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John: Derek Pietz, the VP of Automation at Hyphen joins us today on the hello, Human podcast where we discuss the latest topics in artificial intelligence and how it’s being applied in the real world. I’m John Knisley, the host of hello, Human and a longtime technologist helping companies adopt and utilize emerging digital solutions. A big thanks to FortressIQ for sponsoring the program. Be sure to hit the subscribe button wherever you listen to podcasts.

This episode is part of our second season of hello, Human where we are exploring how AI is being used across specific industries and functional areas of a business. This episode promises to be a real treat. I can add in some other awful puns about whetting your appetite for the future. But to cut to the chase, we’re going to talk all about AI and the food and beverage sector.

We are fortunate to have a true industry leader give us his perspective and insight on the exciting uses and future of AI in the restaurant space. There’s been a lot of excitement for years about technology’s potential impact on our dining experience, and the pandemic only accelerated the transformation. This promises to be a fascinating discussion. Welcome to the program, Derek. Thanks again for joining us on hello, Human and bringing your knowledge and expertise to the program.

Derek, maybe you can start us off with some highlights for our listeners of your story and how you got into technology. how a mechanical engineer with a number of patents who built and sold his own company found his way into the food and beverage industry.

Derek: Thank you, John. I’m very excited to be here and to talk about the space that I do have so much passion for. I’m a mechanical engineer by background. I’ve been building machines for my entire career. That got started in solar equipment and flat panel display manufacturing. That was really the first half of my journey. The second half was really heavily focused on robotic systems integration. The last five years or so have been all about food and beverage and maybe most specifically restaurants.

John: That’s good to hear. I think food space is a bit more interesting than maybe the solar panels. I think for folks who heard season one, they may recall, I’m a big fan of Domino’s Pizza, and my daughter claims to be their number one fan. As a technology guy, I was always drawn to their organization because they really saw technology as a competitive advantage. They describe themselves for years as a technology company that makes pizza.

We see applications of AI being commonly applied in business, sales, and marketing. Now the power of AI is really being fostered across industries all over the world. How have you seen AI being utilized in the food and beverage space? Any of these projects you want to share with us?

Derek: Yeah, absolutely. There are a lot of things in the business and finance space that are being worked on in the restaurant world. But some of the things I’m the most excited about are on the production engine side of the business. I had a chance to do some work in the past on a liquor control product that was able to collect real-time sales data, real-time core information of what products are being consumed in the bar. You can use that to do some really interesting marketing campaigns or redeploy your labor around. If you’ve got a multi-bar facility like at a stadium, there’s some really cool stuff you can do there.

Here at Hyphen, we’re working on redesigning the production engine for restaurants. What that really means for my team is we’re building a robotic appliance to assemble salads and bowls. What’s really powerful about thinking about some of these new tools is there’s all this information that is stuck in the restaurant.

It’s either stuck in disparate systems, different things that don’t talk to each other, or it’s simply not being collected, which is a vast amount of information there. All you data guys would love to get your hands on it, if you simply could get it collected and reported up to the cloud so that we could do something interesting with it. But the tools aren’t there to do it.

A big part of what we’re bringing to the store operations is having that real-time measurement of what’s actually being produced, what’s actually being consumed, and how it’s flowing throughout the store. Think of it, you do all these amazing things with the data that comes off of mobile devices because you have access to this information. We don’t have a collection point. We don’t have the phone in the restaurant yet.

All those tools are relevant and impossible unless you can get that information. What we think we’re building at Hyphen is the phone. We’ll use that as our gateway and then we’ll start building a lot of tools off of it.

John: It’s interesting. You have the same issue that a lot of organizations have, whether it’s healthcare, financial services, manufacturing, or whatever it may be. You have this data, it’s locked in different silos in the organization. The challenge is not getting more data, but how do you integrate it? How do you bring it together? How do you use it ultimately, drive value from that data that’s sitting there?

I think one thing that’s interesting about your background, you’re not only an engineer, but you’ve been an entrepreneur as well. You co-founded L2F. Can you share a bit about that business, the mission, and ultimately, I think there was an acquisition at some point?

Derek: L2F was created to help startup innovators in the hardware space to bring their products to market more quickly. That really started in the cleantech sector, my background in solar panel manufacturing. We started to find that some of our most impactful projects were in the food and beverage space. We’re just finding that technology at the time was really stuck in the 1980s in a lot of these industries. Different companies were faced with the problem of, do we introduce some automation or do we look at outsourcing?

