By Michael Hicks | Ball State University
The pandemic continues to offer insights into a variety of economic phenomena. One that is particularly interesting is the role of automation, innovation and productivity growth. I can think of few better examples than that of Chick-fil-A. I must report that researching this column required several site visits. One cannot effectively judge productivity growth without some data on product quality. I trust readers appreciate that personal sacrifice.
Two years ago, if you were to ask any cross section of automation researchers where the next big innovations in productivity would occur, none would have said fast food. I say that as someone who has written a great deal of technical work about the effects of automation. Then the pandemic hit, and American businesses responded. Few did so as quickly and visibly as fast food restaurants.
It is too early to tell which businesses responded most effectively, or which ones ended up being most profitable in the long run. The full effects of the pandemic endure, and I think it likely that firms will continue to adapt and learn from one another. What worked well in June 2020 may not be the best approach in June 2022. What interests me most about Chick-fil-A, aside from their chicken strips with buffalo sauce, is the comprehensive way they innovate. It is a tasty lesson in economics.
When pressed to describe productivity growth in a business, most of us would say it is due to robotics or computers, but that is usually only part of the story. People and operations matter as well, and nobody I have seen makes it as clear as Chick-fil-A in the wake of COVID. The shift in the early days of the pandemic illustrates how this is done well and why it should be welcomed by everyone except competitors.
The early days of the pandemic caused many restaurants to close. As they re-opened, sales were limited to carryout and delivery. As the pandemic started, Chick-fil-A’s online ordering app was already eight years old. The app allowed the company to handle direct orders, as well as delivery service orders, that blossomed during the pandemic. Those two services continue today, and the restaurant has specially designated parking spaces for second-party delivery services and online orders.
But, the company also had a drive-through innovation team that helped it expand its sales tremendously during the pandemic. There are several interesting news reports on this part of the company’s operations, which include description of large-scale mock-ups of restaurants and other testing facilities. What resonated most is that they used innovations that bubbled up from individual restaurants to build the enormously effective drive-through operation that fueled a 16% growth in sales in 2020.
Even more interesting is how the company mixed people and technology, using the unique advantages of each. The mix of technology also involved customers at their own level of comfort. In many ways it offers a blueprint for how technology will continue to change our workplaces and lives. For those of you unfortunate enough to have missed a Chick-fil-A experience, it’s useful to describe how this has worked through the pandemic.
A customer can access the restaurant in three ways. You can order through a delivery service, like Uber Eats or DoorDash, order a carryout through their app, or you can drive through. The delivery service isn’t really different from other restaurants. The only feature I noticed is that Chick-fil-A maintained a separate delivery door for those services, which allowed drivers to access a single common point for pick-up.
Each of these methods used technology, but that wasn’t the big innovation. In fact, a simple telephone call could replace these technologies. What made Chick-fil-A different was integrating people in process along with the technology. Here is where the matching the strengths of humans and computers was performed elegantly.
Computer technology is very good at transmitting precise information across space, arranging payment and documenting a transaction. These technologies are far better and faster than people at doing this, but the weak point has always been entering the data. That is why most restaurants use employees to input the order, often with simplifying tools, like order numbers rather than descriptions. This reduces error and speeds up the process.
The pre-COVID drive-through lines were occasionally long, but many families chose to dine inside. The face-to-face ordering was always less error prone than the outside speaker. But during COVID, the lines became untenably long, so the restaurant doubled or tripled its drive-through line and took the face-to-face ordering process outside the restaurant.
This innovation potentially doubled or tripled the drive-through order sales. In order to handle the volume, Chick-fil-A combined the ordering and paying operations into one transaction. At some times and some places, the restaurant included staff to direct traffic. All clever innovations, but that didn’t solve the distribution problem, once the order was made.
With a single drive-through window now servicing multiple lanes, the restaurant needed to hand out food quickly and efficiently. This required human skills. As orders are handed to staff members, they match the order with the car in a noisy and potentially dangerous environment. Here’s where no current technology except that nurtured between the ears of a human works well, and without any special training.
Matching orders to cars can be done with technology, but nothing yet beats a human. Deciding that a big order likely belongs to the minivan with six kids, and the small order to the single guy in a pickup is a uniquely human process. Each of the times I drove through the restaurant, this process was obvious. Yes, there was a name on the order, but workers first used judgement then name.
Making this work requires low turnover among employees, which Chick-fil-A obviously worries about. The large tents are placed for their workers, not customers, and they are unusually generous in providing uniforms, coats, hats and gloves to workers. The turnover among workers is just over half that of the industry as a whole, so they are doing something right.
There are two lessons from the Chick-fil-A pandemic story. The first is that productivity growth and innovation isn’t just about automation and robotics and job losses. The second is as old as the industrial revolution. No matter how humble their product, firms that match the strengths of people and technology are a key ingredient to economic growth.
Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University.