

ams6110 14y ago

McDonald's is most assuredly continually doing R&D on their processes. Undoubtedly they have investigated robotics over the years and the most likely explanation for why they have not been widely adopted is the ROI is not there. Restaurant profit margins are not high, there is way too much competition. Until recently, and probably even now, the robotic technology needed to automate the kitchen would have been prohibitively expensive and likely unreliable. Restaurant kitchens are hot, greasy, steamy environments. Also anything that's used for food production has to be able to be regularly cleaned by immersion or high pressure hot water or chemical cleaning. Not great for electronics and precision mechanisms unless they are built to rugged specifications (not inexpensive). Even ordinary, manually operated restaurant equipment is very expensive compared to what we buy to use at home, and the reason is that reliability must be very high; you cannot afford to lose your production capability for even a short time, since restaurants are the ultimate just-in-time production operation. Finally, unlike more traditional factory operations (e.g. automobile manufacturing) where robots replaced highly paid unionized workers, the average McDonald's worker probably makes less than $10/hr with minimal benefits. At maximum staffing, labor costs for the kitchen staff might be $50/hr, and at most times of the day, less than that. There's just not a huge savings to be had.

smiler 14y ago
Especially as if you had these machines, you would have to have at least 1 on-site engineer at all times (most likely two) to be able to fix / correct them when they go wrong - who would cost you $50 / hr.
- MichaelApproved 14y ago
  Ideally, you should be able to serve more people for $50/hr with the new system (robots and engineer) VS. $50/hr with the current staffing.
  - pretoriusB 14y ago
    People don't just come in when you can serve more of them. McDonalds are working with a certain flow of customers mostly based on location, time, etc, not on "ability to serve". Now, if they start throwing people off because they are just too many to serve, that's another thing...

sheri 14y ago

McDonalds is seemingly trying to create an image of a wholesome restaurant, serving naturally made and original food. McDonalds in Canada has a series of videos showing how their meat is natural, and their fries are 100% potatoes etc. I feel that mechanizing their burger making process would be counter productive to this image.

JumpCrisscross 14y ago

"I wish there was a website or publication that took businesses and profiled how they work, the challenges they face and the costs associated with parts of the business consumers might not understand, so these sort of questions were easy to answer. I would love to read how McDonalds works (as a business))" Not for all businesses, but for public ones, there is something pretty close: SEC EDGAR [1]. Search for the most recent 10-Q (concise quarterly filing) or 10-K (more detailed annual filing). [1] http://www.sec.gov/edgar.shtml http://www.sec.gov/edgar.shtml

jaggederest 14y ago
Right, but in McDonalds case, the parent company isn't the one operating the franchises most of the time, and the franchises are almost always small companies privately held. So you don't get an accurate look at how the average McDonalds franchise operates. Other businesses have their earnings obscured by different sources of retail, or inexact expense breakdown.

JulianMorrison 14y ago

The fact is that mechanization is competing against humans. And so long as the human wage can be driven down in real terms, the falling minimum cost of mechanization won't meet it. But there is inelasticity in human wages, created by things such as food and having a roof over your head. When the lines cross by enough to outweigh the political backlash, the companies switch to machines, and one more category of job disappears forever. Thus I have said: in a few years time, we are going to face the choice - either we all retire, or we'll all be sacked. To take option 1, first discard money and capitalism.

HeyLaughingBoy 14y ago

There are many such websites and publications. The "problem" is that there isn't a single one for all types of businesses (hardly surprising). But for just about any business category you can think of, there are multiple trade publications (often free) that cover that domain. One of the top 3 hits for googling "restaurant industry publications" is an answer to someone asking this question.

joezydeco 14y ago

I'm doing active work for a couple of companies that sell equipment to McD's and other fast foot joints. But we'll focus on McD's for the sake of this reply. McDonald's is heavily invested in new technologies, but they are very conservative about deployment. If something like this did appeal to them, it would take a lot of field trials and monitoring before it went out. Remember that the corporation can specify certain equipment to produce their products, but in franchised stores those store owners need to do the actual purchase and maintenance of the equipment. They need buyin as well. McDonald's also second-sources everything. If they say "this is the shake machine we recommend", there will be two competing companies making that type of machine. This is good business for a number of reasons. So something like this mega robot would never make it to the field without a duplicate style of machine being made by someone else. As far as this robot goes, it's just too complex and too critical to base an entire restaurant upon. If it goes down, your entire operation is stalled for the duration of the repair. Doesn't matter if a technician is seated on a stool next to it 24 hours a day, you still can't guarantee when it will be running again. This type of technology just won't be able to compete with semi-skilled labor and simpler cooking devices for the mid to long-term.

Datonomics 14y ago

I wonder how well it works. I could not find a video anywhere, which would be a marketing no brainer for such a cool machine.