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Comment by citricsquid | Hacker News Reader

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))

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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.

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.

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.

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...

But Moore's Law is at work, and humans can't make that much more productive at making sandwiches.

Moore's Law in observation made about transistor density; not some universal law of technology.

They saying this chinese noodle slicing robot costs the third of an employee: http://www.youtube.com/watch?v=ukNkCnNJuR8 (also they are other restaurants already using robots: http://www.youtube.com/results?search_query=robot+chef)

As someone who is addicted to chinese handmade noodles, this is very cool! Perhaps this will increase the quality of noodles in the states eventually.

That $10/hr worker is also available for mopping floors, cleaning bathrooms, moving and unloading boxes, refilling condiment/utensil dispensers, taking out the trash, etc. When business is slow, the robot just sits.

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-es...

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.

> 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.

I've seen a single McDonald's close down. So I guess it does happen.

"I've never seen a McDonald's close down."

Fewer people will see one close down than you might expect; the ones that close down are the ones that not enough people go to, so only small numbers of people see it close down - if lots of people were there to see it close, it wouldn't be closing.

I've seen Quizno's and Subway sandwich shops close and Wimpy restaurants but never a McDonald's, KFC or Burger King.

I've seen plenty new ones open but never a closure.

This is in Glasgow, Scotland.

There was a McDonald's beside the southern General hospital in Govan that has now closed

Edinburgh's Princes St had once two Burger Kings. One is now an HSBC, the other was in a building that is now being demolished.

There used to be McDonalds on university avenue near UW in Seattle, they closed it down sometime after I graduated. That was a high traffic store also, so it must have been a lease issue.

I'm sad that these restaurants are what I'll be faced with if I ever visit Glasgow. I visited the UAE and McDonalds, Hardees, KFC, and Burger King were by far the most common places to eat there; much more common than local restaurants.

These restaurants are absolutely everywhere and have been for a long time so don't be surprised about it.

There are however plenty of better restaurants out there, Glasgow included, so don't be sad!

It's a real estate company because for many franchise stores, it owns the land and collects rent and franchise fee from the franchisees.

“McDonald’s real moneymaking engine was its little-known real estate business, Franchise Realty Corporation; envisioned and created by Harry Sonneborn. The obscure McDonald’s alter ego company was based on Sonneborn’s unique even lesser known financial formula.” http://en.wikipedia.org/wiki/Harry_J._Sonneborn (First CEO)

As I explained the "rent" is just a way of extracting money from the franchise. They are not necessarily charging the local market rate for commercial real estate (if it's a very busy McDonalds they can charge way more). They don't realistically sit down and consider maybe replacing the McDonalds with an American Apparel so they can charge more rent. So it's not the typical landlord<->renter relationship where the landlord considers getting new tenants and the renter considers moving to a new place.

You've never seen one close down, because they do extensive research on vetting each location before they put one up; but also, they remove all identifying signage etc. within 24 hours of a location being closed, since they don't want to hurt their brand by implying failure.

>You could make the back room potentially a lot smaller if it was all in a machine.

You might not want to, though. You might want to keep the redundant infrastructure around in case the automation breaks down and you need somebody to flip burgers in the interim, after all, the jobs you're replacing aren't terribly skilled.

It's also worth noting that maintenance people normally get more (significantly so for the more complex machines) then normal crew, and given how frequently the machines break already you start seeing the costs of a robot being more then the cost of paying someone to do the work.

Further the machines get cleaned constantly, and are deep cleaned every night. That takes people, and given how low the crew numbers are normally, you're not going to save anything by having robots make the food.

There doesn't need to be a cashier. If there was a wall of touch screens, and all the food production was automated, you'd only need unskilled labour. Cleaners, and someone restocking the food inputs. You could have someone service the machine once a week, or in emergencies - but they already have expensive machinery running, so they probably already have the support staff infrastructure for those jobs.

EDIT: I should have said 15%/5% of revenue, not costs.

It's better to automate and mechanize the food production and harvesting processes, then, which is already happening in agriculture.

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.

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.

I was asking a question not making a judgement.

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.

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

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?

Yes, they do care about restaurant sales, but, IMHO, only to keep franchisees happy.

I still think they'd be just as happy franchising robots. I could be wrong.

At the risk of sounding nit-picky, you did make a judgment: "I have the feeling that, if this sort of idea was as value as the article implies, McDonalds ... would have put serious money into developing this sort of thing and it would already be everywhere."

It was this judgment that I felt super-serial was responding to.

Somewhat OT - in Redwood City, it's not unusual to see lines of 3-5 people at each of the two Red Boxes at the seven-eleven on fifth avenue. I'm guessing those two redboxes do more business than the entire Block Buster in downtown RWC based on how fast that line turns over.

Block Buster got squeezed out by automation - At the high end from iTunes and on the Low-End from Netflix/Redbox/Amazon.

I'm starting to see the Seattle's Best Coffee machines (powered by Redbox, image[1]) replacing Starbucks stands inside grocery stores. The machines are way smaller, cost less, and make more consistent coffee. They seem like the younger sister to the "Microsoft Starbucks" machine [2], which are apparently available to anyone buying 4 cases of beans per month.

[1] https://lh3.ggpht.com/-0vJb6GbCYGs/Tn9dFJkPPUI/AAAAAAAAGtE/2...

[2]https://blogs.msdn.com/cfs-filesystemfile.ashx/__key/communi...

Why is it Microsoft Starbucks? is it in the MS campus? Or running Windows?

I believe they were first introduced inside of Microsoft (in '05 or '06, I think). And it was a huge relief, too, let me tell you. They replaced these awful Farmer Brothers industrial-style coffee urns.

You'd punch in your order (tall drip, decaf, etc.), and it would grind beans and brew your coffee all in about 20 seconds. They're quite spectacular.

They're a simply amazing blessing. You press 3 buttons (cup size, right or left coffee (right is always house blend), then "Start"), and a minute later you have delicious coffee. Anywhere on campus, any time of day or night. The machine does Short (8oz), or a Tall (12oz) which makes a beautiful latte in my 16oz cup with 4oz of milk.

You probably already know this, but for those who don't Seattle's Best is a Starbucks company --they used to be the brand found in bookstores, when those were popular --now they seem to be the brand SBUX uses for in-store (substore) locations.

Seattle's Best started out as their own company that was then acquired by Starbucks in the 00's sometime. At around the time they were acquired, they became the cafe brand for Borders bookstore, and we all know how that worked out in the end :) B&N has always franchised Starbucks directly in their stores (or at least, for as long as I can remember).

Redbox's boost into it's current fame didn't have as much to do with automation as it did with the price and convenience factor.

People were tired of paying $5+ to rent from Blockbuster and get nailed with late fees all the time. Redbox simplified this model ($1/day until you return it). Of course the 24 hour kiosks are a boon too.

They have them, they call it blockbuster express.

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.

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.

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-...

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.

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.

"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

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.

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.

it comes out perfectly cooked

That's a somewhat subjective statement.

Not necessarily, if you look at it from the perspective of a meat's internal temperatures.

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...

"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."

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.

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.

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.

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