Tech Takeover

Joel Oliphint

On a sunny morning in mid-May, Scott Holowicki stands in a McDonald's parking lot, gazing at the restaurant's golden arches. Below him, permanently etched into the cement of the curb, is Holowicki's last name.

“I had to stand out here and guard this,” said Holowicki, who, when the cement was being poured, told the construction workers, “Dude, it's cool. I'm paying for the concrete.”

Holowicki is the owner-operator of this McDonald's across from Easton Town Center. He got into the family business in 2002, joining up with this dad, Jim Holowicki, who has been affiliated with McDonald's for roughly 40 years. Combined, they own and operate 18 Central Ohio McDonald's restaurants.

Dressed in fitted jeans and a blazer with a red, embroidered flower pinned to his pocket, Holowicki reflects on what the white, vintage-looking fast-food restaurant evokes. “This is classic, Americana McDonald's right here,” he said. “It pays tribute to the original restaurant. It's got a throwback look and feel.”

While the exterior is all about the past, venturing inside the restaurant at 4131 Morse Crossing provides a glimpse into the future of fast food. The traditional red-yellow-white color scheme has been replaced by neutral grays and browns. Along the windows, pendant lighting illuminates natural wood tables. Above a communal eating area, modernist LED light bars criss-cross in an irregular pattern that makes the place feel more like a Wexner Center eatery than the fever dream of a red-haired clown.

And the screens. Two customers smash alligators on a tablet mounted next to the table. Another customer swipes a screen built into the soda fountain, which offers virtually limitless drink possibilities, including carbonated water with a hint of lime (for La Croix types).

Most striking of all, though, are the two human-sized, double-sided touch screens near the entrance. A group of four young employees from a nearby tire store walk directly to the kiosks, order their food on the screens and then head to a table where a black-clad McDonald's worker will deliver their meals.

When a middle-aged man enters, though, he appears to not even see the kiosks and walks directly to one of two registers manned by a human being.

“I think some of the people at a certain stage of life crave that human interaction,” Holowicki said. “They want to talk to somebody. They feel more comfortable. Probably 70 percent of our customers go right to the kiosks and feel comfortable.”

To help those who may feel intimidated or confused by the kiosks, a host — dressed in suit and tie — mans the lobby area, offering guidance and smiles. “This is not your mother's McDonald's,” the host tells me. He's right, and McDonald's is not the only one embracing automation.

Erik Thoresen, a principal at Chicago-based market research firm Technomic, studies consumer acceptance of technology in restaurants. “Our research finds, generally, that more than half of consumers tend to be accepting of the idea of interacting with a kiosk or a similar device,” he said. “When you see players like McDonald's making significant investments with kiosks in their locations, we need to look at that as a signal that there will be a mainstreaming of this kind of ordering from fast-food restaurants in the future.”

A Wendy's restaurant on High Street in Clintonville closed for a rebuild last August and reopened in March with similar people-sized touch screens for ordering. Two other Columbus-area Wendy's restaurants also have kiosks, and according to Heidi Schauer, director of corporate communications at Wendy's, the company anticipates that 1,000 locations will feature kiosks by the end of 2017.

“Kiosks are now available to all franchisees, and we're prioritizing installation in high-volume restaurants,” Schauer said in an emailed statement. “We believe they will help us drive some efficiency in busy times of day.”

Depending on your view of technology and automation, the “efficiency” Schauer refers to is either impersonal or convenient, exciting or ominous. It hints at a larger question: Does automation take away jobs?

“I've got a regular [customer], and he said to me, ‘Young man, the store looks fantastic. But how many jobs did you replace with these kiosks?'” Holowicki said. “The biggest misconception is that we're replacing jobs. ... I actually added five new positions.”

Since the remodeled McDonald's debuted in April, Holowicki has added two hosts, a lobby employee, a table runner and an extra staffer in the kitchen. Schauer, too, said the renovated Clintonville Wendy's added employees, doubling its previous staff of 20 to 40.

“Automation allows us to be more efficient, which means that we can serve more customers, and when you're serving more customers you need a greater headcount, even with the automation,” Technomic's Thoresen said.

While automation has inarguably replaced manufacturing jobs, it appears to be a local job stimulator in the food-service industry. Does that mean we can all breathe a sigh of relief and raise a glass of carbonated lime water to kiosks?

Not quite. According to Benjamin Campbell, associate professor of management and human resources at Ohio State's Fisher College of Business, automation is moving up the skill chain, and that upward trend could create problems.

“It's really terrifying how quickly automation is starting to replace jobs that we never thought would be automated away,” Campbell said. “Being a cashier at a fast-food restaurant is, frankly, not that low skill of a job. You need to be aware of all the products on offer, all the options a customer might want. You need to be aware of different strategies to upsell the customer. It's actually a pretty sophisticated job. We have just recently turned a corner on having sophisticated enough computers and algorithms to embed all those skills in technology.”

“For McDonald's,” he continued, “I imagine the next step is to then automate the kitchen side of things. Looking into a McDonald's kitchen, there's already so much technology there. I'm sure they're not that far away.”

Please place the item in the bagging area

When Bill Leibensperger goes to the grocery store, the 61-year-old wants to interact with the people who work there. And when it comes time to check out, he refuses to use the automated self-checkout area. Leibensperger has made his preferences known to Kroger multiple times via customer surveys and emails.

“I will not go through the self-serve line again, and if the store offers only that, I will not shop there,” he wrote to Kroger last year. “In fact, if the store offers it at all, I am disappointed enough that I will begin to look elsewhere to purchase my staples. Feel free to forward this exchange to those who made the decision to replace workers with unpaid consumer labor.”

