We Have Our Eye on Robotic Companies Serving the Restaurant Industry
We expect this will become an even bigger topic for investors as we approach the April 1st start of California's $20 per hour minimum wage for fast food workers.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
* Rising wages and labor issues have us looking for robotics companies serving the restaurant industry
* We expect this will become a big topic as we approach California's new fast-food minimum wage date
* McDonald's upcoming investor event should confirm we're on the right path
Over the weekend, The Wall Street Journal ran a very interesting article about what Chipotle Mexican Grill CMG founder Steve Ells is doing now. It speaks to one of the pain points we see on the horizon for the restaurant industry as it continues to cope with attracting workers as well as rising wages. We've shared our view this will spur the adoption of automation and robotics as companies look to limit if not offset those pain points. Ells is also in this camp.
Ells early next year will open in Manhattan the first location of Kernel, serving meat-free sandwiches, salads, and sides made to order. A skeleton crew will run the restaurants alongside robots, making faux chicken sandwiches and sides such as cucumbers with wild rice.
Customers' orders are beamed to the kitchen, where a robotic arm puts food-laden pans into the oven. A programmed toaster flips a bun into the oven for warming, while conveyor belts move dishes through the kitchen. Workers finish off the dishes, package the food, and slot it into cubbies for pickup.
"We've taken a lot of human interaction out of the process and left just enough," Ells said.
We're not focused on the menu offering so much as the use of robots and the roles they take. We expect this will become an even bigger topic for investors as we approach the April 1st start of California's $20 per hour minimum wage for fast food workers.
Action Alerts PLUS name McDonald's MCD and others have started to admit there will be price increases to offset that, but there will be other levers as well. We expect McDonald's will discuss this in greater detail at its upcoming investor event in early December. The company has been an adopter of technology to drive productivity, something that sets it apart from many others.
That has us starting to do some legwork on companies positioned to capitalize on this pain point. Companies are addressing this, including Miso Robotics and Kitchen Robotics, but the vast majority of them are privately held.
There are some public companies, including Ecolab ECL and Rockwell Automation ROK , that have exposure to restaurant robotics, but we will need to determine if their exposure is enough to move the overall revenue and profit needle.
While Rockwell does have exposure to the Food and Beverage industry, that looks to be more focused on packaged goods than the restaurant industry. The same appears to be true for Ecolab and its focus on food safety but the company recently invested in Miso Robotics, a potential gateway to the restaurant industry.
We'll continue digging into these two companies and others as we look for a suitable candidate for the portfolio.
Action Alerts PLUS is long CMG, MCD.