Welcome to White Castle. This is Brittany. How may I help you? This robot named Flippy runs the fry station at a White
Castle outside of Chicago. With its mechanical arm and using computer vision
technology. Flippy can cook everything from French fries and onion
rings to cheese sticks. White Castle said it plans to add 100 Flippys to its
kitchens nationwide. We used to need two people to operate that french fry
area during peak hours, and now we are able to only have one person operate in
that area. Would you like to try the mac and cheese bites today? All right. Thank you. If the screen's correct, it is
$8.27. Second window, please. Fast food jobs are demanding, quick moving and
sometimes even dangerous, but not for robots. When you look at the restaurant industry, it's a little
bit late to the party in adopting automation and robotics in particular. So far, the restaurants that are using them or trying
them out, say that this automation really only has to do with helping relieve boring
tasks from workers' plates, help make their jobs easier, let them engage with the customers more. But there's a lot of reports out there kind of
guesstimating how many jobs could be replaced by these robots by automation. Up to 82% of restaurant positions could to some extent
be replaced by robots. Automation could save U.S. fast food restaurants over $12 billion in annual
wages. And restaurants are also struggling to find workers. American restaurants are down more than 560,000 jobs,
or about 4.6% of its workforce from their pre-pandemic levels. About a third of Americans worked in a restaurant as
their first job, and half have some restaurant work experience. Yeah, the economics of this are very, very compelling. If you take minimum wage, be just around the $20,000-p
er-year mark. That's the cost of one robot. Other companies in this space include Picnic that has a
robot that makes pizza and AUTEC whose machines make sushi. So what impact will robots have on the fast food
industry and the livelihood of its workers? CNBC got a behind-the-scenes look at
restaurant robot maker Miso Robotics to find out. Miso Robotics got its start in 2016 with a handful of
engineers in a Pasadena, California garage. Two years later, the company launched Flippy at a
nearby CaliBurger restaurant. Flippy's first job was turning over a hamburger patty
after it was placed on a grill by a human chef. But the company quickly pivoted to fried
foods, rolling out a portable fryer station for baseball games at Dodger Stadium. This was really the peak throughput test for us. Can Flippy keep up with in between innings at a Dodger
game and everybody goes to the concession stand? Can we meet that demand? In 2021, Miso launched Flippy 2 using a mounted rail
system, A.I. and computer vision technology that can identify and
track food as it moves through the structure. Although it has a camera, tablet and robotic arm,
engineers say the real tech is in the software. The hard thing to get right about this product is
having the computer vision, the algorithms the plan, the cook cycle and the software that manages
the robotic motion to all work together so that it's as reliable as a
refrigerator and it does the job. Food is dispensed directly from the freezer into a
basket. The robot's computer vision identifies the type of
food and places it in the appropriate fryer. Once the food is cooked, the basket is taken
out of the fryer, shaken and dumped into a holding area where it is bagged by a
worker. For those of us who have been in a restaurant, this is
exactly the same process that is done today by a human. He's constantly playing like a multi-frame game of
chess in his mind, understanding where to be next. So his sequence of movements is precise and he
doesn't undercook overcooked food. But what about the cost? Miso charges restaurants about $3,500 a month for
Flippy 2 under its robot as a service model. The company charges an additional fee of about $10,000
for installation. By comparison, the median hourly wage of fast food
workers in the U.S. is just $12.07 an hour. There were roughly 1.7 million restaurant workers in
the U.S. in 2022. But Flippy 2 is different. Flippy 2 works around the clock. We have many 24 hour locations where Flippy 2 is
installed. Flippy doesn't call in sick. Built in Columbus, Ohio, it takes Miso about six weeks
to manufacture one Flippy 2. The current off-the-rack mechanical arm is the same
type designed for car factories. And Miso says they cost $15,000 each, plus another
$5,000 to modify with additional grippers and sensors. Last year, Miso partnered with robotic arm maker Ally
Robotics in hopes to start producing its own arm in 2023. The company also makes a streamlined version of Flippy
2 called Flippy Lite, as well as a drinks dispenser named Sippy. Flippy Lite is currently being tested in restaurants
by Chipotle. And what Flippy Lite is designed to do is to take one
item that requires frying and just cook the heck out of it all day long. With about 25,000 shareholders, Miso has so far raised
more than $70 million in crowdfunding. The company has also announced it is testing a robot
that fries chicken wings for wing zone. The global fast food industry is a $273 billion
business, including more than 280,000 fast food restaurants in the U.S. alone. At this White Castle on the outskirts of
