Some of San Francisco's robot-run restaurants are failing. It could simply be that we still want to be served by humans, not machines.
A trend in food automation has swept the country in recent years. The San Francisco Bay Area has seen a high concentration of robot-run restaurants, but some of them have failed. It may simply be that people still value some sort of human interaction in a dining experience. Here's what it was like visiting some of San Francisco's automated eateries. Visit Business Insider's homepage for more stories.
The robot revolution in San Francisco has begun. Or has it? The tech-centric city has seen an automized restaurant scene in recent years. The idea is that robots could be used to fill repetition-heavy positions that require hours of nonstop work — like line cooking — that could then free up human employees to provide higher quality customer service. Labor costs and, subsequently, menu prices would be lowered, tipping would become obsolete, restaurants could more heavily invest in higher quality ingredients, and profits would increase for business owners in the process — or at least that's the theory. It's a trend seen across the country and the world, but San Francisco specifically has been the ideal market for robot and semi-robot restaurant testing for a number of reasons. The city's millennial workforce is busy, which makes a quick automated culinary experience appealing. A harshly visible wealth divide, low wages, and a housing crunch also spell a labor shortage in the 7x7 city, a shortage that could be addressed by placing robots into these roles. And on top of that, venture funding-seeking startups here have long used the streets of San Francisco as an experimental playground, with the city's occupants as their guinea pigs for testing out what could be promising technology — so much so that it's grown into a bit of an issue, with the city considering launching an office specifically designed to regulate emerging tech before companies can throw it into public spaces.
At San Francisco's Eatsa automat, you could quickly order and then pick up your $7 quinoa bowls — prepared behind the scenes by unseen employees — through futuristic pickup windows lined against the wall of the restaurant, as Business Insider's Melia Russell reported. At a Peter Thiel-backed CafeX coffee bar, a jolly-looking robotic arm is the barista building and serving you your coffee order. And at Creator, the Google parent company-backed burger joint of the future, a robot builds your $6 burger from start to finish in five minutes. Other Bay Area-based automated restaurants like pizza-making and delivery startup Zume, TeaBOT, the ramen vending machine Yo-Kai Express, the Blendid company whose robot will fix you a $6 smoothie, and Chowbotics' salad-prepping Sally robot round out the region's autonomous eatery arena. Visiting one can feel like stepping into a sci-fi flick — being handed a cup of coffee by a robot is a bit of a novelty. But innovation aside, there are concerns that automation may result in mass unemployment as robots are deployed to fill jobs that humans could occupy. There's also the longstanding question of whether or not people actually desire human interaction when they're being served. And even with those questions aside, it turns out that some of these restaurants aren't surviving. In July 2019, Eatsa shuttered its San Francisco locations after the company was found to be thousands behind in unpaid rent. It's since pivoted to restaurant tech and software and rebranded itself as Brightloom, with a new deal with Starbucks announced in 2017. Just this week, CafeX closed its San Francisco locations, though its stations at San Francisco International Airport and San Jose Airport are still open. And Zume, the Softbank-backed startup known for its pizza-making robots, shuttered its pizza business and pivoted into food-truck tech and services in November 2019. Then, in January 2020, the company laid off 400 employees to further cut costs, as reported by Business Insider's Megan Hernbroth.
One of the robot-run restaurants that seems to be doing alright is Creator, which is still humming along since opening in mid-2018. There are "robot attendants" and humans present in most of these restaurants, but there's more of a human presence in the burger-making robot joint, as The Guardian's Vivian Ho pointed out. The robot prepares the Creator burger, but humans take your order and perform other tasks. And as SF Gate's Alix Martichoux writes, the robot restaurants the author visited and enjoyed the most were the ones that involved real-life people. So there could be multiple reasons why some of them have flopped, but perhaps a straightforward explanation is that we're simply not ready to be served by robots in lieu of humans. Here's what it's like eating at San Francisco's robot restaurants, some of which have since failed.SEE ALSO: We tried to pay $1 in cash for a soda at Amazon’s cashier-less convenience store of the future, and it took way longer than expected Creator is the world's first robot-made burger spot. This is what the burger bot looks like.
And this is CafeX's robot barista. The coffee company's San Francisco locations are now closed, so you can only check it out at two Bay Area airports.
The same goes for Eatsa — its San Francisco locations gave customers a futuristic dining experience before closing in mid-2019.
Over at Creator, "robot attendants," or human employees, take customers' orders on devices. The status of each customer's order could be tracked on a counter tablet.
At CafeX, customers ordered at digital kiosks.
The process was similar at Eatsa — you ordered via a tablet. When Business Insider's Melia Russell visited in 2016, there were eight bowls to choose from, all priced around $7.
Source: Business Insider Once a customer orders, a brioche roll from a local bakery is pushed through an air tube into a chute at Creator.
