Wendy’s 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 has been testing self-service kiosks. But Wendy’s, which has been vocal about embracing labor-saving technology, is launching the biggest potential expansion.
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.
That nearly doubles the labor costs, you know. And a restaurant is nota high margin business so I wonder how many of them will go out of business because they can’t afford Liberalism??
Wendy’s plans to cut company-owned stores to just 5% of the total.
Still, Penegor said that increased customer counts more than price hikes drove the chain’s 3.6% same-store sales increase in the first quarter.
Although profit exceeded Wall Street estimates, Wendy’s shares dived nearly 9% Wednesday because of weak second-quarter sales.
“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.
While Wendy’s management was upbeat about company prospects, noting that it just experienced its first year with a net increase in restaurants since 2010, its downbeat comments about sector growth were contagious. McDonald’s eased 1.7% after touching a new record high on Tuesday. Yum Brands , which owns Taco Bell, Pizza Hut and KFC, slipped 2.6% and Restaurant Brands International fell 3.4%.
For now, Penegor said, wage pressures have been manageable both because of falling commodity prices and better operating leverage due to an increase in customer counts. Still, the company is wary about both wage hikes and a possible recovery in commodity prices and is “working so hard to find efficiencies” so it can deliver “a new QSR experience but at traditional QSR prices.”
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.
Kiosks, of course, do the job of a human at the cost of $0 per hour.
Automation is coming, and it’s going to be at the cost of low-skilled workers–and not just the ones at Wendy’s. McDonald’s is also considering using kiosks, and self-checkout lines are common at grocery stores across the country. Minimum wage laws create an artificial price floor that hurts workers more than it helps.
But “victim” laden greedy Liberals and their Power mad Politicos won’t listen to basic economics. They have baser desires in mind.
And when the jobs go away, it won’t be there fault. It will be big bad “Corporate America”. Mind you, as it said most of the Wendy’s are FRANCHISE operations, meaning they are a SMALL BUSINESS owned by an entrepreneur not a massive corporation. So you’re hurting the small business guy by doubling his labor costs!