Dominos might just be the best delivery startup in America, despite the huge investments made by Silicon Valley venture capitalists into startups like Grub Hub and Maple. California’s Zume Pizza has recently made waves for using robots to cook and assemble their pies. And, college students can now grab a $9 personal pizza that is ready in only three minutes via Pizza ATM.
Because pizza is relatively easy to prepare and has near-constant demand, the segment has come to inhabit the bleeding-edge of efforts to automate restaurant operations. True, the results generated by innovating pizza companies could be difficult for other segments to replicate, but the potential to reduce labor costs for restaurants besieged by surging operating expenses will certainly be tempting.
Zume Pizza is currently spending 14 percent of its earnings on labor – compared to the 30 percent of Wall Street darling Dominos – and this number will only get smaller. The Bay Area-based company plans to work towards only hiring employees to create new recipes and prepare fresh ingredients.
"it would be like dominos without the labor component. you can imagine how incredibly profitable that would be." zume pizza co-ceo alex garden
But, what message is sent to the masses of job-seekers looking for an opportunity, when government policies become advantageous to business models light on labor?
Nearly one-third of American employees worked their first job in the restaurant industry, and the data shows how important these first job experiences are to building a successful future in any workplace. Furthermore, new research on minimum wage increases has found evidence that employers will seek out more-skilled employees when paying higher wages – making it even harder for those lacking any work experience to enter the workforce.
On New Year’s Eve, I visited a local Round Table Pizza to pick up food before meeting up with friends. Inside, there were multiple teenagers working at every facet of the business. In the context of the growing push for automation in the restaurant industry, it has now become reasonable to ask whether this will be a fixture of the past and who the “winners” and “losers” will be.
The innovator seeks to disrupt where he or she finds opportunity. In the case of the restaurant industry, its thin margins and heavy reliance on manual labor look more and more like a golden opportunity for disruption in a scenario of exploding wage costs. That makes the push for a $15 minimum wage, something with the potential to further disconnect young Americans and low-skill workers from gaining the foothold into the workforce they desperately need.