Chicago, staff in the busy lunch hour shift face a barrage of orders coming from drive-thru
customers as well as the main counter. Would you like to try any mac and cheese bites today? I think if the screen's correct, it is $10.42 second
window, please. It's very fast paced. We're all in our positions, but we do move around,
jump about to help out, to get the orders out. But meager salaries, fewer teenagers in the workforce
and fear of COVID have been a drain on fast food restaurants. Job openings at restaurants and hotels reached 1.3
million in November 2020 to the 20th consecutive month, with over a million
vacancies. Bars and restaurants make up about 90% of those
positions. A typical fast food worker makes about $26,000 a year
compared with a concierge at a hotel who can earn more than $37,000. During the pandemic. We faced a lot of staffing
challenges and things are better, but there are still challenges with staff in many locations. To assist workers. White Castle added Flippy to take over its fry
station. The robot cooks food more consistently and doesn't
require time off. And I think some restaurants are also looking at this
as a way of, 'Well, this robot is expensive, but is it cheaper than however many employees I would need
to hire? Especially because a lot of workers have not been
sticking around as long as they're used to.' This is one of the positions that is the hardest to
fill and hardest to retain for restaurant operators. There are dozens of positions back of
house. This one is a really demanding one. It's hot and it's very, very fast paced. Robots like Flippy solve other problems for
restaurants, too. For starters, fast food work can be dangerous. In California, the state with the highest number of
people employed in the fast food industry, workers face health hazards ranging from overflowing sewage, smoke
inhalation and extreme heat, according to one study. Turnover is another headache for the industry prior to
the pandemic. The restaurant industry faced a workforce turnover of
130%, according to Panera Bread CFO Michael Bufano. At the same time, low wage workers made up 43% of the
U.S. workforce. As you look at the labor allocation within the
restaurant, that's being able to shift one human from that station somewhere else, and that's saving every
single month, probably somewhere around $700 to $900 in actual profit. Another incentive for restaurants hard-to-fill
positions have forced chains to push hourly wages to new highs. The wages have been very low in these industries. They've really been very much pegged to the minimum
wage so that when the minimum wage has been allowed to decline in real terms, that is, it hasn't kept up with inflation, then those
jobs get progressively less and less attractive. Labor is one of the biggest costs restaurants face,
averaging about 25 to 30% of sales. McDonald's said it would reach an average of
$15 an hour by 2024 at all company owned restaurants. Starbucks said it was bringing its pay floor for U.S. baristas to $15 an hour. Gen-z consumers made 5 billion restaurant visits in
the year, ending July 2022, including 4.3 billion trips to fast food eateries. Restaurants often have thin margins, which is one of
the reasons why adoption of automation has been slow. But that could be changing as the cost of robots has
declined by 50% over the last three decades. Industrial robot usage has tripled over the
past decade, from about a million in 2010 to 3 million in 2020. The auto industry, by far the largest segment in the
market, is followed by electronics, food and beverage and metals and machinery. The industrial robotics market is expected to reach
$81 billion by 2028, up from almost $42 billion in 2021. But will those trends impact Miso's business? Robots are hard to develop and they're expensive to
develop. It takes a lot of time and money and frankly, a lot of
engineers to get all the technology working together smoothly. Miso makes money by having more and more
robots in the field. In 2021, Miso spent $1.5 billion in R&D, $7.8 million on salaries, $6 million on sales and
marketing, and a little over $6 million on overhead and administrative expenses. Revenue was just $36,000 in 2021, mostly from the
deployment of one Flippy. Right now it seems like Miso robotics is probably the
biggest and best-known player in the space. Competitors is a pretty small pool at the moment. We've been on the forefront of this for a long time. But they are coming and we know the ones that aren't
here today will be here tomorrow. Robot adoption could come quickly in a similar fashion
to the way delivery apps revolutionized the restaurant space. The global food delivery app business is over $150
billion, triple the amount it was in 2017. And that would be welcome news for fast food
restaurants who face pressures ranging from rising food costs to staff turnover. Americans spent $2.1 trillion on food in 2021, with
more than half of that money going to food-away-from-home purchases. The tide has turned. This is a there's no longer a
question of 'Are robotics coming to the industry?' It's a foregone conclusion. The question is 'At what pace and in what form?' And what you will see in the months and years ahead for
the foreseeable future is more and more automation solutions like Flippy 2 being deployed in
everyday restaurants, including some of the best known brands in the world.
