Main Street's menu is incorporating big food automation technology.

• Small businesses are also adopting automation in the food industry, as Chipotle has started testing a robot chip maker.
• Self-ordering kiosks, inventory-tracking robots, and packaging bots are becoming more affordable for local restaurants, allowing them to hire these machines at a lower cost than temp workers.
• Inflation and labor shortages have intensified the search for cost savings in many areas, including raw goods and wages.

Smaller companies and even small businesses can now afford automation and robotics technology, which was previously associated with multi-million budgets at multi-billion dollar companies.

In Jonesboro, Georgia, THAT Burger Spot!, a burger and wings joint with four locations, grew weary of being slowed down by phone orders.

The menu includes beef burgers, turkey, Impossible, black bean, fish, chicken, and other options. Customization options include patties and sauces. It takes an average of seven to eight minutes to place a phone order, but this is only possible with staff available to take the orders.

Cedric Pool, president of THAT Burger Spot Franchising, Inc., stated that their menu is complex with numerous options.

Staffing has been and remains a problem," Pool stated. "We believed we could automate the order-taking process, eliminating the need to pay someone to do it.

They discovered a solution in Grubbrr, which offers free-standing kiosks that can handle in-store orders and integrate them with online orders and a point-of-sale system. Pool began with two kiosks in one location at a cost of $14,400, which is roughly the amount a company would pay someone to take orders over the phone for a year.

The restaurant's average ticket order increased from $19 to over $21 after customers were eased into using the kiosk and online ordering. Additionally, average sales per labor hour rose from the high $50 range to $85, according to Pool.

Grubbrr CEO Sam Zietz stated that restaurants have been slow to adopt technology due to their ability to hire low-cost labor.

A recent report by the National Restaurant Association revealed that seven out of ten restaurant operators are currently unable to meet customer demand due to a shortage of employees. Despite adding 1.7 million jobs in 2021, the restaurant industry continues to struggle with understaffing, and many operators anticipate that labor shortages will persist and hinder their growth.

In the latest CNBC|SurveyMonkey Small Business Survey, 17% of respondents in the accommodation and food services sector identified labor shortage as the greatest threat to their business.

According to Dirk Izzo, president and general manager of NCR Hospitality, customers in cities such as Denver and Jacksonville, Florida, have reported that their kitchen and front-of-house staff costs have increased by 20%-40% compared to the previous year.

Automating tasks can significantly reduce costs when you're taking on them, Izzo stated.

Contactless ordering and paying through QR codes is a popular and affordable technology used by restaurants. This technology allows customers to order and pay for their meals directly from their phones, saving time for restaurant staff who would otherwise have to manually enter orders into the point-of-sale system.

Technology is getting cheaper

The global smartphone and self-driving car industries are contributing to the decline in the cost of robotics through broader investments.

Brad Bogolea, co-founder and CEO of Simbe, stated that the cost of their autonomous robot technology has significantly decreased.

Simbe, a company that primarily works with large retailers, also collaborates with smaller retailers with 50 to 100 stores. Simbe's robotic inventory taker can scan an entire store's inventory three to four times a day and place orders directly when items start to run low. According to Bogolea, it is not feasible for humans to scan at that frequency or level of accuracy in these environments. Retailers typically spend between 30 to 100 hours per store per week on inventory management.

Instead of purchasing expensive equipment upfront, many technology providers now offer automation as a service. Companies can pay a monthly fee for this service. GreenSeed Contract Packaging, located near Chicago, implemented robotics to automate repetitive packaging tasks, such as packing baby snacks into a box and moving packed boxes off the line onto a pallet. The company is charged monthly based on the number of hours the robot works.

David Gray, CEO of GreenSeed, suggested using a robot instead of an agency to get a temp worker. The cost of robotics is 40% to 50% of what he would pay to hire a person, who costs at least $17 or $18 an hour, not including benefits or agency fees. By doing so, Gray said, companies can reduce their costs and achieve better consistency.

Although the cost of technology has decreased, small businesses still need to spend more as a percentage of their revenue than larger companies due to their lack of economies of scale. For instance, in the accounting industry, a recent survey by Ernst & Young found that 70% of large companies with $30 billion or more in revenue plan to spend between $2 million to $6 million on tax automation technology, while 81% of smaller companies with less than $1 billion in revenue plan to spend between $1 million to $3.99 million. Despite the difference in spending, the smaller companies' investment is not that much less.

David Helmer, global tax and finance operate leader at Ernst & Young, stated that smaller companies are under immense pressure as they almost spend as much.

Inflation and small business economics

The rising costs in core areas of their business are making small businesses consider the cost of automation in relation to inflation.

Nana Joes Granola, a San Francisco-based company, is facing higher costs of raw goods and labor and is trying to find ways to reduce the cost of its premium granola as consumers become more price-conscious. Michelle Pusateri, the owner of Nana Joes Granola, is considering options such as reducing the volume in bags by a few ounces, reformulating the recipe to cut down on ingredient costs, or automating the production process to increase efficiency and output.

Pusateri stated that the company, which partners with Whole Foods, faces a highly competitive market. Although the company was able to pass on some costs to customers in 2021 due to sales booming, being a higher-cost granola during inflation is more challenging.

The company obtained a Covid EIDL loan, which was primarily used to purchase ingredients at higher volumes due to inflation. However, Nana Joes Granola also allocated a portion of the loan for automation on the packaging side of production, and may require additional business loans for equipment.

Pusateri stated that he believes inflation will persist, and the company will face challenges in managing increased volume with the same staff and overhead.

Pusateri, who supports higher wages for workers, believes that investing in automation won't lead to downsizing staff. She stated, "The women who have been working for us since 2016 are performing the same tasks repeatedly, leading to fatigue."

—CNBC’s Eric Rosenbaum contributed additional reporting.

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