It's toasted, buttered, and is dropped into a to-go container. Ingredients, like smoked oyster aioli, charred onion jam, and "delightful shreds" — not slices — of cheese, are then placed onto the burger, according to the specific customer's order.
The Creator bot can have your burger built in under five minutes.
It was the same deal at CafeX. A $3 cappuccino was delivered via a tiny hatch in no time at all.
You received your Eatsa bowl in a similar fashion, via a small locker. The customer's name appeared on the front of the window, which meant the order was ready for pick-up.
Eatsa marketed itself as the "future of restaurants." It may have been a unique, futuristic experience, but as Melia Russell reported, it wasn't as though a robot was wheeling your order out to you. Unseen human employees worked incognito behind the lockers and deposited food orders while the window flashed black.
Source: Business Insider Russell said her Balsamic Beets Bowl was hearty and refreshing when she gave it a try in 2016.
Eatsa, Russell wrote, was perfect for people in a rush who value a wholesome meal at an affordable price more than human interaction.
Source: Business Insider But, alas, the company's restaurants are no more. Eatsa announced in 2019 that it was closing its San Francisco locations to focus on selling its technology to other restaurant brands. It was also revealed that the company owed thousands in unpaid rent.
Source: SF Eater With CafeX, Zume Pizza, teaBOT, and Eatsa now closed, Creator is one of the last automated restaurants left standing in the city.
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Robots are increasingly taking over retail spaces and restaurants. Their role has become especially vital during...Robots are increasingly taking over retail spaces and restaurants. Their role has become especially vital during the pandemic as businesses look for new ways to enforce social distancing and no-contact service. We rounded up 20 retail and restaurant robots. It's up to you to decide: are they cute, creepy, or both? Visit Business Insider's homepage for more stories. The robots were created by man. So far, they haven't evolved, rebelled, or formed a plan to kill all humans, but they're definitely more present than ever in daily life. In the last few years, robots have entered our public spaces in a way only previously imagined in science-fiction books, movies, and TV. They've leapt from popular imagination into the aisles of warehouses and grocery stores, into restaurant kitchens and dining rooms. Not only do robots play an important health and safety role during the pandemic — often testing for coronavirus and doing temperature scans — they're more necessary than ever before to allow businesses to reopen in a safe and socially distanced way. Take a look at some of the Most Valuable Droids of retail below and decide for yourself: cute or creepy? Or both?SEE ALSO: KFC will test lab-grown chicken nuggets made with a 3D bioprinter this fall in Russia DON'T MISS: Redefine Meat's CEO reveals the tech creating its 3D-printed "alt-steak" that raised $6m in a seed round from the investors behind Impossible Foods and Beyond Meat A restaurant in Hangzhou, China has a robot chef that looks like Ultraman, a Japanese anime character. This chef robot slices noodles in the kitchen. Source: Getty Flippy, a robot chef arm made by Miso Robotics, is used in stadiums and select restaurants. This fall, White Castle will start testing Flippy in one of its restaurants. Read more: Meet Flippy, White Castle's new robot chef that can fry food and flip burgers In Japan's Huis Ten Bosch amusement park, a robot named "Andrew" makes okonomiyaki at Hen-na Restaurant. Source: World Economic Forum As part of KFC's "fast food of the future" initiative in Russia, the chicken chain is testing a fully-automated fried chicken preparation system. Source: The Takeout Starship Technologies' tiny sidecar-on-wheels robots have been tested widely as a convenient (and now contactless) food and grocery last-mile delivery method. Starship robots have been tested by Postmates and Doordash. Read more: Investors are betting $85 million that hungry students will normalize these robot food delivery workers of the future Softbank's humanoid Pepper robot is being used around the world. In Germany, chain grocer Edeka introduced Pepper robots in its stores to help people social distance and stay safe during the pandemic. Source: Retail Tech Innovation Hub Walmart has staffed 1,000 of its stores with Bossa Nova robots, which stock shelves and help keep track of inventory. The six-foot robots contain 15 cameras that can scan aisles. Read more: Walmart is bringing robots to 650 more stores as the retailer ramps up automation in stores nationwide In Moscow, Russia, some Lenta supermarkets are staffed with Promobot robots, which roll around the stores and announce discounts and promotions. They also recognize regular customers and can do product demonstrations. Source: Grocery Dive In 2019, regional supermarket chain Giant Eagle started testing Tally robots at its stores. Tally robots, which are made by Simbe Robotics, scan shelves to keep track of stock. Source: Supermarket News Hundreds of Stop and Shop and Giant Foods stores are home to the googly-eyed robot Marty, who has become a customer favorite. Marty also played a key role in a murder suspect's alibi in January. Read more: A high-profile murder case hinges on an alibi involving a googly-eyed grocery-store robot named Marty There are many restaurants around the world that utilize waiter robots, including this one in Qingdao, China. "Tete" delivers food to guests and can speak over 200 words. Source: Getty This Chinese server robot made by Kewang Trade Corporation plunges deep into uncanny valley territory with its human-like visage. It can also carry more than 35 kilograms (just over 77 pounds). Source: Getty A robot waiter at a restaurant in Wuhan, China has expressive eyes on an LED screen. Source: Getty Chinese hotpot chain Haidilao employs non-humanoid robot servers that make facial expressions and speak to guests. Read more: A massively popular Chinese restaurant chain is trying to take over the world with snarky robots, free snacks and hand massages, and a noodle dancer. Here's why I loved it. "Robot" restaurant in Chennai employs seven female-esque robot waiters. 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85% of independent restaurants may go out of business by the end of 2020, according to the Independent Restaurant Coalition
