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Wendy’s Kiosks: Is This Really About Minimum Wage Hike?

At first glance, Wendy’s is deploying self-service kiosks and other automated IT systems to combat labor costs and the rising minimum wage. But take a closer look and consider the true reality: Even if minimum wages don’t rise, Wendy’s and its rivals would be exploring — and frequently rolling out — these automation technologies.

The U.S. fast food industry employs about 3.7 million people, according to Statista. Most eyes are on the minimum wage war between those employees and the fast food giants/franchise owners. Wendy’s says “self-service ordering kiosks will be made available across its 6,000-plus restaurants in the second half of the year as minimum wage hikes and a tight labor market push up wages,” according to Investors Business Daily.

Frankly, I think the wage debate provides a “convenient” excuse for Wendy’s locations to accelerate the potential kiosk deployments.

kfc-self-order-kiosk-1Hypothetically speaking, let’s say wages hold steady. Even in that scenario, fine dining restaurants in the U.S. have a 66% annual employee turnover rate, while fast food restaurants have been averaging a whopping 145% turnover rate in recent years, People Report says.

Now, let’s assume you own the fast food franchise.

  • Do you continue to hire and train an entirely new staff at least once per year?
  • Or do you embrace self-service kiosks to reduce your workforce — and labor turnover?

Fact is, we increasingly live in a self-service world. Touch screens, digital signage and customer-facing point-of-sale systems (PoS) systems are the norm. In many cases, a “great customer experience” no longer requires human interaction.

Sure, fast food restaurants still need cooks and other food preparation workers. But order taking? Point, click, goodbye employees.

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6 Comments

Comments

    Rob Leon:

    I’ve used these at several fast food places including Arby’s and McDonald’s. When they’re working it’s a pretty quick way to get some food without having to deal with a less than average order taker.

    Dave Cava:

    It’s widely accepted that service jobs and retail jobs are rapidly evaporating. We live in the day of self serve kiosks, red light cameras, and online shopping, and the trends towards these kinds of things will continue for quite a while. I read a great article in the Economist a couple of years ago that compared our age to the time of the Luddites. They destroyed all the looms that were automating their work and taking their jobs. Tech advancement is not the enemy. It always ushers in new levels of efficiency and prosperity. What is the enemy is educational systems that make no attempt to adjust to societal changes or the job market and unions that focus on perpetuating jobs that would not exist in a truly competitive marketplace. They need to focus on lifetime employ-ability rather than lifetime employment. Ultimately technology will make everyone’s lives better, but it may take decades for those service jobs to be replaced with other desirable jobs, not because the jobs don’t exist today, but because those “service employees” are ill equipped to do them. Things like raising the minimum wage can certainly lead to more overseas outsourcing and the quickening of the pace of automating certain jobs – the fact is businesses are generally going to do what makes them the most money.

    Joe Panettieri:

    Rob: “When they’re working…” <-- I suspect the reliability rates are quite high but I haven't seen stats. Checking for them now. Dave: "...the fact is businesses are generally going to do what makes them the most money." <-- You summarized the article in a sentence or less. -jp

    Greg VanDeWalker:

    When I go to Wendy’s my expectation is to be treated like I’m going to Wendy’s and not the Ritz. When I think Wendy’s I think…fast food. To me the question to ask is “Does the kiosk make the fast food experience faster?

    My guess is yes.

    Steve Thom:

    It might seem cruel, but it is their fiduciary responsibility to the shareholders to make as much money as they can. If it fails and the customers don’t embrace it, then they’ll have to switch back.

    Joe Panettieri:

    Hey Greg: Looks like you and I like to wait in the same (rapidly moving) lines.

    Hey Steve: You’re absolutely right. But I think some critics believe the pursuit of earnings-per-share and automation means employees always have to lose. That simply isn’t true. CostCo is a shining example of a heavily automated business that pays good wages and retains employees. Not sure if there’s a similar example in fast food…
    -jp

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