Table service, QR codes and unemployment
The post-pandemic economy is going to be different in ways we can never imagine. As the human race slowly re-emerges from the depths of lockdown, there will be some significant changes to the way we live our day to day lives. I've recently started returning to the small cafes and restaurants near my house as restrictions allow and there are some small but potentially significant changes I've already noticed. QR codes are nothing new and in many economies such as China are the cornerstone for mobile payments, yet they never seem to have been as influential in the UK. That's changed, with almost every establishment I now go to adorned with these black and white graphics. From merely a link to a menu to a complete payment and ordering infrastructure, I think this could lead to one of the largest labour restructurings we will see.
You walk in and get shown to a table. Sit down scan the code, see the menu, order and then pay. No contact needed. Sometime later your food comes then when you're done you leave. Now, none of this is a new technology or a crazy new way of using it purely a constraint-induced way of changing how we function and what is normal. Yet this requires so few people and even less time per table for the people it does need. A quick search found providers who from as little as $100 a month could offer full systems with menus, ordering, delivery and analytics on all customers and what they use. To put into context, according to PayScale, the average waitress in the UK earns £6.87 an hour, and my local cafe of choice is open 10 hours a day during the week. So for around the same price, you can have a fully-fledged payments system for a month or a teenager for a day. Yes, you may do both, but from my personal experience, there doesn't seem to be that much work for these staff who have gone from continually attending to tables and many other tasks to now just showing people to seats and bringing food out. I admit this isn't sounding great for these staff, why would you pay someone expensive when you frankly don't need them. Here are my scenarios.
Firstly, those who study economics will be familiar with the idea that labour is sticky. In short for the others we won't be seeing thousands of restaurant staff unemployed overnight. So what will be done with these staff if they stay? The simple answer could be more tables will appear because of this increased efficiency. Guests stay for less time; less space is needed to store menus, ordering systems etc. so more tables can be put in. Overall staff do less per guest, but there are more guests.
Or conversely, furlough schemes end and staff aren't brought back. Restaurants cut costs and embrace these new systems. Not all places can afford or have space to expand so if cutting staff costs keeps them afloat and makes business sense, why wouldn't they?
Finally, roles change, and staff have to adapt. Maybe instead of waiting staff, you now become a chef or manage the new data you're gaining from customers or play a more active role in attracting new business.
So how could this be a good change? The main benefit of this shift will likely be for us, the customer. Economists speak of deflationary tech and how the technological revolution has lead to the allocation of resources being more efficient and in sectors we thought couldn't be improved. Airbnb took land, commonly a fixed factor of production, and built the largest hotel company in the world adding capacity we thought wasn't there. These massive supply-side shocks, ceteris paribus, lead to lower prices and who doesn't want a cheaper coffee? (Well, me. I prefer hot chocolate) Although we won't see new restaurants popping up everywhere, there are some significant impacts this could have. Restaurants and hotels make up 7.7% of CPI weighting in the UK a figure which has enormous implications from valuation modelling and government policy to how much your rent can go up. As you can see this slide in prices on a large scale could bring down CPI and disrupt swathes of the economy.
My local cafe losing three employees isn’t a monumental shift in the labour market but consider the impacts on a national level with almost 90,000 restaurant businesses registered in the UK. If on average each of let just two people go that would be the equivalent of Goldman Sachs, Morgan Stanley and Google all letting their entire workforce go. That’s only in the UK and just the restaurant sector. The global implications could be huge. Humans are adaptable and will need to shift to this new post-pandemic economy. As one digital menu provider advertised, ‘You always knew online ordering was the future. The future just came faster than we thought it would.’
