Joe & The Juice

Quality conversations against the rise of automation

2018.09

Joe & The Juice: Quality conversations against the rise of automation
Joe & The Juice
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I. Joe & The Juice’s brand of establishing customer affinity

Prioritizing fresh ingredients and quality customer interactions, Kaspar Basse opened Joe & The Juice in Copenhagen in 2002.

  • Kaspar Basse, a Danish karate champion, believed that healthy food should be prepared and cooked only after customer's order in order to maintain the freshness and quality of the ingredients. He liked Starbucks’ philosophy and concept very much, but identified two issues: Starbucks didn’t have enough fresh and healthy menu options, and could not provide a customer experience differentiable from that of other cafes.
  • To directly address these issues, Basse founded Joe & The Juice, a company that operates with values and approaches different from the status quo. He built an open kitchen and had employees begin prep only after customers order, demonstrating that their food is made from fresh, clean ingredients. Basse also minimized changes in the menu and focused on creating specialties.
  • Most franchise cafes do just the final prep steps in-store, such as blending, mixing with water, microwaving, or grilling ingredients packaged and supplied from headquarters. This approach reduces production/distribution costs through mass production and increases store turnover by reducing customer wait times, increasing corporate profits, and ensuring consistent taste and service throughout all stores.
  • Many companies that pursue “healthy food and beverage” (e.g., Jamba Juice) simply blend washed and diced frozen fruits, or focus on prepackaged drinks and pre-cooked foods to reduce prep time.

Basse was convinced that his company’s culture and point of differentiation from competitors would revolve around human interaction and intimacy.

  • Basse had been running the store alone since its inception when he decided to attend his mother’s birthday party in Paris and leave his store with a regular customer named Philip. Philip came to the store an hour before opening for prep, making not only food but also friendly conversation with customers. Through this experience, Basse started to think that if given freedom and dignity, employees will be motivated to provide the best service to their customers, and that this should be the culture of Joe & The Juice.
  • Believing that the advantage of offline spaces lies in human interaction and intimacy, Basse wanted to make his company’s services feel like a Saturday dinner with friends. He wasn’t interested in forming a corporate culture out of teaching employees how to smile or hand sandwiches to customers. Instead, he believed that culture is something people create and experience naturally while employees interact with customers in-store.
  • Basse wanted his employees to treat the customers intimately, like a host greeting guests at a weekend dinner party. He called them “guests” instead of customers and responded to them in different ways, remembering the names and interests of the patrons just as he would talk to a friend who came over for a home-cooked meal.
  • Basse [1] handed over the reins to his employees to change the vibe of the store. The staff decorated the juice bar like a living room to fit the “Saturday dinner party” concept and changed the music and volume to suit each situation, offering a unique customer experience differentiated from other brands in the food and beverage industry. Juicers entertain waiting guests with their near-magical tricks, like pouring juice from a mixer into a cup balanced on their back or head. The store music and employees’ energies work together to create the distinct ambiance of Joe & The Juice. Basse wants customers to personally experience the ways the brand sets itself apart from others.

Basse has made Joe & The Juice the trendiest brand by hiring employees who fit with his business philosophy and providing them with opportunities for freedom and growth.

  • Basse knew very well that culture ultimately comes from conversation, and that communication skills are not something that can be taught. Therefore, he focuses on hiring employees who are likely to match Joe & The Juice’s corporate culture through “casting” and “scouting.” He invites people to “casting” parties where people are handsome and kind; have communication skills and a trendy sensibility in various fields such as music, fashion and interior design; and are free-spirited with tattoos all over their bodies. From that pool, Basse hires people who want to develop as juicers. In addition, if there are low numbers of casting participants where they’re trying to expand, they will visit the trendiest neighborhood and try to scout people who match their ideal type.
  • With this freedom and authority, employees were able to find meaning in their work and voluntarily provide high-quality service to customers. Other than the entry-level juicer position, Basse fills all senior positions (manager, executive, etc.) with only internal promotions. He defines the attitude and core competencies required for each position and created an internal system of training and testing for promotions. All juicers learn how to make items on the menu for the first five weeks of training, and will receive separate training and evaluation for each position when promoted.
  • Given a clear career path, employees who want to [2] move up the ladder work more diligently and enthusiastically, continually strengthening the unique brand of Joe & The Juice. The company expanded around Scandinavia and opened its 75th store in 2014. Basse still sticks to his principle of internal promotion (excluding very few positions limited by law, tax, etc.) and promoted Sebastien Vestergaard, who joined as a juicer in 2005, to CFO at the age of 23.