As many as 85% of independent restaurants may permanently close because of the pandemic by the...As many as 85% of independent restaurants may permanently close because of the pandemic by the end of 2020, according to a report commissioned by the Independent Restaurant Coalition. Independent restaurants, which comprise 70% of all restaurants, rely more heavily on dine-in revenue than chains and don't have a corporate safety net or support system to fall back on. Restaurant owners say that while the Paycheck Protection Program provides a temporary lifeline, it won't prevent most independent restaurants from massive losses that will force them out of business. Owners also say it will be a long time before dine-in revenue will return to pre-pandemic levels, meaning that many restaurants will be forced to operate at a loss. The IRC is pushing for $120 billion in grant funding from Congress in the form of Oregon Representative Earl Blumenauer's RESTAURANTS Act. Visit Business Insider's homepage for more stories. As many as 85% of independent restaurants may be forced out of business by the end of the year, according to a new report commissioned by the Independent Restaurant Coalition. The report, which was conducted by consulting company Compass Lexecon, outlines the threats facing independent restaurants as the pandemic continues to affect business. Although the restaurant industry as a whole has suffered major losses, independent restaurants like mom-and-pop diners, neighborhood Thai joints, and fine dining staples, are much more at risk than fast-food chains like McDonald's and Starbucks. Independents, which comprise 70% of all restaurants, rely much more heavily on dine-in revenue and don't have the corporate resources that make some chains so resilient in the face of disaster. "What I'm afraid of is the people that are the least likely to survive are going to be these small, single-location, immigrant-run, women-run, people-of-color-run operations. That we're the ones that don't have the infrastructure like the chain restaurants to survive this," Dan Wu, owner of Atomic Ramen in Lexington, Kentucky, said on an IRC press call. Wu is an immigrant, like many other independent restaurant owners and workers. Business Insider spoke with Amanda Cohen, who runs Dirt Candy, a vegetarian restaurant in New York City, and is a member of the IRC leadership. Cohen said that what originally seemed a two-week problem has turned into a two-year problem. "I think it's going to be a long haul to get back to where we were," Cohen said. "I still have most of the same bills that I had before I closed. I still have to pay electricity and gas and purveyors. And I don't think I will have enough customers to keep my business going." Restaurant owners say that while the Paycheck Protection Program has provided immediate relief for many independent restaurants, it's a temporary band-aid for their long-term problems. "We do have the support of the PPP loans and also the grants that are paid by the government but simply not enough to stay open long term. I don't think most restaurants will even last to December," Nina Compton said on the IRC press call. Compton is the chef and owner of Compère Lapin and Bywater American Bistro in New Orleans. "We don't have the infrastructure or the financial support that chain restaurants have," Cohen said. Cohen received a PPP loan that she said will last her through December, but she's unsure if she'll be able to stay open after that. "I don't know who I turn to now if I need more money." Restaurants already operate on razor-thin margins. For sit-down restaurants, those margins are decimated by capacity limits, which will likely be in place until a vaccine is found. Many restaurants that have pivoted to delivery have found that it still isn't profitable — even with cities capping delivery platform fees at 15%. A recent Eater survey of San Francisco restaurant owners found that 87% said they would not be able to survive on just delivery and takeout, and 60% said they're losing money by staying open. It's likely that restaurants won't be able to return to pre-pandemic business levels until they're able to open dining rooms at full capacity without social distancing restrictions. Although May saw the return of nearly 1.4 million restaurant jobs, that recovery trajectory is unlikely to persist through the coming months as most restaurants continue to operate at a loss. Especially in dense urban areas like New York, social distancing protocols are a death sentence for small restaurants that pay high rent and rely on densely-packed dining rooms "There's just no way any of us in Manhattan can survive," Cohen said. In Congress, the IRC is pushing for restaurant-specific funding in addition to the PPP with a new bill spearheaded by Oregon Representative Earl Blumenauer. Blumenauer's proposed bill, the RESTAURANTS Act, or the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed To Survive Act, would provide $120 billion in grant support to independent restaurants. SEE ALSO: Food delivery with third-party apps like Grubhub and Uber Eats is booming, but no one's making money. Here's why their business is broken. Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
