Matthew Casella, AI Driven Robotics in the Hospitality Sector

Author(s): Scott Douglas Jacobsen

Publication (Outlet/Website): The Good Men Project

Publication Date (yyyy/mm/dd): 2024/12/19

Matthew Casella, President of Richtech Robotics Inc., discusses the company’s focus on AI-driven service robotics tailored to the hospitality sector. Originating with founders Wayne and Michael Huang, the company leverages Autonomous Mobile Robots (AMRs) to optimize operations in underserved industries. Based in Las Vegas, Richtech partners with businesses like Boyd Gaming and Walmart, deploying solutions like ADAM robots to enhance customer experience. Casella highlighted their Robot-as-a-Service (RaaS) model, blending automation with human interaction, reducing costs, and increasing efficiency. Advancements in AI, including NVIDIA’s technologies, have propelled innovation, enabling rapid training and deployment of versatile robotic solutions.

Scott Douglas Jacobsen: Today, we are here with Matt Casella, President of Richtech Robotics Inc., a Nevada-based provider of AI-driven service robotics. Your company specializes in something universally appreciated—hospitality and service. It seems like a strong market choice. So, why AI-driven service robots, and why specifically focus on the broad spectrum of the hospitality and service industries?

Matthew Casella: Richtech Robotics focuses on commercializing robotic solutions tailored to the hospitality and service sectors. The company’s origin story dates back several years to its founders, Wayne Huang and his brother, Michael Huang. Wayne has always been driven and passionate about the hospitality industry.

His journey began with formal training as a chef. While initially pursuing a career in the culinary arts, he later transitioned into technology, focusing on the interactive visual display market. This shift eventually led him to the Autonomous Mobile Robot (AMR) market, which opened the door to integrating robotics into the hospitality and service industries.

One of the key early applications of AMRs was in the restaurant industry. This use case became a foundational aspect of Richtech Robotics’ strategy, demonstrating how robotic solutions could enhance operations in food service.

From there, Wayne and the team expanded their focus to the broader hospitality and service sectors, recognizing these areas as underserved by existing robotic solutions. While robotics had gained traction in factories, warehouses, and logistics, they needed to be more utilized in hospitality. This gap presented an opportunity to bring robotic innovation to an industry ripe for transformation.

Jacobsen: Did Nevada seem like the most versatile place to establish your headquarters?

Casella: Yes, for several reasons, Las Vegas was a strategic choice for our headquarters. Its status as the hospitality capital of the world was certainly a key factor. Additionally, it positioned us near potential partners and clients. For instance, one of our long-standing clients is Boyd Gaming, for whom we’ve deployed our Matradee robots across several of their restaurant properties. These robots have significantly enhanced operational efficiency and customer experience.

Jacobsen: In popular media, robotics has long been a focal point, from Japan’s advanced robots to Elon Musk’s Optimus robots more recently. Experts predict that autonomous robots will eventually outnumber humans performing various specialized tasks. How do you see Richtech Robotics shaping this future?

Casella: Our mission centers on specializing in tasks that can and should be automated. Our solutions are designed to complement human capital rather than replace it. All of our robots are classified as collaborative robots, or cobots, meaning they work alongside humans rather than independently of them.

Our robots are purpose-built to interact with the general public and fulfill specific tasks, allowing businesses in the hospitality and service sectors to optimize their operations. By automating routine or repetitive tasks, our technology enables human employees to focus on higher-value activities, such as direct customer engagement and personalized service. This synergy between human workers and robots enhances efficiency while maintaining a human-centerd customer experience and more value-add tasks.

So, a great example is delivery. The restaurant delivery space, we’ve continued to broaden the delivery applications of robotic products because that is a task that understandably should be automated.

When you think about a restaurant use case and a server, does a server need to walk five or six miles during a shift, going back and forth between the dining room and the kitchen? Or could that process be enhanced by a robot? For example, a robot could take dirty dishes from the dining room back to the kitchen or bring prepared food from the kitchen out to the dining room, meeting a server who could then hand the meals off to customers at their table.