Fortunately, we had a lot of really forward-looking customers that wanted to keep their production domestic. We’re able to sell them their first robot if you will. A lot of really fun stuff. I started picking up some projects in the restaurant space. I think we’re the only ones that are crazy enough to go after that early on. It’s such an unstructured environment to be bringing a traditional automation asset into. We got to do some really forward-looking things.

Two really high-profile clients we have are Zume Pizza. […] pizza at the time. Now they make some really fantastic sustainable packaging. They contracted with L2F to design and manufacture the lines that were in the news quite a bit. We saw robots making pizza. We built those for them. The other one is Cafe X, which is the robotic coffee shop that they put together. They had a couple in San Francisco and San Jose airport as well. We designed and manufactured the kiosks for them.

Those projects got the attention of The Middleby Corporation. Middleby is the largest restaurant equipment maker in the world. The brand you definitely know their equipment on the residential site is Viking Appliances. They wanted to add automation technology to their portfolio. They acquired the company in 2017.

John: Very interesting. I think a year or two ago, I saw there was a bunch of news about the robot that flipped hamburgers. Not sure what happened with that one, but that was the first like, there’s some interesting technology in this space. I think, obviously, it’s come a long, long way since then.

Today, you’re serving as the VP of Automation at Hyphen. As an aside, I think Hyphen had a cool or interesting pandemic story. Iy used to operate this Ono Food, which was essentially a robotic food truck, but the company pivoted at the onset of the pandemic toward a more enterprise solution. Maybe you could provide a bit of color on that as well. Could you talk a little bit about your current role, how you see Automation becoming a larger role in the food and beverage industry?

Derek: Yeah, absolutely. Ono Food Company came to market first as Ono Blends, which was our own smoothie brand that was powered by robotics and mobility. What that really meant is we built a robot, we shoved it at the back of a van, and tore around Los Angeles selling smoothies out of it. It was going really well. We’re getting great traction.

We produced a fantastic product at an ultra-competitive price that still had meaningful profit margins. Like a lot of other restaurant operators, in the face of the pandemic, we had to take the truck off the road. All of the places that we’re distributing through, which were in places where people tend to gather, were all closed. We had to take a step back, think about what to do next.

It was clear that we could take what we had already proven we could do with automation. We’d already wanted to grow the menu to start offering food items. It just made more sense for us to start building our own brand. There’s a certain path to that, a journey that’s quite challenging. The opportunity that we saw was to really start building the picks and shovels for the next generation of restaurants.

I came on about that time to help facilitate the pivot. This was in May of last year. What we’ve been building since then is a robotic makeline for assembling salads and bowls. That really means is we take the orders in all digitally, we inject the bowl into the system, dispense all of the ingredients—all perfectly portioned down to the gram—slap the lid and the label on it, and hand it back off to the store team to get to the customer.

John: A common misconception about AI and robots in the food industry is that they’re taking jobs away, and just as a quick aside a small group of friends we tried to go to dinner recently at a premium casual chain in a touristy area. We could only get a reservation at 4:00 PM, which I thought was kind of odd. We show up, there’s this sign at the front of the door that says no more reservations available today.

We get walked to our table. They have a big outside area that overlooks the water (really nice) and half of it’s totally empty. Probably a third of the dining room was empty, and they simply didn’t have the staff to support it. My knowledge of the restaurant industry is limited primarily to Anthony Bourdain’s Kitchen Confidential books so I don’t know a ton about it. But I know they tend to run on extremely low margins. I imagine Hyphen’s work is potentially saving the industry in many respects. Is that the case?

Derek: Yeah, we certainly like to think so. If you look at the jobs that we would most significantly impact, it would be the most mechanical of the tasks that are in the kitchen—loading vegetables into bowls and shuttling the bowl around the back of the office. These aren’t really positions that people enjoy or even honestly are particularly good at compared to what a machine can do. Like you pointed out, there’s this intense pressure on labor. It’s always been there.

The restaurant industry has been able to rely on this constant supply of, let’s face it, disadvantaged people that they’ve been able to keep very low wages on. The pandemic has really given this new light into the back of the house where people are standing and saying, hey, we’re doing these really difficult jobs for really low pay. That was always true, but now we’re more aware of that as a society. Those individuals are saying, you know what, we want more than this, we demand more of this. We’re helping to facilitate that.