Joe & The Juice maintains both high profitability and rapid growth, striving to maintain and strengthen its culture and brand identity.

  • After achieving great success in Europe in 2016, Joe & The Juice entered the U.S. market, opening 20 new stores within its first year and now has 56 locations in the U.S. and 263 locations worldwide. Joe & The Juice is growing rapidly while maintaining high profitability through careful location selection, performed by a self-developed algorithm that factors in elements like the flow of population, income level, age, gender, and individual taste. Most Joe & The Juice stores exceed the [3] financial breakeven point (BEP) within six months and recover all of their investment within 30 months.
  • Although Basse did not offer employees financial incentives based on sales performance, he operated various programs to promote cooperation among juicers. Each country manager was given a budget for group-building activities, and a Facebook page was created so that juicers around the world could show off their skills. This not only generated healthy competition among juicers, but also created a space to share skills, recipes, and tips and tricks. In addition, the company holds the Global Showoff competition, where juicers can compete with their skills once a year for the top prize of a Rolex watch.
  • The company funds six months to one year of travel time for employees awaiting promotion to visit various Joe & The Juice stores around the world. Basse built “Joe Houses” around the world, including New York, Miami, Sydney and London, where employees can stay free of charge. This is not only to help employees grow into managers and leaders by experiencing various cultures and people around the world, but also to maintain and spread the unique culture of Joe & The Juice through regional exchanges.
  • The average length of employment for juicers at Joe & The Juice is about 16 months. Joe & The Juice continues to hire young and stylish employees, maintaining a unique and trendy corporate culture. In addition, when opening stores overseas, the company sends a SWAT team from headquarters. This is to support the opening of the store through its initial stabilization phase so that the culture of Joe & The Juice can take root in the new market.


II. Automation technology that provides a new experience to customers

Machines have begun to take over human roles in the service industry for a variety of reasons, including advances in technology, rising labor costs and labor shortage, and new consumption trends.

  • Given that the local minimum wage exceeds $15 an hour in some areas of the U.S., the fast food industry is actively pursuing machine-based automation. In addition to installing simple self-order kiosks, McDonald’s has found quite a bit of success introducing Big Mac vending machines in Boston. Pizza Hut, Dominos, and other pizza franchises are collaborating with car companies to experiment with automated cooking and delivery services.
  • The San Francisco-based startup Creator recently released news of its newly completed project, an AI robot that makes hamburgers. This machine is operated by 350 sensors, 50 actuators, and 20 computers, and can start cooking right after receiving the order, providing customers with the world’s freshest cheeseburger in just five minutes.
  • With the ability to adjust sauce content down to the milliliter and the precision to cook meat custom-to-order, this highly efficient machine produces high-quality hamburgers that can sell for more than $15 above the market average of $6. This restaurant requires only minimal human labor to restock ingredients or assist with customers’ ordering processes. This is the first robot to independently perform the entire cooking process, and much attention has turned to it as the potential beginning of popularizing automated restaurants.
  • The Chinese e-commerce company Jingdong.com announced that it will open a smart restaurant with robot cooks in August 2018. Everything in the restaurant, including ordering, cooking, serving and so on, will be done by robots; they offer about 40 Chinese dishes through collaboration with a famous chef. Jingdong.com said it plans to unveil its technologies and recipes and launch a franchise business, and has also completed the construction of an automated logistics system in which every step from warehousing to packaging to classification is done entirely by robots. In October 2017, China’s Alibaba opened a restaurant where everything is automated except for cooking food, and founder CEO Jack Ma disclosed his plans to open more than 100,000 locations.
  • Due to aging and a declining birthrate, Japan is one of the countries where automation is spreading most quickly. The top five Japanese convenience store companies plan to attach IC tags to all products sold in Japanese stores, introduce automated cashiers, and automate all stores by 2025. Due to the labor shortage in Japan, the number of restaurants and cafes where people can order and eat meals using only machines is also increasing rapidly.
  • Korea’s minimum wage is continuously rising, by 16.4% in 2018 and 10.9% in 2019. As a result, automation is growing around the retail industry, including convenience stores and franchise companies, where labor costs are a concern. E-Mart 24, CU and others have already started running automated stores, and will continue to expand their numbers. The installation of digital kiosks, which replace some human labor, is rapidly increasing in the fast food industry. McDonald’s has installed and operated digital kiosks at 220 stores out of 400 stores nationwide, Lotteria at 750 out of 1350, and Burger King at 210 out of 313 stores; all are planning to continuously expand.
  • Starbucks Korea introduced a preorder service called Siren Order in May 2014, and as of 2018, about 13% of all daily orders are placed through Siren Orders. In addition, 500 coffee machines and automated cashiers will be installed in locations like airport lounges and ski resorts over the next five years. Coffee brand Sweet Coffee opened “b;eat,” the first automated robot cafe in the Korean coffee industry, at Incheon International Airport in January 2018. When you order at mobile or booth kiosks, a machine automatically makes coffee and brings it to a pickup location. Automated stores are expected to continue to grow in the future because they meet the new consumption trend favoring non-face-to-face interaction while reducing corporate costs in human labor.

