Chinese Fast Food Restaurants Rely On Robots To Fuel Expansion

Courtesy of ZeroHedge View original post here.

Last year was a record-breaking year for robots joining the American workforce. But in China, the advent of robotic workers was equally – if not more – intense.

According to a report from Nikkei, Yum China's network of KFC and Pizza Hut outlets has seen significant growth over the past year, even as the size of China's workforce has remained steady.

"We increased our stores, but without increasing the total number of staff," said Joey Watt on a call with analysts and investors on Feb.9, highlighting Yum China’s investments in artificial intelligence and digital technologies to support operations and training.

Most stores now feature touch screens where customers place orders, a feature that has become familiar to American consumers over the past decade. KFC robots make soft-serve ice cream cones for customers, while take-out orders can be picked up by customers from digital lockers without forcing them to have any contact with staff.

As for human workers, Watt noted that the company now has about 420K full- and part-time staff, about the same number it had in 2016 when it was spun off by its American parent, Yum! Brands.

Over the same period, the number of outlets increased by 56%, reaching 11,788 as of December following the addition of a net 1,282 outlets in 2021. Between 2016 and 2021, annual net profits nearly doubled to $990MM (though that number also included proceeds from a one-off gain).

Source: FT

But despite its growing use of robots, Yum's labor costs have continued to climb, due in part to higher insurance-related costs.

Despite the cap on staffing, Yum China’s labor costs have continued to rise, reaching $2.25 billion last year, up 31% from 2020. Payroll and benefits have also made up a growing proportion of total store operational expenses, hitting 29.2 per cent last year, up from 25.5 per cent in 2016. Part of this is due to higher insurance expenses. The company last year raised medical coverage for some store managers to Rmb1mn ($157,182) while extending critical illness and other coverage for 100,000 front-line staff and family members.

The company expects to roll out more robots in restaurants it plans to open next year.

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Chinese Fast Food Restaurants Rely On Robots To Fuel Expansion