If you take those most mechanical jobs and you shift it through the use of technology, you can have these people do more cognitively challenging things. They can focus more on product creation, they can focus more on hospitality. They can shift this emphasis more on to people and have people work on the areas that they can be the most successful at, they can get the most impact on, and take the most meaningful work.

I also like to believe that we’re almost creating a new career path in the hospitality industry that hasn’t existed before. This technology is new and so now you need robotic makeline operators, robotic burger service technicians. That hasn’t existed and those are much more complex, higher skill, higher pay positions that will be, at some point, prevalent throughout the industry.

John: I totally agree. It’s not, in my mind, the people issue or a robot issue, but it’s really about how you leverage the technology to let people focus on what they’re good at and then at the same time, let the machines do what they’re best at. I’ve always argued that artificial intelligence is, I think, a lousy term. I think it’s more machine intelligence. It’s not the equivalent of human intelligence. It’s a totally different thing. But there are some things that people do better. There are some things that machines do better and everyone needs to line up.

Derek: There are great examples out there that we’re all familiar with. When ATM machines came out, everyone was concerned that all the tellers at banks were going to be out of work. That’s true. There are a lot fewer tellers in the banking industry today. But as an entire sector, it’s doing better than it ever has. There are more people in banking now than there have ever been banking.

Freeing up manual labor and allowing people to use their minds to add value to their industry has lifted the entire market for those personnel. I think there’s an opportunity to do that here. There are problems that have to be cracked in the new world of food, the post-pandemic world of food.

Look at the rise of third-party delivery, look at our on-demand grocery delivery, micro fulfillment centers. These are all technologies that were very nascent prior to the pandemic, and the buying public is now obsessed with. I don’t want to go back to the grocery store two times a week. I’d much prefer to be able to order it all up and have everything come to me. Those are probably impossible services to provide at the price people are willing to pay unless there’s substantial technology power.

John: It’s crazy. My daughter’s away at school and I see a DoorDash bill. I said, I don’t know how you survive without DoorDash. I’m like, I don’t know how I got through high school and college without DoorDash as well. Just some of these advances that we’ve had have changed the supply chain incredibly. To wrap up, Derek, what excites you about the future of AI in your industry and beyond.

I’ll let you take this one wherever you want to, but if you start to mention the meal pill from The Jetsons, I may cut you off because I think that food and dining is just too important to our culture and society to be replaced by a pill and the quest for efficiency.

Derek: Yeah, I totally agree with you there. The Michelin starred experience I don’t think is going to change anytime soon. It’s maybe the question, what else is going to change? Probably everything. What’s really exciting to me is that we’re at the beginning of this journey. These tools are new, these technologies are new, and the demand for what these products can unlock is just beginning to be realized.

Danny Meyer of Shake Shack said recently that right now is the best time in 100 years to start a restaurant. I absolutely agree with him. A lot of locations didn’t make it through the pandemic. The ones that did had to change a lot of things in order to survive. The buying public picked up some new interests and some new buying habits. Being digital-first, on-demand, highly customized, maybe even more health-focused, certainly interested in lower touch from people to minimize contamination.

We’re building a lot of these tools that are going to be available for the next generation of restaurant tours to put to use. I think the next big food brand, the next big restaurant brand is being founded right now, the next Chipotle, the next Yum. The founders of these innovations, they just have new knives in the drawer.

John: That’s great insight and a great point to end on. To recap today’s conversation with Derek Pietz, the VP of Automation at Hyphen, which is looking to revolutionize the food and beverage industry. Labor shortages are nothing new for restaurants. But after the global pandemic, the industry was hurt harder than ever. Foodservice organizations are turning to automation and robotic solutions to help conquer the labor challenges and enhance food safety.

Utilizing automation alongside employees can streamline processes including production, assembly, quality control, and reporting. The time and labor saved allows for individuals to focus on cognitively challenging tasks and hospitality. All the redundant work is mastered by a machine.

This episode has been part of our second season of hello, Human. A big thanks to Elizabeth Mitelman for spearheading the season. That’s a wrap on today’s show. Thank you, Derek, for joining us and FortressIQ for sponsoring. If you enjoyed it, don’t be shy about giving us that five-star review on whatever platform you’re listening. I’m John Knisley and this has been hello, Human.