Wendy’s (WEN) said that 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.
It will be up to franchisees whether to deploy the labor-saving technology, but Wendy’s President Todd Penegor did note that some franchise locations have been raising prices to offset wage hikes.
McDonald’s (MCD) has been testing self-service kiosks. But Wendy’s, which has been vocal about embracing labor-saving technology, is launching the biggest potential expansion.
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.
“We are seeing a bit of a softer overall category in April” relative to the past two quarters, Penegor said on an earnings call, implying more of an industrywide trend than an issue specific to Wendy’s.
Penegor said the reason for softer growth was hard to pinpoint, but he listed a cautious consumer, tougher spring weather in the Northeast, and a wider gap between the cost of food at home vs. food away from home as possible contributors.
In addition to self-order kiosks, the company is also getting ready to move beyond the testing phase with labor-saving mobile ordering and mobile payment available systemwide by the end of the year. Yum Brands and McDonald’s already have mobile ordering apps.
Carl’s Jr. Investing in Machines
The 100% automated restaurant, Eatsa, has inspired the CEO of Carl’s Jr.
The CEO of Carl’s Jr. and Hardee’s has visited the fully automated restaurant Eatsa — and it’s given him some ideas on how to deal with rising minimum wages.
“I want to try it,” CEO Andy Puzder told Business Insider of his automated restaurant plans. “We could have a restaurant that’s focused on all-natural products and is much like an Eatsa, where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”
“This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” says Puzder. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”
Zero Human Interaction Eatsa
A new restaurant chain called Eatsa is unlike any fast-food chain we’ve seen before.
The restaurant is almost fully automated, functioning like a vending machine that spits out freshly-prepared quinoa bowls.
When customers enter Eatsa, they order their food at an iPad kiosk.
Then they wait in front of a wall of glass cubbies, where their food will be appear when it’s ready.
Hidden behind the wall of cubbies, kitchen staff prepare the food.
State of Affairs
Fast food is not cheap. $15 minimum wages do not help.
It’s easy to dismiss Eatsa. It has 10 stores. But it’s the idea that’s important.
Wendy’s is adopting a similar model as best it can, en masse.
Department stores that have massively over-expanded will follow suit.
None of these trends bode well for store expansion or hiring. Layoffs are on the horizon.
Mike “Mish” Shedlock