Wendy’s to Lay Off All Cashiers, Autonomize 6,000+ Locations to Fight Wage Increases

The unintended consequences of raising the minimum wage are already beginning to take hold on several industries nationwide. In one of the most public moves combating wage increases to date, Wendy’s fast food chain has announced plans to automatize cashiers at over 6,000 facilities nationwide by the end of 2016.

Company CEO Emil Brolick hinted last August that the franchise might do just this. At the time Wendy’s was debating laying off employees in favor autonomization, or increasing the prices on their menu. As Emil Brolick stated “our franchisees will likely look at the opportunity to reduce overall staff, look at the opportunity to certainly reduce hours and any other cost reduction opportunities, not just price. You know there are some people out there who naively say that these wages can simply be passed along in terms of price increases. I don’t think that the average franchisee believes that.”

Wendy’s CFO Todd Penegor went on to add “We continue to look at initiatives and how we work to offset any impacts of future wage inflation through technology initiatives, whether that’s customer self-order kiosks, whether that’s automating more in the back of the house in the restaurant. You’ll see a lot more coming on that front later this year from us.”

Indeed they will. In an interview with Business Daily, Wendy’s representatives noted how the company’s 258 restaurants in California were struggling to keep up with the $10/hr wage demands, and similarly, the company’s 200+ franchises in New York simply cant keep up with the cost of wage inflation. Last month these two states voted to impose a minimum wage increase to 15$ statewide – going into effect within the next several years.

This legislation, along with the growing support for “the fight for $15$” nationwide, was the deciding factor. Wendy’s will now phase out cashiers at every location nationwide, in favor of self serve kiosks. The company also claims they will move forward with mobile phone ordering and mobile payment systems, which the company has been testing for the last several years.

Before you go calling Wendy’s just another evil corporation, here are some real world statistics to consider – imagine you are owner of a Wendy’s.  Wendy’s makes a profit of $120 million dollars per year and employs 37,000 employees. This means if each employee worked 2,000 hours per year (38 hours a week), with a 1.62$ increase for each employee, the company would loose all $120 million in profits and break even.  Again, this is with a small wage increase of 1.62$, never mind all the way up to 15$.  At 15$/hr the company would bankrupt themselves.

This is the problem of raising a minimum wage and a perfect example of the harm wage increases can cause to the work force, corporations and the economy all at the same time.

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.

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.

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.

10 Comments

  1. LOL. How’d that walkout for $15 an hour work for you?

  2. Thanks to obama! Wage increase, obama-care…………right out of your jobs!!! Have you seen what a third world life is like? THAT’S what obama and clinton have in store for America………so, WHO are you going to vote for????

    1. you really shouldn’t be allowed to vote if you think this has anything to do with obama, vs reality. That reality is we live in a world where corporations only care about the bottom line and as technology continues to innovate, more and more jobs will be automated. Problem is, this country is like 50% service employee’s, so when service field is mostly automated, what the hell are they going to do then?

  3. it might look good on paper now , but the reality is that the machines will wear out as did the cash registers they are replacing. yes, that’s right they aren’t really replacing the humans, just the cash machines of 1999! And then, there will become a need for register technicians. which are Humans. hello!! Trade schools are you listening!!

  4. They are letting machines take over the personal touch of the restaurant business–what happens when the power goes out of one of the machines goes haywire? You cannot complain to a machine–Wendy’s has lost the business I would have given to them.

  5. I have another spin on it. If I could have taken the most productive employees I had while at McDonalds ( you know the ones that show up everyday and with the right attitude) I could have operated with half the workforce. Those employees would probably be making $15 an hour. If you are not in this industry you have no idea how the system works.

  6. I will no longer shop at Wendy’s beginning now. I have bought breakfast there most mornings before I retired last year and have always enjoyed the hamburgers. I will miss them. I hope many others do the same. When management does not value the hard work of their employees their businesses should fail.

  7. Anyone who supported the minimum wage increase and didn’t see this coming….what were you thinking?

  8. Awesome! Wendy’s will get all my business now.

  9. So for those who say they are going to boycott Wendy’s, did you not read the article? if they do not take action, they will wind up bankrupt. Everyone loses their job.

    You are correct in that a business is there to make MONEY, not to make you feel good about giving some kid a job. They are not getting rid of everyone, so if you have a complaint you can take it to them. It will be just like WAWA, in a way, or any grocery self-checkout.

    Fast food is not meant to be a career, nor be a living wage (unless you progress to management). It is so young people can learn job skills, like how to take direction from a supervisor, show up on time for your shift, etc. If your only skill in life is how to drop fries, you should perhaps reassess yourself.

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