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Will Efforts to Increase the Minimum Wage Accelerate Automation by Fast Food Franchisors?

by Ed Teixeira

Learn what the franchise fast food sector is doing to control labor costs through automation

As an increasing number of states and cities move towards minimum wage increases that especially target large franchise systems in the QSR sector, these efforts could lead to increased labor saving technologies in franchise locations.

Fueled by pressure from organized labor and progressive activitists, politicians are being moved to action. Recent minimum wage increases to $15 in Seattle, Washington and Los Angeles, California, have been enacted. New York State is attempting to implement a $15 minimum wage for fast food workers by-passing the state legislature and using the New York State Wage Board.

A bill is being considered in Hartford, Connecticut that includes a fine of $1 an hour for every worker on the job who's earning less than $15. It's reported that approximately 150,000 workers at big companies are estimated to be taking in less than $15 an hour, some of them are earning the state's minimum wage of $9.15, according to WCBS 880 Connecticut Bureau Chief Fran Schneidau.

There is little doubt that more politicians will jump on the minimum wage increase bandwagon in a response to pressure from organized labor and to possibly curry favor with voters.

From a franchisor standpoint, QSR magazine reported that White Castle added two touch-screen ordering kiosks at a renovated restaurant in Columbus, Ohio part of a pilot project. The large screens allow customers to order their burgers exactly as they like them. The Wall Street Journal reported in an October, 2014 article that McDonald's plans to introduce new technology in some markets around the third quarter of 2015. The plan is to implement new technology in certain markets whereby customers could order digitally and also customize their orders. In other news, Panera Bread is the most recent chain to introduce automated service and announced that it has a goal to bring self-service ordering kiosks to all its locations within the next three years. This is similar to Chili's and Applebee's placing tablets on their tables, which allow customers to order and pay without any interaction with human staff. Although, claims it isn't planning job cuts as a result of the technology, certain analysts see this strategy as a necessity for the industry.

In a recent study, the University of Oxford estimated that there is a 92% chance that fast-food preparation and serving will be automated in the coming decades. With artificial-intelligence technology making strides in advanced reasoning and language robots could be designed to provide more sophisticated interactions with restaurant customers than kiosks can manage. The study stated there are start-ups offering robots for gourmet hamburger preparation and a food processing company in Spain uses robots to inspect heads of lettuce on a conveyor belt, throwing out those that don't meet company standards. Darren Tristano, a food industry expert with the research firm Technomic, said digital technology will "slowly, over time, create efficiency and labor savings" for restaurants. He guessed that work forces would only drop as a result by 5% or 10% at a maximum in the decades to come."

We can assume that efforts to introduce more technology into the fast food or QSR sector is inevitable, however, given the intensity on the part of some factions to increase minimum wages by a substantial amount, automation efforts by fast food chains will most likely accelerate.

 

2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com

 

 

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