SEATTLE — Jarvis moves slowly, but meticulously, from station to station to brew a cup of cappuccino. Jarvis makes the espresso, pours the milk, steams the foam and brings it together, topping it with a carefully drawn sheet of foam.
The result is a ready-to-use cup of cappuccino.
What makes this cappuccino special? maker. Jarvis is a robotic arm, not a human barista, at Artly in Pike Place Market.
While Jarvis is busy, a human staff focuses on interacting with customers, explaining the concept to newcomers and placing orders with a tablet.
Seattle robotic startup Artly, founded in 2020, has seven locations in Washington, Oregon and California. The highlight of each site is a unique barista bot with its name, gender, voice, accent, and personality. The robot techniques are different at each location as they learn from a different human barista.
It’s interesting to see robot coffee-making technologies, but pressing market needs were behind the innovation. Concerns about cost and high employee turnover in food services led Artly and others to offer automated solutions to restaurants and businesses, even before the pandemic hit and created additional challenges.
Just two years into operation, Artly CEO Meng Wang says the company has maintained healthy operating margins — the profit a company makes after paying for production — by eliminating the biggest expense in the food business: labor.
For a coffee shop that might need two or three baristas, Artly needs one employee, plus a barista robot like Jarvis. Wang said Artly reinvests the money it saves in labor into more quality coffee.
Artly isn’t alone in offering robot assistance with food preparation. Picnic, another Seattle-based startup, offers automation solutions for a staple of the American diet: pizza. The food prep station can produce up to 100 pizzas in one hour using metered toppings.
Since Picnic was founded in 2016, its robots have been assembling pizzas in many places, including T-Mobile Park in Seattle and the Las Vegas Convention Center. The company has seen a growing interest in its robots. This summer, Picnic announced partnerships with pizza site Moto’s West Seattle and department store Domino’s in Berlin.
The startups behind these bots are promoting their automated solutions to achieve higher productivity and lower costs. Picnic CEO Clayton Wood said that automating pizza assembly could help restaurants reduce food waste and potentially save money. For example, it helps keep the amount of layers even.
Wood said that by automating the process with predetermined amounts, it could be more cost-effective to make pizza.
Automated solutions also fill a gap in finding and retaining workers. Food service jobs can be “boring and dangerous, and there is a very high turnover rate,” Wood said. “There is no progress and working conditions are not great.”
Issues with productivity and turnover in the food industry predate COVID-19, said Geoff Harris, investor in Picnic and co-founder and managing partner of venture capital firm Flying Fish Partners. But the need increased with the spread of the pandemic, with restaurants closed. Many employees have been laid off or furloughed and have not returned to the food industry.
Employment levels in eating and drinking establishments remain below pre-pandemic levels as labor demand remains high nationally, according to a National Restaurant Association analysis of U.S. Bureau of Labor statistics data in November.
However, robots cannot replace humans everywhere. Joe Yang, owner of several Portland coffee shops who is also the co-founder of Artly and chief coffee officer, has experienced this firsthand in his coffee shops.
Yang beta tested Jarvis in his own stores. His customers were initially intrigued and excited about the robotic coffee maker, but the service was slower than with human baristas. He said customers crave contact with the person making their coffee.
“When (customers) go to a coffee shop, their expectation is to be served by a human being,” Yang said.
However, Artly focused on opening locations in shopping malls and commercial office buildings rather than regular coffee shops.
Artly also saw an opportunity to expand into areas that lack coffee shops due to the pandemic or where Starbucks stores have closed.
“During COVID-19 there have been a lot of ‘coffee deserts,’ and the competition is obviously much less than before,” said Wang.
For example, its first location at Japanese retailer MUJI opened in Portland in May 2021, after a former coffee operator left due to a labor shortage. Similarly, Jarvis made a home at the Stoneridge Mall in Pleasanton, California, in December 2021 because there was no barista there.
The CEO of Starbucks said that because Starbucks had exclusivity as the sole provider of coffee in some areas, consumers had no other coffee options when they left. Such was the case at the Stonestown Galleria shopping center in San Francisco where Artly opened its location in August.
investment and future growth
While the need and opportunity exist, some startups are starting to feel the pinch. Fears of inflation and recession this year have dragged down the stock market, reduced investors’ appetite for risk, and led to a decline in venture capital activity.
Hardware, Picnic Zone, can be considered a risky investment, Wood said.
“The current investment market is challenging,” Wood said. “We can go faster in our product development and market expansion if we operate in different market conditions.”
Wood declined to comment on the company’s fundraising, but GeekWire reported last year that Picnic raised $20.5 million in early-stage funding, led by California venture capital firm Thursday Ventures. Flying Fish, Vulcan Capital Management and Creative Ventures also participated in the round.
By the end of 2021, investment activity has slowed, with fewer initial public offerings and stock market losses. These factors have “made the venture capital market significantly more conservative than it has been in the previous several years,” Wood said.
However, with a modular hardware system, Picnic’s robots are easy to build and inexpensive to make, Flying Fish’s Harris said. With a bots-as-a-service business model, the standard full offer for operators is $4,500 per month on a 36-month contract.
Wang, CEO of Artly, said the company had no difficulty with financing. It closed an $8.5 million funding round this year and a $1.5 million round last year. Both rounds were early stage investments.
Picnic and Artly are still young companies. And despite the potential economic challenges, both have plans to expand the business.
Picnic has once again partnered with Moto to install a food prep station at the pizzeria’s downtown location, though the unveiling date remains unclear. More partnerships are on the horizon, according to Wood and Harris.
At Artly, as barista bots become more stable and reliable at making coffee, Wang said the next step will be franchising, though that goal is still a few years away. In 2023, the company plans to expand by adding between 15 and 20 locations.
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