(Bloomberg Opinion) -- Covid-19 has scarred us in many ways, but has also created an opening for disruptive technologies and concepts. Could dining in restaurants staffed with robot waiters and chefs be one of them? China may have an answer.
Even before the virus hit, smart restaurants were already springing up in China’s biggest cities. Small talk with waiters was optional, even discouraged, at busy establishments. The Tai Er chain, which specializes in sauerkraut fish, a popular Sichuan-style dish, has diners order directly from the restaurant’s WeChat account. A waiter only comes over to confirm the order and deliver it. The bill is settled with mobile payment apps such as Tencent Holdings Ltd.’s WeChat Pay.
In mid-January, the last time I visited my hometown of Shanghai, delivery robots were not an uncommon sight at trendy hot pot restaurants. Designed like tray carts — some even with comical expressions — these robots roam around kitchens and hallways, bringing plates of raw meat, vegetables and tofu to your table.
Even back then, the Chinese happily accepted these new-age waiters; if anything, they were the crowd-pleasers. On one occasion, I saw two robots bump into each other in a busy corridor and their delivery trays got tangled. Diners started asking each other whether to stage a “rescue.” We decided not to, so the robots could have this “machine learning” experience. When they resolved their border conflict, we all cheered and went back to our tables.
China is well ahead of other countries in restaurant automation. In early 2020, UBS Group AG conducted a survey of more than 13,000 consumers around the world. They found that 64% of the Chinese respondents said they had ordered meals via their mobile devices at least once a week, versus only 17% in the U.S. With digital ordering ubiquitous, robot waiters and chefs are the next logical step.
The economics is starting to work in robots’ favor, too. In China’s biggest cities, blue-collar wages have been rising fast. These days, a chef typically costs 8,000 to 10,000 yuan a month ($1,171 to $1,463), while a server can earn 3,500 to 4,000 yuan, UBS found. Back in 2010, you could hire a waiter in Shanghai for a monthly salary of just 1,600 yuan.
Meanwhile, a restaurant owner can rent a delivery robot built by Shanghai-based Keenon Robotics Co. for 99 yuan a day, which would come to about 3,000 yuan a month. You can purchase robot dim sum chefs, too. Guangzhou Xuzhong Food Machinery Co.’s dumpling machines cost 26,800 yuan apiece and come with one-year service guarantee.
This is why the popular hot-pot restaurant chain Haidilao International Holding Ltd., which has garnered a $36 billion market cap, vows to eventually convert some locations to smart restaurants. Known for its long operating hours and array of services, which span manicures and shoe shines while you're waiting for tables, Haidilao managed an impressive table turnover rate of 5.2 at the store-level in 2019. But this comes with a price — it has to hire a lot of workers. Labor costs accounted for 30.7% of sales last year, versus 19.7% at Tai Er, according to HSBC Holdings Plc.
Haidilao’s first flagship smart restaurant in Beijing, which opened almost two years ago, showcases how robots can save money. It has a cold room that houses nine robotic arms made by Panasonic Corp. These appendages pick fresh meat and vegetables from a storage shelf, place them onto a conveyor belt, and pass them for human inspection before being placed on Keenon’s robot waiters.
The result is a whopping 37% reduction in staff, or a monthly savings of 172,000 yuan, according to UBS estimates. Meanwhile, consumers haven’t been put off: Wait time at that site can be as long as four to five hours during peak times.
Covid-19 is perhaps a wake-up call for a nation in love with its food. Months after Beijing relaxed its social-distancing rules, restaurants have yet to bounce back, with catering retail sales still down 11% in July from a year earlier, according to the latest data available. A smart kitchen and contact-free service could reduce the chance of food contamination and give consumers some peace of mind.
And let’s be frank. Sauerkraut fish and Sichuan hot pot aren’t exactly fine dining. Tai Er has a very simple menu: the signature spicy fish dish, offered in three sizes, and no more than 23 basic add-ons, which includes beverages and extra soup ingredients. True, Haidilao stores are larger and stock more than 100 items for the boiling pot. But in both cases, cooking largely comes down to preparing a soup base, which can easily be done by robot chefs. In fact, the perfect blend of Sichuan cuisine’s two flavors — spicy and numbing — have little room for error, so automation could come in handy.
The robot concept can easily extend beyond Sichuan spicy soups. Fresh seafood markets at the Boston or San Francisco piers can borrow the concept from Alibaba Group Holding Ltd.’s smart restaurant Robot.He in Shanghai. Humans still assist and cook, but a robotic arm places seafood into a refrigerator to stay cool until the customer is seated and ready to eat. Similarly, making a salad bowl is perfectly suited to robot preparation. An automated chef can be designed like a Chinese Buddha — with one thousand arms.
Investors are certainly seeing opportunities. Haidilao has rallied 69% this year, even though it swung into a sharp loss in the first half. Meanwhile Jiumaojiu International Holdings Ltd., owner of Tai Er, has soared 164% above its January IPO price. Both have some experience with smart restaurants and the capital to expand.
Is it such a bad thing that robots are replacing humans? We don’t have to frown over a stray hair or unwanted pieces of corn in our salad bowls. There are legitimate worries that robots are taking our jobs. But in China’s big cities, millennials aren’t willing to wait tables, anyhow. They’d rather open stores on Alibaba’s e-commerce site Taobao or strive to become social influencers via livestreaming. China’s $671 billion catering industry has no choice but to be smart, antisocial and robotic. Covid-19 just sped up that process.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.
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