Welcome Hamburger Enthusiasts!
The origin of today’s episode goes back to the late 1800’s when the first automat opened in Berlin, and was brought to America soon after. The automat, which presented food in a wall sized coin operated vending machine, adapted quickly to the United States and actually became the first fast food chain.
Our guest today is writer, reporter, and author Brian Merchant. He writes the Blood In the Machine newsletter about AI, Silicon Valley, labor and power. He joined us for a discussion based on the very recent case study McDonald’s: Moving Toward a Fully Automated Future? and to teach us some lessons from the luddites.
The case study, and much of our conversation, is really asking if we as a society have a problem with a certain level of automation. Obviously the automat is a charming and nostalgic idea of an “automated” restaurant, but what about Miso Robotic’s pop-up CaliExpress where they demonstrated a robot arm chef?
Should Mike rally the people at his hamburger restaurant to go smash some robot arms? Brian isn’t so sure… He points out that the Luddites were highly skilled textile workers with great pride in their craft, which is a pretty different scenario from the modern day fast food employee.
The fully automated burger is still a capitalist fantasy. It’s more cost effective to hire low wage workers than install and maintain expensive robotics. The case study’s example of an “automated” McDonald’s was actually not automated at all.
We’ve seen this kind of layout before with Starbucks, and while the inside of this McDonald’s is a dystopian hellscape, anyone using the drive thru would likely not even notice the difference.
The case study ends by asking:
… with its most recent innovation of an almost-fully automated location, McDonald’s came up against mixed and strongly felt reactions. … how should [McDonald’s] move forward? Should [they] commit to having solely human employees or continue to move toward fully automated stores?
Which is, as we get into on the podcast, not the right question. This is not in any way an “automated store” and while it uses less employees it also serves fewer customers and in a very different way. If you look at the location on the map you’ll see that Burger King, Popeyes, and Starbucks all have smaller drive-thru focused stores at the same location:
As our discussion moved into science fiction Chris asked the philosophical question, “If we could make a fully automated machine that sold burgers, should we?” To which Brian replied that it’s not up to us and our ethics. As soon as it’s profitable for a company to do it, they will. The problem for automation is that the United States has kept labor costs very low. The minimum wage in that Texas location is $7.25 an hour.
Of course it is not the binary of “to automate or not to automate.” It’s simply a matter of how much savings are there at scale for a massive company like McDonald’s. And if there is a move to less human interaction (something some customers and employees both seem excited about) that opens more opportunities for the smaller, less automated locations to differentiate themselves even more from the chains.
A great example of this is the taste test Mike did at Rick’s Drive In in Los Angeles, California. This is a drive thru fast food restaurant but the inside maintains a level of charm that is unimaginable at scale.
Next Up: How To Read a 10-K
Next week we have our most interesting friend coming on to help us understand the most boring regulatory filing. Marcus Estes returns to the podcast to talk about finance, culture, seed oils, and everything else that relates to the public filings of McDonald’s.
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