Restaurant robots are the ‘vanguard of automation,’ top analyst says. It’s not coming for fast-food workers’ jobs—it’s actually helping them

“It’s not that they are necessarily reducing the number of people,” Senatore told Fortune. “It’s more that they’re making those people more productive and happier.”

Senatore wrote in a March 11 note that back-of-house robots in restaurants are the “vanguard of automation” and have the potential to not only make a company money, but make jobs more enjoyable.

At Kernel, a vegan fast-food restaurant in New York, the benefits of automation are already coming to fruition. The store’s three staff members work alongside a robot arm that places food in the oven, then puts it on an assembly line for employees to prepare. Employees work with the team’s software engineering team to code the robot to maximize the team’s efficiency, including timing the arm to retrieve a burger from the oven the same time a brioche bun is finished toasting.

“Team members are enjoying the experience, and automation is creating a better working environment for them and not a worse one,” Stephen Goldstein, Kernel’s president, told Fortune. 

The restaurant began hiring four months ago and has been open for only a month, but so far it has a 100% employee retention rate, Goldstein said. The fast-food industry’s average turnover rate was 144% in 2021. Staff have a starting wage of $25 an hour and have paid vacation and sick leave. The company is developing a stock-option plan. And the customers don’t appear to be paying for Kernel’s hefty investments in its workers and technologies. Its plant-based burger is $7, over a buck cheaper than Shake Shake’s Veggie Shack.

Kernel shows the potential for putting robots at the forefront of a fast-food joint. But is it just too early to tell if restaurant robots are too good to be true?

The rise of the retail robot

Restaurants with automation aren’t inherently new—think the Horn & Hardart Automat of 1902 that revolutionized the dining experience by essentially creating a massive vending machine for customers—but the proliferation of AI-powered robots certainly is.

“To some extent, the restaurant industry is a microcosm,” Senatore said. “Software has become pretty pervasive: relying on computers to predict things, to plan things, to certainly aggregate and quantify and analyze data. But the bigger challenge, then, is actually integrating them or incorporating them from a physical process.”

Though online ordering was introduced in the mid-2000’s, innovation and implementation of technologies from robot couriers to in-app ordering were fast-tracked or expanded because of the pandemic, which saw a massive decline in employment in the retail and restaurant sectors. 

Shoppers’ continued use of online ordering and automation after the pandemic inspired retailers to pursue omnichannel strategies. The model appeased consumers wanting to return to brick-and-mortar stores while keeping the efficiency that pandemic-era technology created. Some analysts are crediting automation with the economy’s surprise productivity boom—in the first months of 2021, productivity surged 5.4%.

“It’s been really, really important for retailers to be able to address the needs of the consumer at any point during the day or or during the evening,” Mark Mathews, executive director of research at the National Retail Federation, told Fortune. “The retailers need to be able to cater to what the consumers want. That has also created this need for retailers to invest in technology.”

Restaurant automation, particularly the introduction of robots, has helped the bottom line of fast-casual restaurants like Sweetgreen, which has struggled for years with profitability. It introduced the Infinite Kitchen automation system in two suburban locations in 2023 and has already noted the benefits.

Sweetgreens with Infinity Kitchen reported 10% higher ticket sales than other stores in the surrounding market, according to its fourth-quarter earnings. Despite development and installation for Infinite Kitchen costing about half a million dollars, Sweetgreen is expanding the model in more stores. It expects a seven-point margin benefit for locations with the system.

“The Infinite Kitchen continues to deliver many benefits to our operating model, such as higher throughput, better order accuracy, portioning consistency and substantially lower team member turnover,” CFO Mitch Reback said in the earnings call.

The technology to improve productivity is expensive, but so is replacing employees. On average, replacing an hourly worker who quits costs a company about $1,500, per People Keep. High turnover also weakens employee morale and may leave them with burnout as they shoulder the responsibilities of their former coworker.

There’s also a less-tangible argument to be made to keep employees around, even when robots take over some of their rote tasks: Employees are still able to provide a human touch that robots just can’t, Mathews said.

“Employees can be a difference maker for retailers,” he said. “Retailers recognize that you still need to invest in your workforce despite the fact that consumers are wanting to interact or transact in a variety of different ways with you.”

When will the perks run out?

Just because employees are working hand-in-hand with robots now doesn’t mean the relationship won’t sour.

Labor costs make up 36% of average restaurant’s costs, per the BofA note by Senatore, and 98% of restaurant operators identified higher labor costs as an issue for their business, according to the National Restaurant Association’s 2024 State of the Restaurant Industry report. Senatore admits that with more efficient systems and employees no longer needing to complete more menial tasks, it makes sense for employees to begin cutting hours.

Retail employees are still worried that the presence of robots could cost them their jobs down the line, Marc Perrone, United Food and Commercial Workers International Union’s international president, told Fortune.

“At this point in time, it’s kind of ambivalent,” he said. “What we’ve seen is a reduction of workforce in the front of the stores, and that is a direct result of the technology that’s been moved in the stores.”

Most of the rank and file of UFCW are workers at food retailers like grocery stores, not necessarily restaurants, but Perrone said that the union was down 100,000 members over the last 15 years as automation has taken hold of those spaces.

Hershey said in a February SEC filing that it would lay off workers as part of a restructuring which includes changing recipes to include less chocolate among soaring cocoa prices, as well as an investment in automation. Automated pizza-making startup Picnic laid off an undisclosed number of workers last year, with CEO Clayton Wood citing a challenging economic environment.

Perrone isn’t naive to the future of retail incorporating more automation, but he asserts that technology can’t help employees if it costs them their jobs.

“Technology can be utilized to benefit all parties,” he said. “I do believe that before technology is introduced, there should be some conversation about it.”