Being replaced by machines is probably not what the Raise the Wage! crowd had in mind, but here we are. Again.
For almost two years, McDonald’s has been flirting with automated ordering machines, and has introduced the new mechanical overlords to some of its locations.
I blogged about this back in 2014:
This is all basic economics, really. As costs of labor increase the added cost must be offset. In order to satisfy operating costs, produce a product consumers want to purchase, and still turn a profit, it’s perfectly reasonable for a company like McDonald’s to look for cost-cutting alternatives. As Forbes pointed out, the added pressure to increase wages only serves to expedite technological solutions.
Now, fast-food chain Wendy’s is experimenting with automated ordering kiosks. The driving force behind technological expansion? Wage inflation.
Jed Graham of Investor’s Business Daily reports:
Wendy’s Penegor said company-operated stores, only about 10% of the total, are seeing wage inflation of 5% to 6%, driven both by the minimum wage and some by the need to offer a competitive wage “to access good labor.”
It’s not surprising that some franchisees might face more of a labor-cost squeeze than company restaurants. All 258 Wendy’s restaurants in California, where the minimum wage rose to $10 an hour this year and will gradually rise to $15, are franchise-operated. Likewise, about 75% of 200-plus restaurants in New York are run by franchisees. New York’s fast-food industry wage rose to $10.50 in New York City and $9.75 in the rest of the state at the start of 2016, also on the way to $15.
For now, Penegor said, wage pressures have been manageable both because of falling commodity prices and better operating leverage due to an increase in customer counts. Still, the company is wary about both wage hikes and a possible recovery in commodity prices and is “working so hard to find efficiencies” so it can deliver “a new QSR experience but at traditional QSR prices.”
In addition to self-order kiosks, the company is also getting ready to move beyond the testing phase with labor-saving mobile ordering and mobile payment available systemwide by the end of the year. Yum Brands and McDonald’s already have mobile ordering apps.
The fast food industry isn’t the only one to feel the pinch of increased labor costs. Recently, UC Berkeley put 500 jobs on the chopping block ahead of California’s $15 an hour minimum wage increase.
[Featured Image from Wendy’s website]
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