Wendy's Plans To Automate 6,000 Restaurants With Self-Service Ordering Kiosks (investors.com)

An anonymous reader writes: In response to the rising minimum wage, the fast-food chain Wendy's plans to start automating all of its restaurants. The company said it will have self-service ordering kiosks available to its 6,000-plus restaurants in the second half of the year. Wendy's President Todd Penegor said it will be up to franchisees to decide whether or not to adopt the kiosks in their stores, noting that many franchise locations have had to raise prices to offset wage increases. California's decision to gradually raise the minimum wage to $15 by 2022 will impact Wendy's 258 restaurants, all of which are franchise-operated. About 75% of 200-plus Wendy's restaurants are run by franchisees in New York, a state that is also on its way to $15. Penegor said, wage pressures have been manageable both because of falling commodity prices and better operating leverage due to an increase in customer counts. The company is still "working so hard to find efficiencies" so it can deliver "a new QSR experience but at traditional QSR prices." The CEO of Carl's Jr., Andy Puzder, is also looking into replacing many of its workers with machines to save money.

Comments

How about replacing the CEO with a machine

[Anonymous Coward]

That would get the biggest savings of them all.

Re:How about replacing the CEO with a machine

[bobstreo]

Just make it a chatbot that responds to key terms "bacon" or "cheese" with "yes, more please" and you've got a winner!

I think you meant "Leverage Synergies" "Core Competencies" "Stockholder Value" "You should be happy to just have a job here"

Re: How about replacing the CEO with a machine

[avatar avatar]

Actually, people do have the right to tell others what to think. At least, as much right as you have to tell them to "FUCK OFF AND DIE!!!111" Funny you managed to miss that, during an election of all times.

Re: How about replacing the CEO with a machine

[Time_Ngler]

How about everyone who wants basic income all get together and make it happen? There is nothing stopping you all from pooling your money together, and letting the ones that don't want to work live off the humongous surplus of cash your system is bound to create. I mean if basic income is feasible, that is.

Re:How about replacing the CEO with a machine

[jcr]

You have no right to tell others what they should think is right.

Sure you do. You can tell others anything you want to tell them. What you don't have the right to do is force them to comply.

-jcr

Re:How about replacing the CEO with a machine

[Anonymous Coward]

What you don't have the right to do is force them to comply.

But it is perfectly acceptable to elect officials to carry out that task for us, to force others to comply. Right?

Well, that is WHY Wendy's does have to comply with the health code, yes.

It'd be easier for them if they didn't, but they do.

Re: How about replacing the CEO with a machine

[operagost]

Hopefully you were being sarcastic, because that's the point. If a bunch of people want to live together voluntarily and pool their resources (like the early Christians or the Hutterites) only a fool could protest their free exercise of liberty. But socialism as a political system requires high levels of taking at the barrel of a gun.

Re: How about replacing the CEO with a machine

[Anonymous Coward]

But socialism as a political system requires high levels of taking at the barrel of a gun.

As the taxation systems of all government types are enforced by their armed police forces, your statement is completely content-free. Do you have a point to make?

Re: How about replacing the CEO with a machine

[JonnyCalcutta]

Every political system requires taking at the barrel of a gun.

At the end of the day, that's the ultimate authority behind any political system - if you don't follow the rules someone has the means to force you. Every capitalist transaction is finally backed up with a gun. Don't pay, we'll sue you / arrest you. Refuse to be arrested we'll shoot you.

Re:How about replacing the CEO with a machine

[mlts]

I would throw the concept of Mazlow's Pyramid into this. If basic food and security are not present, you will not get much from people in the way of advances. By a guarenteed basic income, which would let people focus on other things than trying to eke enough for food, it would allow people to spend time doing research, making stuff, designing cooler items, and advancing the arts and sciences in general. The Renaissance is an object lesson to this, when people had time to do something other than toil in the fields.

