Automating Fast Food: Wendy's Shifts to AI Workforce

0:00What can 160 years of experience teach you about the future? When it comes to protecting what matters, Pacific Life provides life insurance, retirement income, and employee benefits for people and businesses building a more confident tomorrow. Strategies rooted in strength and backed by experience. Ask a financial professional how Pacific Life can help you today. Pacific Life Insurance Company, Omaha, Nebraska, and in New York. Pacific Life and Annuity, Phoenix, Arizona. Since the launch of ChatGPT, the debate around AI replacing people is getting bigger and bigger. And one of the biggest areas that we hear this talk about or talked about is in, you know, like entry level jobs, specifically in fast food.

0:42I think there was a lot of controversy when earlier this year, McDonald's announced that they were going to create a completely automated restaurant. and today we have an announcement that Wendy's is also following Suite, partnering with Google Cloud to create an AI model that can answer people and take people's orders at the window. So today we're going to talk about that. We're going to talk about the implications and where we believe the industry is going and what exactly Wendy's is doing, if anything different than McDonald's. So the first thing to know is when McDonald's originally unveiled back in January, kind of right after the whole chat gpt ai hype began a completely automated restaurant a lot of people criticized them for this saying you know you're going to replace eventually you know if this works you're going to displace a ton of jobs and mcdonald's ceo apparently pushed back and said that the restaurant the automated restaurant they created well it's true the whole thing you take kiosk orders inside and the whole thing's automated to deliver your orders while it is automating a lot of different things.

1:47There is still about the same size team as a normal McDonald's restaurant, just instead of focusing on taking orders and giving people food and making the food, they're more focused on packaging food and other areas. So apparently they have a similar size staff. Now, that being said, I don't believe for a second that they spent all this money on automation to, you know, have the exact same headcount and cost. Definitely this thing is going to be able to cut down on headcount and I'm assuming now they can just serve way more people. So if that's the case, that means that they only need to create one McDonald's restaurant instead of five because while one has the same staff as one before, it can now serve five times as many people, therefore eliminating the need for five more restaurants, theoretically speaking.

2:33All that to say, you know, I don't know, when people push back and they're like, no, we have the same amount of people doing stuff. It's like, yeah, but you're doing more stuff. Like inevitably these, the the concern is that the robots are taking jobs and the robots are taking jobs now um not that i don't think we should have automation and yada yada but i just think like to be fair that's the you know that's the truth of the matter so in any case uh mcdonald's ceo said that customers interact with less um in person and more their digital devices with heightened expectations for the service they receive and it's interesting because there's an article on a website called Freethink talking about this and they said bans on outdoor dining early in the pandemic led to fast food restaurants like McDonald's to serve more people via drive-thru leading to longer wait times the number of people ordering through delivery services also surged yada yada just my opinion I find a little cringe when anyone references the pandemic for why things have to be fundamentally different today I love work from home and that kind of concept that it led to but it's not like any of these things, like these things are great, but like, it's not like, it's not a need.

3:43The pandemic's over. We're post-pandemic. So using the pandemic to justify any specific concrete changes today, I find a little bit cringy. Well, I guess COVID's not over. I know plenty of people that got it in the last couple of weeks and got over it fine, but, you know, the hype and hysteria around COVID is over. So, but any, in any case, maybe it is necessary because you know Bill Gates says that uh we need to start preparing for the next pandemic so whatever he's got planned for us there might be happening soon oops I say that out loud okay so anyways um what is interesting is McDonald's specifically what they're doing is they have two different drive-through lanes one where you can go through and do your order more um normally um on their first restaurant as a test and the second one is specifically going to be all completely automated so you can order on your phone you drive up they have like a conveyor belt that pulls your phone out to you and when i was watching their their video about this it looked really similar to like if you've ever used chase bank or well any any bank really that you go there and they have like those tubes where you stick your credit card information and it sucks it through the tube and gives it to the teller and then the teller gives you the stuff and it shoots it back down it's something kind of like that you pull up and it has like a little window that has a conveyor belt and pops your food out like that.

5:00Since no one is going to be in that lane specifically ordering and waiting for food, their hope is that that goes faster. Okay, so that's what McDonald's did back in January, which automated to a large degree a lot of different jobs. In addition to you've been able to give your order through AI, and now Wendy's is following suit and doing something really similar. So Wendy's actually says that 70 to 80 % of their customers are choosing the drive-through as a preferred ordering channel. Delivering a seamless ordering experience using AI can be difficult due to the complex menu options. It's actually a really funny point that they're going to bring up in a second.

