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Wendy’s to Install 1,000 Kiosks to Lower Labor Costs

Wendy’s to Install 1,000 Kiosks to Lower Labor Costs

Pat yourselves on the back, Raise the Wage! crowd

As I’ve blogged before, I hardly think that forfeiting decent paying jobs to machines is what the Raise the Wage! crowd had in mind when they began demanding a ridiculous $15 an hour to flip burgers.

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.

Last year, Wendy’s indicated they were experimenting with self-ordering kiosks.

Recently, Wendy’s announced plans to install the robotic waiters in over 1,000 stores, or approximately 16% of their stores:

The Dublin-based burger giant started offering kiosks last year, and demand for the technology has been high from both customers and franchise owners.

“There is a huge amount of pull from (franchisees) in order to get them,” David Trimm, Wendy’s chief information officer, said last week during the company’s investors’ day.

“With the demand we are seeing … we can absolutely see our way to having 1,000 or more restaurants live with kiosks by the end of the year.”

Trimm said the kiosks accomplish two purposes: They give younger customers an ordering experience that they prefer, and they reduce labor costs.

A typical store would get three kiosks for about $15,000. Trimm estimated the payback on those machines would be less than two years, thanks to labor savings and increased sales. Customers still could order at the counter.

via GIPHY

In an industry where franchise owners see very little profit margin, the prospect of trimming labor costs is appealing. Especially when kiosks are running about $5,000 each.

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.

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Comments

A career in kiosk maintenance and repair seems like it might have a future.

The leftists had “good” intentions so they felt really good about the raising the minimum wage. The reality of harm is therefore notwithstanding. They only consider that one person might benefit. It matters not that thousands suffer due to the cost of that benefit.

    I’m not convinced they had good intentions at all. Maybe the “rank and file” leftist sheep that just bleat along behind their thought masters, but not the ones in charge…they’re not stupid, they can figure out basic economics.

    The left NEEDS people to be dependent on government in order to keep them rioting and screaming for ever expanding, ever more powerful bureaucracy.

    When enough people are dependent on the government for their very survival, it’s that much easier to control their votes by simply claiming that the evil “other party” wants to take away their”entitlements” and let them starve in the streets.

    What better way to create dependent people than to ensure that they can never get their foot in the door of employment opportunity; than to greatly reduce or eliminate the low skill, entry level positions that so many of us used as a starting point to build a work history and gain experience?

    I think they know exactly what they’re doing and what the results will be, they just don’t care about the well being of the low skilled, as long as it helps them get and maintain power.

This is a sure way of learning arithmetic,

(a) $15/hr * 0 hours = $0.00

(b) $10/hr * 40 hours = $400.00

“Now, class, which answer will put more money in your pocket,* (a) or (b)?

*Disregard the amounts that the greedy federal and state governments will force your employer, under threat of penalties to that employer, to remove from your pay before said employer pays over the net amount to you.

The folks who fought for $15.00 an hour wages for, basically, high school kids thought it was “fair”, as it gave them a “living wage”. It didn’t seem to occur to them that the majority of the fast food workers, still living at home, didn’t need that much money and that paying it would mean the restaurants would have to either raise prices drastically or cut costs somewhere. Since the first option would be economic suicide, cutting costs was the only viable option, and personnel costs were the place where cuts would be easiest to make. Now, a lot of kids have one less opportunity to gain experience in the business world, and make a little pocket money in the process.

Logical thinkers, which seem to be a rare commodity on the left, call this The Law of Unintended Consequences. Savvy economists call this the Theory of Duh!

If Wendy’s is going to have success with ordering kiosks, they need to look at a chain which is blowing the kiosk opportunity – Panera Bread.

The kiosks are there but no one is using them in my town. Like all new concepts, don’t assume that the customer, who wants to interact with the order-taker, is going to do anything differently without a push – maybe a price discount.

Americans endure post office service because the bureaucrats behind the counter don’t sell the automated machines in the lobby. Bank tellers are more pleasant than ATMs and are likely much dumber, but at least they know their boss’s name when asked.

The folks who have never been near an I-Pad are staying away from the Panera kiosk tables – me included. A really well-trained greeter could work wonders over the next year or so. But unlike those at Walmart and Meijers, smiles and speech must be a requirement.