It sounds "cool" to tell people to just go eat cake, but that philosophy has its blowback. Look at how the US has stagnated, while countries that guarantee some means of knowing where one's next meal is coming from are advancing. A population that is barely existing is not a population that is inventing and advancing science.

Re:How about replacing the CEO with a machine

[bondsbw]

I dunno if my outlook is so screwed up or what, but it seems to me that trying to put as many Americans as possible out of work - or at least have them work for as little as possible, just isn't sound business strategy, especially for substandard eateries like Wendy's, who don't exactly cater to the wealthy.

The employees for a Wendy's location make up probably less than 1% of the local population. Probably less than 10% of the general population frequent that restaurant regularly, but employees get half-price meals all the time so they are even less likely than the average person to pay full price for a meal from Wendy's. The impact to revenue is therefore almost non-existent, so any payroll impact is likely to have a much larger effect on net profits.

Granted, once most everybody fires low-wage employees, this will become the problem you describe. But employee wages drive pricing, and if your burgers cost a dollar or two more than the equivalent burgers next door, you lose customers... just as if your burgers cost less, you gain customers. The good guy loses.

It is a problem, it is an inevitable problem, but doing the "right thing" isn't really a viable solution. The good guy will go out of business. The solution has to come elsewhere.

Re:How about replacing the CEO with a machine

[MachineShedFred]

You have the general premise wrong.

He's not telling them they are making too much money. He's telling them that due to outside regulation, keeping them around is more expensive than automating the job. You even nailed the 'why' when you said that Wendy's doesn't exactly cater to the wealthy - they need to keep the average selling price down, so they can continue to exist.

What we are seeing is the inevitable consequence of increases in levels of technology, and outside regulation forcing wages up on jobs that have traditionally not been viewed as a career position, but rather a stepping stone for someone starting out in the labor market. The company is going to do what is necessary to keep sales up and expenses down, and some governmental entity just made automation cheaper than people. The consequence of that shift is that those people are free to look for higher paying opportunities elsewhere.

The upside: we've had self check-out in supermarkets for some time now, and there's still plenty of standard check lanes open any time I go to the store, because that shitty scan robot isn't fast enough for anything but a few items, and doesn't give a level of customer service that you can get from another person. The market will decide which model it likes better - a computer that you place your own order on and then use SamdroidplePay, or talking to a person who can be friendly and courteous at the going regulated market wage, and not enraging if you have the gall to pay with cash, because we still haven't figured out a machine that accepts cash properly.

TL;DR: All of this has happened before, and it will all happen again. Are you similarly pissed off that your car wasn't hand-welded together by some guy named Burt that is still staggering around from pounding cans of Pabst the night before?

Re:How about replacing the CEO with a machine

[Hognoxious]

You do realize that those companies are themselves likely paying FAR more taxes than you towards paying for those police forces and the justice system?

If that's true they need to get better accountants.

Re: How about replacing the CEO with a machine

[PopeRatzo]

But socialism as a political system requires high levels of taking at the barrel of a gun.

You're a drama queen. I was in Finland last summer, and I didn't see any "high levels of taking at the barrel of a gun".

When mentioning "socialism", why do people like you immediately jump to North Korea or Mao's Great Leap Forward without acknowledging that there are socialist countries that have better outcomes, more economic and social mobility, greater liberty and more stable economies than anything that capitalism has ever produced?

Re: How about replacing the CEO with a machine

[Grishnakh]

Capitalist transactions only work because of the threat of violence. Otherwise, what's to stop me from just promising to give you money (or some other item in trade) for your item, and then taking the item and refusing to hand over the money? Social systems like this only work because there's a governmental system that ends up resulting in violent force if you don't play by the rules. Otherwise you'd have anarchy.

It's weird how libertarians are so dense that they can't understand this. They're a lot like the ultra-naÃve loony-left people who think that everyone is just going to behave and play nice because it's human nature, if only you just reason with them and plead with them. It's not.

