Identifying the Impacts of Digital Technologies on Labor Market: A Case Study in the Food Service Industry

Abstract

Digital technologies like artificial intelligence, quantum computation, and 5G communication are advancing at an ever-increasing pace, which have tremendously increased the labor efficiency and workforce productivity. However, there is an increasing concern about the threat of technology innovation - will machines replace human jobs, and will digital technologies cause mass unemployment in the future? To better respond to the upcoming workforce transitions and formulate coping strategies for technological displacement, it is necessary to identify the impacts of such digital technologies on future labor markets and answer questions such as how job demands would change and how required workforce skills would shift. In previous studies, some scholars have quantified the impact of artificial intelligence (AI) on the whole labor market. However, they over-generalized their models and lacked in-depth analyses considering the unique characteristics of different industries. To address this knowledge gap, this research specifically focuses on the food service industry, and takes McDonald’s as a case study. The research methodology includes three main steps: 1) data collection, which aims to collect McDonald’s annual financial reports from 2006-2019; 2) data extraction, which aims to extract six financial factors from the annual reports (i.e., total revenue, total cost, operating income, number of employees worldwide, number of restaurants worldwide, as well as payroll and employee benefit cost); and 3) data analysis, which aims to analyze and characterize the trend of the extracted data. The results indicate that, with the wide use of digital technologies, company’s operation efficiency has been significantly improved and the number of required employees per restaurant have reduced nearly 70% since 2007. This change could be due to the evolving technology at McDonald’s, such as the Company’s global mobile app, self-order kiosks, and AI-driven models such as the conversational ordering interface. The results of this research provide a better understanding of the impacts of digital technologies and trends of job demands in the food service industry. In our future work, we will further extend the case study to different regions and different types of restaurants to verify if similar trend exists in the food service industry in general. We will also statistically test the significance of the impacts of technologies, and propose possible strategies to prepare for and adapt to the potential work displacements.