Franchisees of iconic American chains are 'hemorrhaging' sales, as operators of IHOP, Pizza Hut, and more file for bankruptcy
The franchisees that run locations of some of America's most iconic chains are facing the same...The franchisees that run locations of some of America's most iconic chains are facing the same financial struggles as the rest of the industry. Franchisees for Pizza Hut, IHOP, and Subway have already filed for bankruptcy. McDonald's internally warned franchisees that they may have to downsize or sell locations. "Every franchisee is a small business, and they had to close up, and they're sucking wind," said restaurant industry investor Roger Lipton. "They're hemorrhaging." Visit Business Insider's homepage for more stories. The coronavirus pandemic is proving to be a breaking point for franchisees of some of America's most beloved brands. While chains are better positioned than independent restaurants to survive the pandemic, many of the best-known restaurant brands rely on independent owner-operators to run restaurants. Franchisees typically have more support and guidance than independents during a crisis, thanks to franchisors' assistance. At the same time, these business owners are facing the same struggles as the rest of the restaurant industry. As restaurants across the US are permanently shuttering due to the coronavirus pandemic, experts say not every franchisee is going to be able to stay in business. Struggling owner-operators will be forced to try to sell their restaurants back to the corporate office or other franchisees, or file for bankruptcy. A Kansas-based Pizza Hut franchisee filed for bankruptcy in early May. So did a franchisee with 49 IHOP locations, which are now set to close. At least one Subway franchisee in Nevada filed for bankruptcy in late April, according to court filings. "Every franchisee is a small business, and they had to close up, and they're sucking wind," restaurant industry investor Roger Lipton told Business Insider. "They're hemorrhaging." Even some franchisees of chains that are recovering financially are concerned. McDonald's recently warned franchisees that while it had earmarked $40 million in aid for franchisees, some may need to downsize or sell off locations. In an email obtained by Business Insider, McDonald's National Franchisee Leadership Alliance pushed back on downsizing demands, telling franchisees "if you weren't considering downsizing pre-COVID-19, it shouldn't be a consideration as a result of COVID-19 today." The pandemic is hitting restaurants without drive-thru and delivery business the hardest Not all franchisees will suffer equally, as restaurant owners try to decide if its time to leave the business. Fast-food chains were able to keep serving customers via drive-thru throughout the pandemic. While sales at chains including McDonald's, Taco Bell, and Burger King plummeted by 20% to 35% in the last two weeks of March, most major fast-food have recovered significantly in recent weeks. At chains where the bulk of business comes from sit-down customers, including casual dining chains like Applebee's and TGI Fridays and family-style chains like Denny's and IHOP, sales dropped by more than 70% in late March. While take-out and delivery provided limited business, some franchisees decided to temporarily close instead of attempting to eke out to-go sales. Reopening dining rooms is far from a silver bullet for these chains. Adding new safety measures and rehiring staff to serve customers is a pricey process, Lipton says. With most states capping capacity in dining rooms at 25% to 50%, many sit-down restaurants will not be able to break even, especially if dine-in sales cannibalize the to-go business. As a result, some franchisees that planed to shutter restaurants temporarily may never reopen or may sell their restaurants. Franchisees' financials prior to the pandemic will also have a massive impact on their outcomes. John Gordon, the principal of Pacific Management Consulting Group, says franchisees that went into the pandemic with significant debt are the most likely to have to close or sell their locations as sales slump. These struggling owner-operators are more likely to have entered the business relatively recently, Gordon says, as the costs of becoming a franchisee have risen in recent years. Other franchisees may have gone into debt due to expensive remodels, as franchisors demand updated appearances and technology. Many franchisees received financial support from chain's corporate offices during the pandemic, with franchisors such as McDonald's, Denny's, and Pizza Hut cutting back on franchisees' costs by deferring payments related to royalties, rent, and marketing. But, there has also been a shift across the industry towards a model in which fewer franchisees own more locations. Having fewer, larger franchisees can make it easier to operate with thin profit margins, as well as cut corporate costs. McDonald's, for example, went from slightly less than 2,100 franchisees at the end of 2014 to about 1,700 late last year. Gordon says that the pandemic will accelerate the trend towards chains having fewer franchisees. But, Lipton says that any restaurant company is at risk due to the pandemic — not just owner-operators with a handful of locations. "Small chain, large chain, it's still a restaurant," Lipton said. "Same economics." SEE ALSO: Denny's is permanently closing 15 restaurants. Here's the list. Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid