Good Job “Raise the Wage” Crowd! McDonald’s to Install Automated Kiosks Nationwide
Rise of the machines
We’ve been blogging about the push to raise the minimum wage to $15 and the correlation with the rise of automated kiosks since 2014. Fast forward two years and the machines have won.
I blogged 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.
The pursuit of a “living wage” comes at a high price — countless jobs have been lost to newfangled technological overlords and businesses with small profit margins have shuttered nationwide. Neither were giants in the fast food industry immune to the $15 minimum wage disease.
Ed Rensi, the Former President and CEO of McDonald’s explained:
Let’s start with automation. In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.
Earlier this month, McDonald’s announced the nationwide roll-out of touchscreen self-service kiosks. In a video the company released to showcase the new customer experience, it’s striking to see employees who once would have managed a cash register now reduced to monitoring a customer’s choices at an iPad-style kiosk.
Of course, not all businesses have the capital necessary to shift from full-service to self-service. And that brings me to my next correct prediction–that a $15 minimum wage would force many small businesses to lay off staff, seek less-costly locations, or close altogether.
Most McDonald’s stores are franchised and only rake in (on average) a profit of about $150,000 per year, so it’s easy to see how a huge wage hike rapidly eats away at a meager profit margin.
Perhaps the biggest issue with the counter-argument is that it contends entry-level jobs like that of a McDonald’s cashier is meant to provide for an entire family long-term. Maybe this is a generational difference, but we always understood that those types of jobs were great beginner gigs or extra income opportunities, but certainly not a career.
McDonald’s echoed this “first job” sentiment in one of their latest commercials.
Wendy’s too is embracing the digital cashier for the same reasons. Sadly, “would you like fries with that?” may soon be swept into the dustbin of cultural memory.
For more on how the $15 wage hike impacts business, see here:
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The entire idea of a ‘living wage’ is idiotic.
Internships, no qualification entry level positions, traditional teen jobs like lifeguard or paper delivery boy, these are not jobs that are going to support a family.
You take those jobs to get a work history, to get experience, or to get your foot in the door at a big company to prove your worth and climb to a better position.
Demanding a ridiculous wage for the value these employees provide hurts both the employee and the business.
It hurts the employee because they’re not going to get paid a higher wage. They just aren’t going to get paid, period. It hurts the employee because it eliminates the opportunity to climb up from an entry level position.
And it hurts the company because it makes it more difficult to identify talent for higher management positions.
Higher minimum wages will also impact the wage scale of the whole company.
You might start someone at one rate, move up a class when you get through the probationary period and keep moving up as they gain more skills,experience, education & responsibilities. Over time, the company has a wage matrix. But, if you are forced to adjust that first intro rate, you’ll have to adjust the entire matrix or you hear complaints or lose your experienced employees to similar companies who have made the adjustment.
And,the impact can be across job types – adjust the matrix for the widget assemblers, then the widget engineers want an increase. I wonder how many union contracts have a wage increase tied to the state or national minimum wage?
On top of the wage increase are all of the wage-related employment costs such as the employers portion of FICA, unemployment and workers comp insurance which are usually mandated by state laws. There are some employee benefits which are also tied to wages – retirement account contributions, life insurance, etc.
Ironically, Idiocracy predicted this years ago:
I own a chain restaurant and have been hounding the corporation to pursue kiosks. They claim it’s in the works, but obviously not soon enough. This radically slants the playing field in McD’s favor.
There are enormous benefits to the owner for using a kiosk. Order accuracy, payment accuracy, and not having to pay an employee are just three quick ones.
Will they replace people altogether? Not any more than soda machines and ATMs have replaced store clerks and bank tellers.
The past three years in particular have been terrible for finding employees. It will only get worse when the minimum wage is raised. The effects of the entitlement mentality in this nation are far reaching. Replacing lazy, ungrateful, uneducated people with machines is an easy call, and leaves more money to pay the hard working, grateful, smart people who will not be replaced when the robots arrive.
Many sit down restaurants we go to these days are now using table top tablets on a stand to order and pay for one’s meal. Granted, they still use staff, but it wouldn’t be too hard for them to ditch the staff with these devices.
There used to be this plavce I went to once in a while, called the “Hamburger Factory”.
You walking in, got in line, placed your order, and payed. They gave you this stand with a number on it. You found a place to sit down, and when your order was ready some guy would bring it to yiour table.
Kind of halfway.