Automation is bringing many changes in customer experience with products and services.

  • Although many brands have been working hard to improve the quality of their customer service, such as training employees and creating manuals, the proliferation of automation is completely redefining customer experiences with products and services. Customers who use an automated store will have all their needs met through the machine, from the moment they enter the store to the moment they leave. Therefore, convenience provided by machines are replacing the valuable feelings and experiences that people gain in face-to-face interactions.
  • Founded by Amazon in 2017, Amazon Go is a store where everything from inventory to checkout is operated by artificial intelligence and symbolizes how retail stores are changing. The process of entering the store, getting what you need, and then simply exiting the store demonstrates the desired direction of customer convenience.
  • Moby Mart goes above and beyond just automation, aiming to provide the ultimate convenience by aggregating the latest technologies of self-driving, artificial intelligence, and the Cloud. Customers can simply bring Moby Mart to their home using the smartphone app and purchase items from a traveling automated vending machine; they can also receive merchandise via drones that launch from the Moby Mart roof. This whole process is simplified to “Open → Scan → Check out,” demonstrating Moby Mart’s priority of extreme customer convenience.
  • The benefit of automation lies not just in cost, but also in its speed, efficiency, impersonal convenience, and novelty. This means that the type of emotional satisfaction created from personal interactions at Joe & The Juice is replaceable by that from curiosity and fun with automation. The scope and field of automation will continue to expand rapidly, aiming to increase efficiency by automating much of everyday life and creating a completely new lifestyle.


III. Future considerations

Joe & The Juice must reconsider whether its primary selling points—fresh ingredients and the culture of communicating with customers—are still effective in the midst of these changes in the industry and market.

  • Joe & The Juice has achieved great success from its fresh food cooked to order, and its unique culture achieved through the vibrancy of employees who are granted freedom and authority. However, technological advances are causing significant changes throughout the industry, and competitors are using technology to improve customer service and convenience.
  • As the usage of machines and robots in various fields such as distribution systems, store management, ordering, and food prep increases, the distinguishing freshness of Joe & The Juice is expected to become a common characteristic across all stores. The company’s culture of communication and its dedication to providing a differentiated experience may also be overtaken by the convenience of automation and changes in customer consumption trends. Paradoxically, however, as more stores become automated and reliant on robots, Joe & The Juice as a brand may receive even more attention for its emphasis on intimate customer communication and employee-generated store atmospheres.
  • The company also needs to think about the dilution of brand philosophy and value during their expansion into the global arena. In August 2015, Joe & The Juice opened its first Asian branch in Korea, but since the SWAT team (that helps with the initial launching) has left, the store has lapsed into an ordinary juice bar indifferentiable from its competitors. None of the nine locations in Korea feature the unique attractions of Joe & The Juice: charming interior design, trendy music, juicers who make conversations with customers and perform tricks, etc.
  • Having successfully expanded from Europe to the U.S., Joe & The Juice will need to question whether its core values can be maintained in other regions with different cultural backgrounds and whether these values will be equally accepted and preferred by customers in foreign markets.