    Loren in reply to gad-fly. | February 27, 2017 at 5:01 pm

    The Panera ipad is my go to order means now. Partially, since there is no line there and often the order taker has one. Partially because I can modify the order and see the impact it has on calories.

The principle of demand/supply does not register with the left. Reality seems to be optional.

Example: A man, wins a Gold Medal for Decathalon, marries, has several children, then, decades later, decides he is a female. He is rewarded with fame,fortune and considered for “woman” of the year and wins a national “courage” award. This is denying reality.

I’ve used a kiosk at McDonald’s. It spoke English, got my order right, and could make change. What’s not to like?

    Sanddog in reply to elliesmom. | February 27, 2017 at 9:46 pm

    I stopped by a McD’s in either Oklahoma or Arkansas that had the self serve kiosks. Just like the self checkout lines in the supermarkets, I’d be more interested if you got some kind of discount for performing part of the labor that’s already built into their prices.

I don’t think raising the minimum wage is a good idea. I like the kiosks.

But …

Raising the minimum wage is not causing these kiosks to appear. They would have appearedc anywaty. At most the speed the rate of deployment.

    4fun in reply to RodFC. | February 27, 2017 at 5:11 pm

    Correct. The only thing that’s really happening here is the kiosks might be coming out a little faster than they would have anyway.
    As far as learning to repair them, depending on their expected life and the speed of change in computers/electronics, the franchisee might just decide to upgrade every five or ten years rather than repair them.

    Of course Billy Gates thinks kiosks ought to pay the same taxes of the people who are replaced but that’s food for another day.

    great unknown in reply to RodFC. | February 27, 2017 at 5:15 pm

    There is a cost/benefit equation, where cost includes goodwill. If wages go to high, the investment in a kiosk becomes beneficial. If they stay low, the cost in terms of investment, maintenance, and goodwill is greater than the cost in terms of salary.

    The numbers are easy to crunch. The ability to properly evaluate goodwill is what distinguishes good corporate managers from incompetents.

What do you expect from the left, whose only exposure to economics is Marxism, and perhaps a dose of Keynes?

E.g., Philadelphia is shocked, shocked I tell you, that when it tacked an exorbitant tax onto soft drinks the merchants passed the tax on to costumers. That’s not fair, boo hoo.

And of course, that led to a drastic drop in demand for soft drinks, which is currently leading to massive layoffs in the production and distribution of soft drinks locally.

All because of those meany merchants.

    drastic drop in demand for soft drinks
    ******************
    not really, it led to a drop of them being purchased in the taxed area, other areas saw a rise in sales.
    same end effect though, locally businesses hurting and people still drinking the same amount of stuff.

    And stores just outside the city limits making a lot of sales. Before Coors was widely available people drove quite a distance to pick up some. Why, I’ll never be able to understand. My apologizes if you like Coors.

Gee, someone remind me, what’s $15 x 0?

    dunce1239 in reply to BrokeGopher. | February 28, 2017 at 1:13 am

    It is not just $15, it is with holding tax, social security, complying with labor laws, insurance, and much more as any franchise owner will tell you.

Hopefully the left doesn’t start protesting to make kiosks illegal leaving the nation in the stone age.

This is a proven old idea (automats) that can be updated with computer technology, for example a customer could order a basic hamburger or with cheese , onions, lettuce, tomato, mayonnaise or ketchup. A variety of hot soups could be offered.

DouglasJBender | February 28, 2017 at 1:15 am

But what about all the construction workers who have been earning, say, $10-$14 per hour? Their work is more demanding, and usually requires more skill, than fast-food work. So their wages should jump to $15-$19 per hour. But then all those construction workers who had been making $15 or more per hour will also want a $5 per hour raise as well. Why should it ever end? Just bump EVERYONE’S hourly rate by $5 per hour, and everyone will be happy, except the evil capitalistic overlords, of course. Down with economic reality!!

It is now politically incorrect to have low paying jobs, regardless of the skill level. We demand an end to the notion that unskilled untrained and not-so-smart workers earn less. Next we will demand that skilled educated workers earn less. Only then will we be a just, good nation, and resemble other good just nations like Cuba and Venezuela.

I’ve been using the kiosks at Panera’s for the better part of a year now. I sit in Starbucks and watch people who ordered online with an app walk in and pick up their waiting drinks. This is a trend fueled by liberal policies that won’t end. Soon the kiosks will have voice recognition and you won’t even have to swipe a screen. Thank you Mr. Obama.

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