The “Fight for $15” is less of a fight for a higher minimum wage than a fight for higher unemployment. This isn’t an opinion so much as it’s hard economic fact. And Wendy’s just proved it yet again.
According to the New York Post, the fast food giant announced Monday that it would be adding “self-ordering” kiosks to 1,000 locations across the nation to reduce labor costs.
While it’s worth pointing out that the “self-ordering” term used by most media to describe the move is a misnomer (the machines are hardly ordering themselves, all) the implications were clear: Labor costs are getting higher thanks to a number of states and localities hiking the minimum wage, and replacing workers with kiosks is a good move.
“There is a huge amount of pull from (franchisees) in order to get them,” Wendy’s chief information officer, David Trimm, told investors last week. “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.”
The Columbus Dispatch reported that Trimm said the rationale behind the move was lower labor costs and the fact that younger customers actually prefer kiosks.
“They are looking to improve their automation and their labor costs, and this is a good way to do it,” said Darren Tristano, vice president of foodservice research firm Technomic. “They are also trying to enhance the customer experience. Younger customers prefer to use a kiosk.”
Three self-service booths would cost the firm about $15,000, and the labor savings would mean the machines would easily pay for themselves in two years. Franchisees won’t be required to install them, and customers who want to speak to a human to order would still have that option.
It’s easy to see why Wendy’s would want to go this route; labor costs are expected to grow by 4 percent in 2017, while same-store growth is set to be in the range of 2 to 3 percent. The obvious solution here is to cut labor costs, and the easiest way to do that is to cut artificially expensive labor out as much as possible.
To paraphrase the Hives, hate to say we told you so, but I do believe we told you so.
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