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Jun 12, 2017 | 4 min read

Tech

When Pizzas Meet AI

Tom Morisse

Research Manager


FABERNOVEL
Discover how AI can help disrupt a traditional, well-established industry… pizza parlors! By leveraging collaborative robots and smart logistics, Zume Pizza intends to provide its clients - as well as its employees - with a superior experience.

The pitch – how AI is leveraged

 

On the surface, Zume – which launched in 2016 – is a normal pizza delivery service operating in Silicon Valley: you pick your order by phone, through their website or their apps, you pay and you get delivered.

All the magic sits in the back (for now at least), i.e. in the production process. Indeed, Zume Pizza uses 4 robots (made by the Swiss firm ABB) at 3 steps of its production chain – the most routinized tasks:

 

In addition, Zume is also deploying a fleet of smart delivery trucks. Each one counts 56 ovens that can be turned on or off depending on the locations both  of the truck and of a given customer: exactly 3 and a half minutes before arrival time, the oven starts baking the pizza.

The impact – what AI brings

Transforming the team structure: at its HQ in 2016, Zume Pizza employed 12 engineers, designers and product managers in the office space vs. 30 people as part of the kitchen and the delivery teams. It is thus probably the pizzeria with the highest white-collar ratio.

Less colleagues, more benefits: since Zume Pizza counts fewer employees than a traditional pizza chain, it can afford – and chose! – to pay its employees more. For instance, delivery drivers earn $18 an hour vs. $8 an hour + tips at Domino’s. The company also offers comprehensive health coverage to all of its employees and even “tuition contributions if employees want to take classes that will enable them to move around within the company as kitchen jobs become automated” (Quartz). In the end, the situation seems to be a win-win one, since its HR costs are half its competitors’: 14% of sales vs. 30% at Domino’s.

Competing on experience, not price: Zume Pizza offers products at prices equivalent to competitors. Its major differentiators are the quality of its ingredients as well as the speed of service: from order to delivery, the company can get close to 15 minutes.

 

Ripple effects – possible futures

Ever-increasing automation: the company does not shy away from its intention to quickly automate the whole production process. (Which does not mean that no worker will be present in the kitchen; just as in industrial settings, they will be in charge of supervision and quality assurance tasks.) And we can guess that the delivery part of the business will follow suit in the medium term. The potent alliance between autonomous vehicles and embedded rovers or drones covering the “last meters” to the customers’ houses is already imagined today. But bridging the gap between the “bare pizza in the oven” and “pizza box carried by a rover” steps will be the trickiest part: that would require a kind of flexible robotic arm able to reach the dozens of ovens, put the pizzas in boxes, cut them and finally handle them over to rovers. It is a complicated set of tasks to master for a single robot.

Reshaping the landscape of roles: to achieve automation on a growing scope of tasks, hiring various additional technical profiles will be necessary – both in R&D and on-site. Since Zume has no storefront, its geographical expansion will require marketers to find new clients, customer service reps to retain them, and developers and designers that make sure that Zume’s digital touch points deliver the best possible user experience.

Last but not least, human workers could still be important in the kitchen, for 2 kinds of tasks: 1/ food R&D (having more time to create new types of pizzas rather than sticking to the usual sorts), and 2/ diversification of product lines (e.g. producing desserts), which could mean helping to understand the associated production challenges to prepare for further automation.

Redefining authenticity: Zume is testing the waters of customer expectations in an age of increasing automation. For the moment, it makes sure that its robots do not produce perfect – that is, identical – pizzas, for instance by spreading tomato sauce in a few different ways. In the end, the question is both simple and tough: What is authenticity in the 21st century? A bit of human involvement at some point during the production process? The sole creation of original recipes? The adaptation of every pizza to the unique profile of its eater, made possible by automation? We will certainly end up in a debate that resonates with the difficulty of defining what “made in USA” or “homemade” should mean. And maybe we will create a “made by humans” certification someday.

Undercutting competitors: as we have seen, so far Zume Pizza hasn’t passed its labor cost savings to customers. Instead, it has focused on refining its production and delivery processes as well as providing a better employee experience. But as it starts to compete head-on with the Domino’s of this world, being able to cut its prices could form a solid competitive advantage. In the end, it is where the employment issue plays out: automation decreases the quantity of labor required per unit of output, but if at the same time it leads to lower prices and to a better customer experience, the resulting “broader market” effect could well overtake the productivity gains. Thus result in additional employment.

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