Leibensperger, a retired teacher and union leader on the west side, said he is comfortable with screens, computers and ATMs, and that he's not necessarily averse to automation. “I don't want to sound like a troglodyte. I understand that technology changes things. I get that part of it. But I can't help but feel like this particular change is really short-sighted,” Leibensperger said by phone recently. “Basically, they're exploiting their customers and using them as free labor.”

“A lot of automation [is] about shifting the costs from the firm to the customer,” OSU's Campbell said. “The grocery store automated checkout is a great example of this, where there's more burden put on me as a customer.”

Automation in the form of a McDonald's kiosk or a self-checkout machine at a grocery store allows companies to train customers instead of employees. “Training is always a problem,” Thoresen said. “The high level of turnover … is a big challenge because you're constantly training and retraining. With the kiosk, the training dynamic shifts to the consumer.”

Self-checkout technology at grocery stores predates fast-food kiosks by quite a bit and, aside from ATMs, it's one of the first ways consumers have been introduced to an automated option. Kroger began implementing self-checkout kiosks in Central Ohio 15 years ago, according to Kroger spokesperson Amy McCormick, who said about half of the company's customers use self-checkout.

McCormick also said the prevalence of self-checkout aisles does not mean fewer jobs at Kroger. “They don't replace associates; they shift the workforce,” she said. “Those hours have been shifted to other parts of the business. ... Our business has grown, as well, so we have more products going out. Therefore we need more people stocking … more ready-to-eat meals, more fresh foods. We've increased staffing in those areas.”

In an emailed statement, a Giant Eagle spokesperson said, “We are actively looking to fill front-end [positions] (these would include check-out) at the majority of our Columbus locations. Obviously this indicates that those positions are still in demand.”

Through ClickList at Kroger and Curbside Express at Giant Eagle, both supermarkets also offer online shopping. At Kroger, using ClickList actually guarantees human interaction, since an employee brings a ClickList customer's groceries, along with a tablet for payment, directly to the car.

Still, while local grocers say the jobs have been reallocated rather than lost, Bill LaFayette, owner of economic-consulting firm Regionomics, said that a decade ago the average number of employees at a supermarket in Central Ohio was about 47, and today it's down to 42.

The number of supermarkets has also grown by about 26 percent, but employment at supermarkets over the last decade has grown by less than half of that (about 12 percent). LaFayette said there are two possible explanations for this. “One is that supermarkets are getting smaller. I'm not sure that's the case,” he said. “Or supermarkets are employing fewer people because they're having people go through self-service checkout lanes.”

A 2015 Regionomics study also looked at job growth and recovery in the Columbus metro area after the recession and found that from 2007 to 2013, the number of jobs requiring a degree increased, while those requiring no degree declined. And not only are there fewer entry-level jobs available than before the recession, but the jobs also pay less.

“Automation replaces jobs at the low end,” Campbell said. “It does create some highly skilled engineering jobs for the creation and maintenance of the systems, but overall it's a net negative effect on jobs. It increases the earnings gaps among people who can create and maintain the automation infrastructure versus those who are replaced by it. … If we project into the future, I can see a world where there's a huge gap in wages between people who can write the software and develop the hardware to automate jobs and those who can't.”

Beyond the golden arches, a tsunami

In some ways, automation isn't new at all. Technology has changed the way restaurants, grocery stores and retailers do business for decades. In the restaurant industry, Thoresen identifies the advent of the drive-through as one of the first waves of automation, followed by online ordering in the late '90s and early 2000s.

“What we're dealing with now is that whole customer-engagement and user-experience component blended with technologies that are not necessarily new, but they're a lot easier to use than in the past,” Thoresen said. “It's not just kiosks. It's also the idea that I can download the app and order that way.”

In that sense, kiosks are natural extensions of our phones. The touch-screen technology is the same, and consumers also use phones to order food using apps like UberEats (available at the Easton McDonald's), DoorDash (available at certain Wendy's locations), GrubHub, Amazon Restaurants, Seamless and more.

“I do believe we're in a special time in the industry,” Thoresen said, “but I'm not sure if this is just an extension of online ordering, or if this is something new like the drive-through.”

Campbell believes the current wave of automation has turned a corner and will begin creeping into the kitchens of quick-service restaurants, but for him, the more foreboding aspects of automation surface when applied to skilled labor in other industries.

“Not too long ago I would have said that driving is going to be a job that'sreally hard to automate away,” Campbell said. And yet, self-driven tech is on the rise. Autonomous Uber vehicles have already hit the streets in Pennsylvania, Arizona and California. In Columbus, the city will launch a fleet of six electric autonomous vehicles at Easton with funding from the recent Smart City grant.

“There's not much that's more complex than driving through a big city, as far as cognitive processing,” Campbell said. “And now we're a decade away from having all drivers' jobs gone.”

In early May, Gov. John Kasich visited GROB Systems in Bluffton, Ohio. The manufacturing site produces and assembles machining units and assembly line equipment, and Kasich used the opportunity to talk about automation and technology.

“When we went from farming to manufacturing, there were people who took hammers and tried to pound the machines down. It didn't work,” he said in his remarks. “You can't stop progress. You can't stop technology.”

Kasich implored Ohioans not to be afraid of change, but he also warned of dire consequences if we pretend that automation isn't on a course to profoundly change American jobs.

“The number one occupation in America is driving,” Kasich said. “In light of autonomous vehicles … are we preparing people who are now drivers for another job? … Are we training Americans for the jobs that are to come? And is our education system, at all levels, flexible enough to meet the challenge?

“Because there's a tsunami [coming]. If you wait too long, you can't get out of the way of a tsunami. It destroys everything.”