Robots at your Service

Robots are being increasingly used in the fields of manufacturing, logistics, medical and defence, but are now starting to gain traction within the customer facing service sector.

Big Table Group, which runs the Bella Italia brand has recently trialled robot front of house waiters. Early signs are that ‘BellaBots’ are proving a hit with customers and have helped contain costs. The robots, which are made by Chinese robotics firm Pudu Robotics, have been trialled at Bella Italia since May.

Due to the Covid pandemic, the service sector has not only been hit by reduced staffing levels, but the experience levels of its workforce has also changed hugely. All this is against a backdrop of inflation and rising costs. To become more efficient and to enable staff to be in the right places, robots are being used to enable those customers that are happy to order on a system to do so. The robots take food out to tables and dirty plates back.

Similarly, SSP which operates a number of catering brands at airports including Upper Crust, is also trialling robot service technology at Belfast Airport. Six service robots will be employed – a ‘BellaBot’ will bring food and drinks from the kitchen, while a ‘HolaBot’ will collect plates and cutlery once customers have left their tables.

Given service robotics involves intelligence sensing, network and cloud computing it is not surprising that most of the ‘big tech’ names including Amazon, Google, Microsoft as well as Japanese engineers such as Honda, are involved in the Robots as a Service (RaaS) market. Some forecasters are predicting there could be as many as 1.3million RaaS devices in use by 2026 with a market worth $34bn.

Could robots be the answer to the hospitality sector’s staffing crisis? Mind you, if the Bank of England’s latest unemployment forecast (see below) proves correct then employers may find recruiting human workers less challenging than it is currently.

What have we been watching?

Markets were focused on central bank monetary policy and interest rate guidance. The 0.75% hike by the US Federal Reserve (Fed) had been fully priced in by markets but, yet again, hopes of a ‘Fed pause or pivot’ were dashed. The Dollar strengthened with Sterling dipping back to $1.13. This was despite the Bank of England matching the Fed by hiking rates by 0.75% to 3% although it did cut its economic outlook. After a deluge of central bank updates, political news may dominate this week with the Republicans potentially well placed to take control of both the US Senate and House of Representatives in the mid-term elections. Looking beyond these, neither Joe Biden or the possible return of Donald Trump seems particularly appealing.

Markets were more hopeful about China last week following stories on social media that the authorities might be considering an exit plan from their unpopular zero-covid lockdown policy which is hampering China’s economic recovery. However, China’s health authority has re-iterated its support for the nation’s zero-covid policy while Beijing said it will ‘unswervingly’ stick with this strategy. This would seem to quell exit plan hopes although given Asian equities extended their gains on Monday, this would suggest they are hopeful that the end may be in sight. For now, however, mass lockdowns are continuing. For example, the Foxconn iPhone factory, which has 200,000 workers has been locked down. Workers are being offered a quadruple bonus to ease discontent but some have tried to escape!

In the UK, ahead of the Autumn Statement on 17^th November media reports suggests there are plans to fill the budgetary shortfall through a combination of 50% tax rises and 50% cuts to public spending. The change in fixed interest investor sentiment from Truss/Kwarteng towards Sunak/Hunt was reflected in the first gilt auction by the Bank of England (BoE) under its QT programme, which although a relatively small offer, was covered almost 3.3 times by potential buyers. The BoE’s strategy is for QT to happen ‘in the background’ so that interest rates are its main monetary policy. Perhaps Quantitative Reversal (QR) may be a better description than Quantitative Tightening QT?

The BoE increased interest rates by 0.75% to 3%, although two members voted for a much smaller hike. CPI inflation is expected to peak at 10.9% as opposed to earlier expectations of 13%. The central bank estimates the UK economy contracted by 0.5% in the third quarter, the start of what it predicts could be an eight-quarter recession – which if true could prove would be the longest recession since records began in the 1920’s. However, this appears to be a worse-case scenario based on interest rates going higher than its current forecast! The BoE also changed its 2024 outlook from an economic contraction of 0.25% to 1%. The BoE believes unemployment could nearly double by 2025. The BoE’s interest rate policy going forward will be heavily influenced by the Autumn Statement.

The initial Eurozone third quarter GDP estimate showed the region narrowly avoided contraction with output growth of 0.2%. However, there was yet another upside inflation surprise as the headline CPI rate surged to an all-time high of 10.7%. The recent fall in gas prices has yet to feed through into the inflation data.

In the US, the Fed increased interest rate range by 0.75% to 3.75%-4% as widely expected. In the post-announcement press conference, investors were seeking more detail on whether the all-important ‘Fed pause or pivot’ was on the horizon. The Fed said it was ‘very premature’ to think about pausing and there is still a way to go. Fed Chair Jerome Powell also said he expected interest rates to be higher than the 4.63% previously implied in September, insisting that interest rates will remain high until the job is done in bringing inflation down. He also said there is a greater risk in not tightening enough, allowing inflation to become entrenched than in over-tightening. Jerome Powell did however offer one crumb of comfort in the press conference by suggesting that the time to slow the pace of interest rate hikes could come as soon as the Fed’s December meeting.

Activity in China’s manufacturing sector continued to contract in October due to zero-covid lockdowns although the rate of contraction slowed from the previous month. Meanwhile, Shanghai Disney has become the latest high-profile venue to shut its gates due to China’s strict zero-Covid policy, trapping visitors inside. Are they taking the mickey?

Brent Oil rallied to $97 on speculation of an end to Chinese lockdowns.

Finally, it’s not just the UK with an ageing population and social care problem. Germany has been warned its state pension system could be on the verge of collapse by the German Employers’ Federation. For every 100 contributors, there are currently about 50 pensioners but within 15 years there will be 100 contributors for every 70 pensioners. The problem is that life expectancy is increasing across Europe although Putin keeps threatening to cut it short!

Read Last Week’s Alpha Bites – The Beast from the East

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Robots at your Service

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