I see a lot of casual/fast restaurants do this – it gets the people waiting for their order away from the front. The next person walking in then sees an small or no wait for food and gets in the order line. You don’t look throughout the restaurants for those numbered sticks.
There are some drive-throughs that will make you pull up to a designated spot if your order is large. It moves the line of cars and encourages more people to enter the line.
Just think. The tablets can be programmed to say, “You Guys” a lot more times that a human.
“I own a chain restaurant…” My sympathies, windbag. About a year ago my mom finally got out of the chain fast food restaurants that she and my dad owned. It took years to find “someone rich enough to afford them and stupid enough to want them.” The margins are paper thin and stress is enormous; I wish you the best.
Thanks. You described perfectly the sort of buyer I’m looking for.
I did restaurants for 30 years , not a glamorous as on Tv . When you wear a pair of shoes through in 5 weeks , you know you are doing some walking .
It’s hot ,it’s sweaty and a lot of work for a little cash.
Sadly, “would you like fries with that?” may soon be swept into the dustbin of cultural memory.
Never fear, making a machine say that is no trick at all.
Even better, when you show it your credit card, Mr. Machine can also nag you to order some stuff you were looking at the day before on Amazon. And tell you that Fed Ex has left a package by your front door. And that it’s time for your car’s oil change. All very helpful … I suppose.
All that’s needed is an information network. Hmmm … where can we find one of those?
do the people advocating for 15 minimum wage really understand what will do, all it will do besides the lose of jobs will be to increase the poverty level from 10 to 15 the result will not be in the interest of the children starting out, or for that matter the people trying to survive.
the only problem with the kiosks will the order be correct and what will the remaining employees do to it.
Sure they know what the consequences will be.
They’re simply salivating at the prospects of more people having to be on .gov ‘assistance’.
This is so their friends can keep their cushy bureaucrap jobs and also justify the need for more bureaucraps due to the increase. ( not that the new bureaucraps will actually do much of anything, it’s just that they’ll know which side their bread is buttered on and also vote for the ‘right people’ so they can stay on the gravy train too).
Obviously the fix for that is a minimum wage of $1000 per hour to compensate fast food workers for the expected drop in hours they will be asked to work. After all, how is an 18 year old supposed to keep up mortgage payments and childcare for their four children on $15 per hour anyway?
I just walked into, and then back out of, a fast food joint near my Chevy agency. As I walked in the door, every third word out of the mouth of one of the three behind the counter was the “F-word”. I was the only customer. He saw me, and kept on going; he was apparently discussing some dispute he had with someone. I turned and walked toward the door, when I heard – from the same voice – a very snide “May I help you, SIR?”
I went elsewhere.
PS: Lest you think it was some ghetto denizen, this mouthy kid was white.
I worked at a high-tech business firm where F-Bombs were common. Especially coming from the CEO!
I am in the ongoing process of automating my machine shop.
My sole Employees loves it!
All the slogging is off his plate.
He is free to do the more skillful work.
Job on the floor has 480 drilled holes, 4 at a piece.
Now, load 4 pieces, push go and do something else.
Can be done in less than a day now… before, 2-3 days handling the things.
So, it is better for him, cheaper for the Customer and more profitable for me.
It could literally be said that the ‘living wage’ means dying wages.
“…‘living wage’ means dying wages.”
I find two leftist perspectives in play:
1) I am a compassionate person so this sounds like it would be good for people. I support it so I now feel good about myself. Actual results or impact does not matter as I had good intentions.
2) I know this will create more poor people as they have no way to enter the job market and learn new skills. This helps the Democrat party create the permanent underclass who will always vote Democrat. The impact is intended.
#1 is the ignorant and selfish useful idiots; #2 is evil.
Or, as the song goes: “Feelings; nothing more than feelings”.
Maybe they’ll finally get my order right.
Chick-fil-a and Starbucks have iPhone apps that work GREAT – your online order goes right into the work queue and you just pickup your order – so if there is a long line – you bypass it completely. Keeps your old order to re-order next time. Sorry union dopes – go find some other industry to destroy.
But these kiosks will generate jobs! Just think, someone is going to be needed to repair and service them. Sounds like an opportunity for H-1(B) foreign workers a’la Disney.
Scary. Just been having a “Terminator” festival.
Read an article a couple years ago. Some guy had a machine that would cook, put the lettuce and extras onto the burger along with a crispy bun. I think he said it could do 200 burgers an hour.
He was asked if it would save time for the employees and make their jobs a bit easier.
His response was he wanted to put them out of work.
I hope he’s looking at every job in seiu’s union with the same mindset.