Re: How about replacing the CEO with a machine

[PopeRatzo]

Why do people try to claim that countries like Finland are not capitalist? Nokia is not a "socialist" company,

Your question should be, "Why do people say that capitalism/socialism is a binary, one-or-the-other choice?"

This happens every time socialism is mentioned around here. People try to argue that you can either have socialism or capitalism, but not both, when there are very successful countries that have found a way for the two to co-exist and work together.

Re:How about replacing the CEO with a machine

[alexgieg]

Basic income is a concept created by people that want to stifle capitalism and devalue education and personal initiative to better one's self.

Er... not really. Some of its advocates are famous libertarians, such as Friedrich Hayek. And if there is one thing one can never say about libertarians is that they want to stifle capitalism.

The thing is, the worst for capitalism, far worse than taxes, is all the interference by big government itself, and basic income works against this. It allows us to downsize and dismantle entire governmental sectors by simply giving the money that would have gone into them directly to the people, who in turn would use it by purchasing from capitalist companies. Additionally, as more and more of those governmental bodies were dismantled, we could start transferring to the people part of the taxes that went into them, thus also lowering taxes overall. In the end, you get a small government, more freedom, and a functioning society that, while still relying on money from taxes, does it in a most definitely "non-welfarian-statist" manner. Also, less crime, because those who want to use cocaine, crack, heroin or whatever will have the money to engage in that and will be able to do so at home in a manner that would be safe for most everyone.

There's no practical downside to this proposal. It diminishes government, it lowers taxes, it lowers crime, it incentives business, it provides welfare without being actual big government-style welfare, and it requires just a small chunk of all the surplus generated by an exponentially-growing economy. In fact, wealth for those who work will continue expanding exponentially, just a little less exponentially than it might otherwise. It's cheap, and it's effective.

Disgustng

[Anonymous Coward]

America is shedding jobs at an epic rate so that the rich can get slightly richer. The only reason these corps "can't afford" a higher minimum wage is because they need to protect their obscene profits. We're all in this together and we're all headed to the same grave. Let's try helping each other out instead of seeing who can amass the biggest pile of cash at the expense of other people. A revolution is brewing.

Re:Disgustng

[butzwonker]

Stephen Hawking has warned about that trend recently on reddit.

Have you thought of “technological unemployment,” where machines take all our jobs?

The outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.

I agree with him. The second option seems more likely.

Re:Disgustng

[bickerdyke]

However: I do agree that increasing automation will cause large social problems,

It's not the automation per se that causes the problems.

it's more the fact that we insist that people somehow "work" in exchange for goods, services and housing, but less and less of that work is needed to provide goods, services and housing, thanks to automation.

Re:Disgustng

[jbmartin6]

If everyone is miserably poor there isn't much value in owning a bunch of machines to make things for them.

Re:Disgustng

[swb]

I would think we would be at the point where the HENRYs -- high earners, not rich yet, people like the highly educated professional class and SMB owners, people with a high income and wealth accumulation potential, but still needing to work due to lack of sufficient wealth accumulation -- would be starting to feel some kind of collective fear for their own status.

The working classes have largely been strip-mined for their wealth, the middle classes nearly so, and the next class on the radar screen has to be the HENRYs. There's an awful lot of income still flowing into that class that must look pretty tempting once the middle class has been finished off.

While they remain politically influential by virtue of their income and education, they probably suffer from some identity confusion, believing that their high income gives them a social status equal to the very rich, leading them to believe their interests are aligned. Really, an economic version of the false affiliation working class whites believed they had with Republicans who used social issues as a diversion while stripping them of wealth and income.

When in fact, it would seem that once the wealth accumulators no longer find sufficient wealth to strip from the middle class, they will target the "inefficiencies" of high income earners as their next source of wealth addition.

I would expect that if the HENRYs ever get sufficiently stripped of income and wealth, that the truly wealthy would just start to feed on each other.

Just another CEO mouthing off...