This would allow the server to interact with and engage more customers, cover more tables, and probably increase their tip revenue while providing a better customer experience. That’s what we’re focused on. This is what makes the hospitality business so interesting when it comes to robotic and AI solutions.

Jacobsen: Why is that?

Casella: In hospitality, every operator wants to offer a different experience than everyone else. The experience itself is part of what they’re selling. These operators want to ensure they can deliver a unique, fulfilling, and engaging experience for their customers. By opening up a toolkit of robotics and AI solutions, we’re helping them achieve that goal. I see this as the next generation of hospitality.

Jacobsen: You’re describing cooperative ergonomic relationships between robots and people in the restaurant industry. What about fully automated restaurants?

Casella: That’s a great question, and it ties into what I was saying earlier. The operators of these businesses will fall across a spectrum. Some will implement fully automated experiences, whether a drive-through, a ghost kitchen, a dark kitchen, or a full-service restaurant. These businesses may lean toward complete automation.

Then, some operators want to blend automation with human interaction, as they view their people as an important part of their offering. They may ask for guidance on integrating both elements effectively.

Finally, some prefer to keep automation entirely behind the scenes. These operators might not want to show guests how automated their kitchen is. This diversity of approaches will continue as operators seek to offer tailored experiences to their customers.

Jacobsen: But these types of businesses and programs are expensive, aren’t they?

Casella: Yes, they can be. However, it’s important to consider the return on investment. Robots can reduce operational costs, improve efficiency, and help businesses reallocate their human capital toward high-value tasks, all while enhancing the customer experience. For many operators, the long-term benefits outweigh the initial costs.

Jacobsen: Robots are not cheap. The Optimus unit, for example, is estimated to cost around $30,000. I assume that’s a base price, excluding specialized programming or additional features. How do you finance, secure investments, engage in financial activities, and maintain investor relations for a business like this? That was a loaded question with multiple parts.

Casella: Yes, that is a loaded question on a number of fronts, so I’ll try to break it down and address it as much as possible. First, it’s true—this is a capital-intensive business on our end, and it also requires an investment on the customer’s end. One of the strategies we’ve implemented, particularly over the past 12 months since going public, is transitioning to a Robot-as-a-Service (RaaS) model.

Instead of requiring a large upfront capital expenditure (CapEx) from customers, we offer a subscription-based approach that fits into their operating budgets. This creates a monthly recurring cost structure that gives customers confidence that Richtech Robotics will ensure their robots operate at 100% efficiency. It also guarantees that we’ll continue supporting them in the long term.

This model smooths out our revenue. Instead of relying on one-time sales, we establish recurring revenue streams with 3-to-5-year contracts, depending on the robot. This is not only attractive to investors—who value recurring revenue—but also strategically sound from a business perspective. Transitioning as much of our portfolio as possible to a RaaS model is our key focus.

Jacobsen: How does this impact the cost curve of robotics compared to human labour?

Casella: Over time, we expect the cost of robotics to decrease as the technology matures and becomes more purpose-built. While robots aren’t necessarily getting more expensive, human labor costs continue to rise, especially in states like California, where I am today.

From a customer’s perspective, the comparison comes down to task automation. For example, how many labor hours can a robot automate? Customers can then redirect higher-cost human employees to more value-added tasks while utilizing lower-cost robotic labor for repetitive or time-intensive jobs. Unlike human employees, robots can operate 24/7, 365 days a year, significantly reducing the cost per hour over time.

The cost curve is shifting in our favor.

Jacobsen: I heard about the ADAM installation at One Kitchen in Rockford, Illinois. Was this a test case?

Casella: Yes, it started as a test case, but we’ve quickly moved beyond that. We recently announced via a press release that we’re taking the next big step. We’ll own and operate 20 of these One Kitchen locations across Texas, Colorado, and Arizona.

We’ve gone beyond the initial test case, which is an exciting development for us. This partnership achieves several important goals for Richtech Robotics, and we’re thrilled about the opportunities it presents.