5:38So because you can do like, they have a lot of complex menu options apparently, and you can do like special requests and stuff like that. They also say the ambient noise around makes it difficult, whatever. I mean, this is all stuff McDonald's obviously solved in January. So they're acting like they're solved. They're like, you know, they solved a puzzle but I mean other people have done it so they was this is something interesting they said though for example because customers can fully customize their orders and food is prepared when ordered at Wendy's this presents billions of possible order combinations available at the Wendy's menu leaving room for miscommunication or incorrect orders okay so this is in their literal press statement that I like their PR the press release that they said this and i don't know if this is like if i don't know if they're actually accurate in saying billions of possible order combinations or if they're just like lots of possible order combinations i think using the word billions in a press release if it isn't actually billions a is odd and misleading i mean why would they say that but anyways if it really is billions someone do the math for me like how many order combinations could you possibly have at wendy's but i guess like every time you add a new product and a new like customization to that product you you know you introduce like x amount of new variable um uh different types of you know orders technically but in any case billions of possibilities that sounds pretty wild so google cloud's generative ai capabilities are now going to be able to bring a new automated ordering experience to the drive through at wendy's that is intended to enhance experience that customers employees and franchisees expect so I think that uh it's gonna be pretty interesting essentially this is the same thing that McDonald's did and I think that by McDonald's kind of front running this they took a lot of the heat and now that Wendy's doing it it's not so much like oh man Wendy's is replacing jobs just like okay well Wendy's is following what McDonald's is already doing and everybody inevitably is going to start doing this I think that's the interesting thing with this is like McDonald's started it they're kind of the premier or like the biggest fast food restaurant in America I think and so since the big player is doing it, Wendy's is now doing it, everyone will start doing it.

7:47And inevitably, we're going to see when you order at fast food in the next couple years, all of these are going to just be like an AI that you are talking to. So it's going to be interesting to see how accurate and how, I mean, inevitably, these things will get good at it. There's no doubt about it. So pretty much when McDonald's launched, a bunch of TikTokers went through it and were like, I tried it and it got my order wrong and blah, blah, blah. And they're this is the first company that does it in the first iteration give this thing a couple years and these things will all be flawless like look at the rate of ai advancing so i don't really buy any of the um a human could do it so much better like stuff that people like that narrative people try to push because come on ai is going to be better than humans at everything and that's like like it or not like i'm not saying that's necessarily good thing i'm not saying i'm thrilled about that prospect but like inevitably that is the scenario that's going to happen so like let's figure out how to adapt instead of you know trying to trash talk the ai in the hopes that i don't know you know we make ourselves feel better because in reality it won't be like that for long so better prepare than you know feel smug for a minute now in any case in the press release wendy said that this is kind of funny wendy said wendy's introduced the first modern pickup window in the industry more than 50 years ago and we're thrilled to continue our work with google cloud to bring a new wave of innovation to the drive-thru experience i don't know i always think it's funny when companies are like, we pioneered the pickup window like 50 years ago, so we're the pioneers, so now we're gonna do AI, look at us, we're pioneers, I'm like, I don't know, not incredibly impressed by the first pickup window 50 years ago, but like, you know, cool historical fact, not relevant today, in any case, that's just my own silly opinion, but it's gonna be really interesting, I think the broader, the bigger news in this whole situation is the fact that McDonald's has done this, Wendy's has done this, the industry is going in this direction, and Wendy's has just announced that they're going to do the ordering at the window, but they will inevitably do the automation.

9:46McDonald's announced that they have a big team running the automated store in the background, but guess what? Newsflash, that was their first store. Of course, they're going to have a bunch of people in the background. It's going to look horrible if it makes mistakes as a completely automated thing. Inevitably and eventually, these stores will be fully automated. That's the truth of it. Inevitably and eventually, fast food restaurants will have the capability of being completely automated from order to pick up to food creation with maybe one manager like running the machines and making sure everything is like not on fire pretty much so and even that I'm sure they could have a robot that puts out fires but you know that's that's another story in any case um that is something to be aware of and something to think about as we look at what types of regulation the government should make what types of legislation should pass around this and what we are planning on doing with all of the people that inevitably are never going to be able to work at McDonald's or some of these entry-level jobs that is kind of honestly like a safety net in America is these minimum wage entry-level jobs that people can work at when they are needing to you know get job experience at the beginning or fall back on in later life if whatever they're working on falls through.

10:58So this is going to be a really interesting area to watch and I feel like fast food restaurants are kind of like the pulse on an entire demograph and how it is going to be replaced and revolutionized by AI. So it's an area we'll continue to watch very closely.