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  • 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