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Bloomberg's Halen on Growth of Automation in Restaurants(Audio) · Bloomberg Intelligence

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  Speaker 1: business flash. You're listening to Taking Stock with Kathleen Hayes
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  Speaker 1: and Pim Fox on Bloomberg Radio. The restaurant industry and
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  Speaker 1: federal government regulations. What are the connections. Well, here to
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  Speaker 1: tell us all about it is someone who's an expert.
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  Speaker 1: We have Mike Halin. He is our a senior restaurant
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  Speaker 1: analyst for Bloomberg Intelligence, providing real time unique research in
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  Speaker 1: a variety of industries as well as the marketed government
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  Speaker 1: factors that affect business operations are terminal. Customers can access
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  Speaker 1: this function at B I go all right, b I go,
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  Speaker 1: Mike Halen, go for it. The restaurant industry and federal regulations.
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  Speaker 1: I know a lot of restaurant owners. They have not
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  Speaker 1: been happy campers the last couple of months. No, they haven't.
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  Speaker 1: Actually this whole year, this whole year has been very difficult.
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  Speaker 1: Started out great weather aided comp right, we had a
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  Speaker 1: very mild winter compared to the year a year ago,
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  Speaker 1: and then since then it's been all downhill. I mean,
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  Speaker 1: I'd say the biggest thing going on here is the
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  Speaker 1: growing gap between eating at home versus away from home.
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  Speaker 1: I think a lot more people are, you know, just
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  Speaker 1: cutting back on lunch or dinner visits and deciding to
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  Speaker 1: either cook at home or brown bag their lunch because
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  Speaker 1: the gap is at a record high. We've never seen
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  Speaker 1: it this high um. And you know, and and it's
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  Speaker 1: all ties back to labor. Restaurants are very labor intensive,
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  Speaker 1: and I you've done some terrific work, and I just
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  Speaker 1: want to highlight it because you know, on the terminal
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  Speaker 1: B I go Bloomberg Intelligence and and following it more broadly,
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  Speaker 1: might you've done terrific work on the minimum wage movement
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  Speaker 1: give or pay everybody fifteen dollars an hour? It has started,
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  Speaker 1: for example, to the steps are being taken in New
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  Speaker 1: York City. But rest he said, very labor intensive, and
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  Speaker 1: restaurants rely on sort of entry level jobs dishwashers, you know,
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  Speaker 1: the lion cooks, where they may not be getting fifteen
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  Speaker 1: dollars an hour, but they might be people who wouldn't
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  Speaker 1: get a job otherwise. And if I'm a small business
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  Speaker 1: in a very tight margin business, like a small restaurant,
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  Speaker 1: how am I going to pay people fifteen bucks an hour?
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  Speaker 1: A lot of them can't. I mean, like you said,
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  Speaker 1: it's a low single digit, mid single digit margin business.
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  Speaker 1: Really there's not much room here. And and they've actually
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  Speaker 1: restaurants have quote a break because food costs are down.
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  Speaker 1: So you know what's gonna happen when when commodity prices
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  Speaker 1: turned back up. UM, what's gonna happen. What we see
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  Speaker 1: happening is greater investment in automation technology. So what a
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  Speaker 1: lot of chains are doing now, UM are testing kiosks
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  Speaker 1: because frankly, millennials want this. They don't want to even
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  Speaker 1: take their headphones off to talk to somebody. They just
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  Speaker 1: want to keep them in order via kiosks, sit down
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  Speaker 1: and get their food. UM. So we're they're testing it already,
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  Speaker 1: and they're especially looking at states like Washington and California
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  Speaker 1: and Washington d see where they're gonna have fifteen dollar
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  Speaker 1: minimum wages because the r I on the automation technology
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  Speaker 1: is better. But if you raised minimum the minimum wage
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  Speaker 1: to twelve dollars or fifteen dollars across the country, you're
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  Speaker 1: gonna see these changes start to accelerate. Uh, the investment.
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  Speaker 1: So you also see at casual dining chains, chains like
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  Speaker 1: Texas Roadhouse, Buffalo Wild Wings, they're testing handheld servers so
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  Speaker 1: every time somebody takes your order, they don't have to
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  Speaker 1: go to the POS system in type. I don't like
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  Speaker 1: it at the report when I just put my put
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  Speaker 1: put my cap something and then someone comes over I'm
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  Speaker 1: just not a fan and I was. I worked in
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  Speaker 1: the restaurant business for many years. Yeah, a lot of
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  Speaker 1: people like the human interaction. At the high end, you know,
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  Speaker 1: people definitely will want to continue to have that UM
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  Speaker 1: service and feel the hospitality of of places like the
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  Speaker 1: Union Score Hospitality Group UM. But on the on the
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  Speaker 1: lower end, you know, there's not too many ways out
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  Speaker 1: of this other than automating for these you know, fast
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  Speaker 1: casual and casual dyning chains. I'm going to give you
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  Speaker 1: the secret see here that there was something called the automat,
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  Speaker 1: and the automat you put your change in a little window,
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  Speaker 1: in a little box and you could open the door
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  Speaker 1: and you get your sandwich out of the automat. So
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  Speaker 1: there's there's the answer to all that. It's gonna be
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  Speaker 1: like the Jetsons, right right, Well, yeah, they're coming home
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  Speaker 1: to rust um talking about the Jetsons. What are the
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  Speaker 1: companies who are the best makes of the technology and
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  Speaker 1: the implementers of the technology in order to get rid
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  Speaker 1: of these repetitive tasks. Yeah, So it's interesting because it's
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  Speaker 1: very disperate. There's not a very um these like family
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  Speaker 1: businesses or like slicing, dicing, packaging, moving convey I mean
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  Speaker 1: you know, yeah, so you know that that Yeah, that's
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  Speaker 1: I I peeling. But um no on the on the
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  Speaker 1: technology side, there's not any really pure plays. Um, you know,
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  Speaker 1: I think your best bet is to kind of um,
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  Speaker 1: who's doing it the best then who. McDonald's is ahead
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  Speaker 1: of the curve. You know in Europe some of their
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  Speaker 1: markets already have this rolled out Kiosk rolled out in
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  Speaker 1: all of their restaurants, so, um, that has enabled them.
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  Speaker 1: They haven't really spoke too much about it because it's
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  Speaker 1: a franchise and they don't want to give out their business.
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  Speaker 1: But um, they have been able to cut back labor.
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  Speaker 1: McDonald's is very careful not to say, look, we're gonna
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  Speaker 1: cut jobs because that typically creates some blowback. And they're saying,
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  Speaker 1: you know, we're going to create a different service environment.
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  Speaker 1: We're gonna speaking of big, big, big names. A quick
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  Speaker 1: final question you have about maybe thirty seconds. Uh, Starbucks
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  Speaker 1: might be a very important company to watch in this regard.
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  Speaker 1: Very So it's interesting because they were very supportive of
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  Speaker 1: a fifteen dollar minimum wage. They're very they pay their
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  Speaker 1: employees pretty well. Most people in the business want to
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  Speaker 1: work at Starbucks. Um, but what's happened since they've raised
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  Speaker 1: the minimum wage is that they've had employees complaining about
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  Speaker 1: aggressive cutbacks of hours. And there's a petition out there
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  Speaker 1: with over ten thousand votes, people saying, you're cutting my hours,
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  Speaker 1: you raise my pay. It's it's a wash. What are
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  Speaker 1: we doing? So it's a very good example of what's
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  Speaker 1: going to happen in the business. Mike Haalen, Senior restaurant
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