Minimum Wage Massacre: Wendy's Unleashes 1,000 Robots To Counter Higher Labor Costs
Minimum Wage Massacre: Wendy's
Unleashes 1,000 Robots To Counter Higher Labor Costs
by Tyler Durden Feb 28, 2017 5:05 AM
In
yet another awkwardly rational response
to government intervention in deciding what's "fair", the blowback from minimum wage
demanding fast food workers has struck again. Wendy's plans to
install self-ordering kiosks in 1,000 of its stores - 16% of its locations nationwide.
"Last
year was tough — 5 percent wage inflation," said Bob Wright, Wendy's chief
operating officer, during his presentation
to investors and analysts last week. He added that the company expects wages to
rise 4 percent in 2017. "But the real question is what are we doing about
it?"
Wright noted that over
the past two years, Wendy's has figured out how to eliminate 31
hours of labor per week from its restaurants and is now working to use
technology, such as kiosks, to increase efficiency.
Wendy's
chief information officer, David Trimm, said the kiosks are intended to appeal to younger customers and
reduce labor costs. Kiosks also allow customers of the fast
food giant to circumvent long lines during peak dining hours while increasing
kitchen production.
As Dispatch.com reports, the
Dublin-based burger giant started offering kiosks last year, and demand for the
technology has been high from both customers and franchise owners.
"There
is a huge amount of pull from (franchisees) in order to get them," David Trimm, Wendy's
chief information officer, said last week during the company's investors' day.
"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."
A typical store would get three kiosks for about
$15,000. Trimm estimated the payback on those machines
would be less than two years, thanks to labor savings and increased sales. Customers still
could order at the counter.
Kiosks
are where the industry is headed, but Wendy's is ahead of the curve, said
Darren Tristano, vice president with Technomic, a food-service research and
consulting firm.
"They
are looking to improve their automation and their labor costs, and this is a
good way to do it," he said.
Who
could have seen that coming? As we noted previously, minimum wage laws - while
advertised under the banner of social justice - do not live up to the claims
made by those who tout them. They do not lift low wage earners to a
so-called “social minimum”. Indeed, minimum wage laws — imposed at the levels
employed in Europe — push a considerable number of people into unemployment.
And, unless those newly unemployed qualify for government assistance (read:
welfare), they will sink below, or further below, the social minimum.
As
Nobelist Milton Friedman correctly quipped, “A minimum wage law is, in reality, a law that
makes it illegal for an employer to hire a person with limited skills.”
Despite the piling up
mountain of evidence on the harmful "unintended consequences" of
artificially high minimum wages, we suspect we already know how this story
ends. After all, it's much easier to win elections by promising people
more stuff rather than less. And, as an added bonus, when it all goes
horribly wrong it's very easy to lame the blame at the feet of the wealthy
1%'ers who are behind all the layoffs. Checkmate.
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