It gets us in the door at Walmart locations. That could be a strategic partnership down the road. Each of the Walmart stores we’re targeting generates substantial annual revenue, these are high-traffic locations with significant volume.

These restaurants will be positioned directly opposite the cash registers in these Walmart locations, meaning every customer checking out will see our ADAM robot as part of the One Kitchen offering. For us, this is a meaningful step. It’s an important milestone where we can demonstrate the efficiencies of a robot-powered restaurant. 

From a business standpoint, this move reflects our dual strategy: we aim to be both a robotic service provider and a robotic hospitality operator. We’ve been clear about pursuing both paths and pushing forward on both fronts.

Jacobsen: Robots still need to get fully automated repair systems. How do you ensure these systems have appropriate maintenance and repair solutions?

Casella: We currently work with a third-party service company that has been in the repair business for a long time and, in recent years, has moved into robotic repairs. We contract with them to ensure that they can service our robots nationwide in case of an immediate repair need. Currently, we have robots operating from coast to coast, so working with a reliable partner is critical.

As we continue to grow, we plan to strategically open new offices and locations in key markets where we can establish our own repair staff. That said, much of the maintenance required for our robots is software-related. Many issues can be resolved remotely, streamlining the repair process and minimizing downtime.

Jacobsen: What updates do you see on the horizon for AI? I recently watched a talk by Jensen Huang, the CEO of NVIDIA. He mentioned that the shift from CPUs to GPUs represents a monumental leap. He suggested that development is no longer just exponential, as described by Moore’s law. It is closer to a “logarithm on a logarithm,” essentially an exponential on an exponential. If that’s true, how does such rapid advancement impact the AI-driven service industry?

Casella: Jensen Huang is undoubtedly a leader in this space, and his observations highlight the pace at which AI and hardware are advancing. If the exponential growth of GPUs and AI capabilities continues at this rate, it will profoundly impact the AI-driven service industry.

For us, it means smarter, more efficient robots that can process data faster and handle more complex tasks. It also means enhanced AI algorithms, enabling robots to interact more naturally with humans and adapt to changing environments in real time. These advancements could lower costs, increase robot versatility, and open new applications. There is a lot  to consider to remain adaptable and ensure our solutions leverage these breakthroughs to deliver real value to our customers. This is an exciting time for the industry, and we’re eager to see how these developments shape the future.

I believe that Jensen Huang provides the structure—the scaffolding—on which  millions of businesses will be built. This will allow the toolkit of robotics and AI to continue growing exponentially. This has allowed us to enhance the experience our robots provide to customers.

Thanks to our technology working in tandem with NVIDIA, the conversations ADAM can have with customers are now robust. For example, the support he can provide, such as drink recommendations, has become increasingly sophisticated. This progress is all powered by advancements in AI.

Using tools like NVIDIA’s Isaac Sim, we can train ADAM rapidly. We can prepare him for virtually any environment. For instance, as you mentioned, ADAM’s ability to recognize all the ingredients or tools around him is improving at lightning speed.

The potential applications of this technology are limited only by our imagination. There’s much speculation about what’s coming down the road and how soon it will arrive. Those advancements are coming quickly, but at Richtech Robotics, we focus on getting robots into the world today.

We’re not waiting for what robots might do in five years—we’re deploying them now and filling in the gaps by providing meaningful solutions to help our customers automate their businesses.

Jacobsen: How did the presentation of your corporate overview go at the LD Micro Main Event in October 2024?

Casella: It went very well. We’ve been working with our IR firm, Core IR, and they’ve been an excellent partner in helping us connect with the right types of investors and bankers. It’s critical to communicate our story to people excited about what we’re doing, who understand the market, and who recognize what an investment in Richtech Robotics means and what they can expect from us.

Jacobsen: Excellent. Matt, thank you for the opportunity and your time today to discuss AI-driven hospitality.

Casella: Thank you very much, Scott.

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