[damn_registrars]

This sounds like nothing but another CEO running his mouth on his new favorite matter - and showing in the process how uninformed he actually is. We saw the same thing with Subway and Papa John's CEOs telling us how the Affordable Care Act was going to bring the sky crashing down on their empires, yet both are doing just fine.

To tell us how much a raise in minimum wage will impact the actual cost of doing business - and the cost of the product - they need to open up about two things in particular that they skilfully danced around in this article:

• How much are they actually paying their employees currently? They mentioned that they already had to raise their wages to get better workers. How much of a raise is $15 over the current rate?
• How much of the cost of the product is actually labor? This one is a big - and difficult - one to answer. A lot of corporate types like to live in the fantasy where doubling a worker's salary means everything they make or do is now twice as expensive, but we know that is not the case. For a fast food place, you need to consider the cost of the materials going in to the product, the cost of paying for and maintaining the building (with its utilities, parking lot, and everything else), etc. The human cost of their product is likely 10-20% at most.

Sure, the wage increase has a cost. What we don't know - and I would argue the people interviewed in this story don't know either - is how large is that cost. Will it actually be offset by replacing more workers with kiosks and robots, or is this just a ploy from the top?

Re:Just another CEO mouthing off...

[skam240]

It's exactly double that by most measurements I've seen. So companies will have to raise prices? There will be more people able to afford them which will only help their bottom line. Henry Ford acted with a great bit of social responsibility by paying his employees enough to where they could afford one of his cars. The least a fast food place could do is pay its employees enough to afford one of its shitty meals.

Re:Just another CEO mouthing off...

[Anonymous Coward]

You obviously don't know how these companies run. Most of this affects franchise owners not big parent companies. People who buy into a brand and have a few stores. Maybe even just one or two. They have to pay the parent company a percent of gross earnings and the rest they get to apply to costs such as labor, maintenance, inventory. All the variables the parent company doesn't absorb. Not to mention the small independent business owner without brand support who is on their own. In the restaurant business labor is a significant factor in costs. Don't fool yourself into thinking this will ever affect the people at a parent company.
No, this affects small business owners.

Re:Just another CEO mouthing off...

[AchilleTalon]

And you missed that minimum wage increase drive wage increase for almost any other job. To afford the increase in price of the products made with labor paid at the minimum wage everyone else will eventually get a salary increase over a period of a few years. After that, the current situation you tried addressing by increasing the minimum wage will still prevail. At the end, it will not solve anything. All the prices of goods and services will be driven up in order to pay for increased salaries.

Re:Just another CEO mouthing off...

[damn_registrars]

We saw the same thing with Subway and Papa John's CEOs telling us how the Affordable Care Act was going to bring the sky crashing down on their empires, yet both are doing just fine.

Subway is not, actually...

I don't know what planet you live on, but here on planet earth Subway overtook McDonald's some time ago as the fast food chain with the largest number of locations world wide. They are continuing to open new locations - in the US and around the world - at a much faster clip than McDonald's as well. Even with most of their locations franchises, how would they be able to keep opening so many new restaurants if they were not doing well? They would have a hard time convincing franchisees to put down the capital to open a new location if they were doing poorly.

How much of the cost of the product is actually labor? This one is a big - and difficult - one to answer.

No it isn't... labor is generally just as expensive, if not more expensive than the cost of the food...

You're only looking at part of the equation. Sure, you can say you pay an employee $X per hour and that they can make Y sandwiches per hour. You can say that the raw materials in each sandwich is $B. What you can't as easily predict though is how much you will pay to keep the lights on, or how much it will cost to maintain the equipment in the restaurant. You can't predict how much your parking lot will cost you or when your landlord (if you are in a shopping mall and don't own your property) will raise your rent. They also cannot always predict what the franchise fee will be any given year. These restaurants have only one source of income - the food they sell. They have to cover all their costs through that.

A lot of corporate types like to live in the fantasy where doubling a worker's salary means everything they make or do is now twice as expensive, but we know that is not the case.

