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.
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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