Human job crisis caused by automation and customer perception are challenges that must be addressed moving forward.

  • Automation is directly linked to the social issue of job security. Concerns about machines replacing human jobs have persisted since the advent of industrialization in the early 19th century. Many economists at the time had said that while technological advances could eliminate some jobs, the fear that humans will be replaced by machines is groundless.
  • These economists were right about the transition from agricultural societies to industrialization, but today’s advances in technology are so much more sophisticated and capable of complex tasks that people are now thinking, “things will be different this time.” People’s concerns are growing as industry growth, job opportunities, and income rate all become unpredictable.
  • There needs to be a social awareness about and preparation for the possibility that technological advancements will eventually create machines superior to humans in all capacities. Will humans and machines share jobs based on comparative advantage theory, or will the concept and value of labor be completely overturned because machines will completely replace humans? Without proper institutional support and social preparation, people's concerns over jobs could pose a major obstacle to the popularization of automation.
  • People's reactions to automation also vary between countries and between fields. According to a survey of 1,000 men and women ages 19-59, compiled by a Korean market research company called Embrain Trend Monitor, preference for non-face-to-face services such as automated cashiers has increased. 85.9% of all respondents, regardless of gender and age, said they prefer a place where they can shop quietly rather than talk to an employee. As much as 66.7% of consumers actually felt uncomfortable about eager, friendly service.
  • According to a recent survey of 2,021 Internet users by the Brookings Institute in the U.S., 61% of respondents said robots are “very” or “somewhat” uncomfortable. Concerning their interest in robots, consumers are more likely to feel averse to them in areas closely related to their lives, such as household cleaning (20%), bodyguards (17%) and care for the elderly (9%).
  • Replacing work involving human emotions and social skills with machines is already difficult, but there still remains, it seems, a barrier to acceptance. Not only are there many technical challenges to solve in order to staff a store entirely by robots, but it will also take time for consumer perception to change completely in the service sector.


IV. Implications

There are two lessons we can learn through Joe & The Juice and the rise of automation.

Lesson #1: Properly running recruitment, assessment, and compensation systems according to the vision and values pursued by the company creates a strong corporate culture that can realize the company vision.

  • Basse’s vision was to turn Joe & The Juice into a store that offered customers the experience of visiting close friends on Saturday evening, along with fresh food and drinks. He hired attractive and sophisticated employees who could have intimate conversations with customers and gave them sufficient freedom and authority to demonstrate their competence. Employees were given training and self-improvement opportunities, and employee performance was evaluated objectively by assessors from other departments within the company as well as those working in the same store. In addition, the company has created a motivational work environment by operating reward systems that actually appeal to employee preferences (such as Rolex watches, travel, etc.) and providing all employees with a fair opportunity to grow through internal promotion.
  • That clear vision, as well as the consistent system management that supports it, created the unique corporate culture of Joe & The Juice. Customers were excited by the unique atmosphere and intimate conversations that they could only experience at Joe & The Juice, which became the impetus for the brand to grow from a single store in Copenhagen to a company with 263 stores around the world.

Lesson #2: Technological advances are changing the paradigm of the service industry.

  • Advances in technology are redefining the purchasing/consumption approach that everyone took for granted in the service industry. That process of visiting stores, talking to employees, and paying for something has either been simplified by the emergence of highly developed machines or completely replaced. Moby Mart, Amazon Go, and Creator's burger joints will be the starting points for this change, and customers will increasingly adapt to the new experiences they offer.
  • As of 2016, the turnover rate for employees working at restaurants and lodging facilities in the U.S. was 72.9%. In addition, 19 U.S. states increased their minimum wages in 2017. High labor costs, including increased recruitment/education expenses caused by high retirement rates, decreased employee morale, and deterioration of corporate culture are long-standing issues that have plagued the service industry. Increasingly, companies will adopt robotics technology to replace humans in the service sector, which will change the paradigm of the service industry.


Discuss “Joe & The Juice and Automation” with your Ringle tutor, and also receive feedback on your English usage.

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