No one believes that who runs a food business

And how often do CEOs actually come from within the industry? There is always pressure from the board to bring in outside executives, which leads to blowhards like this guy.

but it will cause overhead to rise about 16%, give or take, for most such places.

16% isn't that much for fast food, really. A $2 sandwich goes up by about $.30, that really isn't that much. People don't flinch at that kind of price fluctuation on gasoline any more, why would they change their habits on food over it?

Re:Just another CEO mouthing off...

[angel'o'sphere]

Basic economics says you can't really create a minimum wage without creating lots of inflation
Then you should go back to school.
Inflation only comes from a few base interest factors handled by the central bank, or by the amount of "new printed money" (which no one does any more as using the base interest are more effective). It has nothing at all to do with wages.

Re:Liberal Solution: Outlaw Automation

[skam240]

You're an idiot.

"Ideology I don't like will advocate something dumb because of course they will because I'm on the other team". Then "it's a race issue cause I want it to be"

The only loophole here is that the "idiot branch" of conservatism gives you a loophole to feel insightful.

Capitalism does capitalism things

[GeekWithAKnife]

If you were in a mega corporation at C level wouldn't you complain about how anything negative to your business would ruin it?

Wouldn't you try your best to stall any change that ends up causing you to have less profits (even a minuscule reduction) until you implement a process that circumvents the more expensive method?

Minimum wage will drive your business to the ground...like when uhm minimum wage was first introduced?

Otherwise wasn't the future of burger flippers always to be replaced by automation? -we'll only need minimal supervision of a human that can also greet customers should they care for a smiley service person.

Those C-level folk are disconnected from the reality of everyday people. It's all about profit margins, quarterly statements, shareholder meetings, bonuses and so on. It's not about how their business will crash and burn supposedly affecting their poor employees, it's about earning a single cent than they did before and fuck everyone else.

Re: Half arsed

[pellik]

You are assuming that there are other jobs for these people to find. Automation will out-pace job growth at some point. What do we do when there are only 80% as many jobs as people? When there are only 10% as many jobs as people? There is only so much trash to pick up.

Re:Predictable and self-inflicted

[silanea]

Firstly, deduct expenses (health insurance, housing etc.) and that $31k will melt away like a snowball in an oven.

Secondly, the fact that we pay many professions insultingly low wages is not an argument against paying burger-flippers $15 an hour. It is an argument for paying other undervalued professions more.

Thirdly, whether someone spends 40 hours a week transplanting hearts, laying bricks, nursing the elderly or flipping burgers, none of those is a leisurely stroll in the park. Anyone working a full-time job deserves to be able to afford a modest standard of living in my book. Otherwise, what is the point?

Re: Half arsed

[DigiShaman]

Civil unrest and war. When you have robotics and AI that render people functionally obsolete on a planet with 7.4 BILLION people, there's only this logical conclusion. It's what will happen when one group of people don't want to support an endless growth of people that consume vs produce to their benefit. This is not my position of course; I'm a Christian. I'm just simply telling you what will occur based on human nature. Question is, once super AI sees our destructive nature on full display (World War 3), I can only conclude that the future of our species will be planned for permanent exit from the evolutionary tree of life. God help us all.

Enjoy your extra big ass fries.

[toonces33]

In the movie it was Carl's Junior, but Wendys seems to want to get there first.

This is good to stop paying welfare

[WindBourne]

Right now, large number of ppl on Food stamps and other forms of gov subsistence are actually working 40 or more hours / week. Problem is, that America's minimum wage has not kept pace with inflation. So now, we already pay out to ppl who work at Target, McDonald's, burger King, Walmart Sam's club, and yes Wendy's. With this, many ppl will be laid off, but if they buy American made equipment, they can point to providing better jobs. And if America will deal with the illegal alien issue, and send home those that have no families here, or whose families are nothing but drains on society, then we open many lower end jobs.