Wendy's to replace workers with kiosks

Well, it's finally happening! Economics 101 folks. People in the fast food industry have been demanding for a wage increase for a while now. Government has finally responded by mandating a $15 wage (NY and CA).

This is Wendy's response to that:

https://www.washingtontimes.com/news/2016/may/12/wendys-expand-self-service-kiosks-amid-wage-hikes/

Thoughts?

I highly doubt an international franchise like Wendy's was hit that hard by a mandatory minimum wage increase. A small cut to the veritable fucktonne of profit the company makes does not justify doing to people what the minimum wage increase was meant to prevent (people who can't afford to live).

gimmepie said:

I highly doubt an international franchise like Wendy's was hit that hard by a mandatory minimum wage increase. A small cut to the veritable ****tonne of profit the company makes does not justify doing to people what the minimum wage increase was meant to prevent (people who can't afford to live).

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Each Wendy's is individually run as a franchise. As a business owner, I agree with this tactic. Believe me, I would love to pay my workers more for a better quality of life but I wouldn't be able to just "magically" change the numbers to offset the cost.

Let's say on a monthly basis, after paying off inventory and other business expenses, you're left with $100 (Using small numbers). I am paying each worker $10. So I have enough to employ 10 workers. But then suddenly, I'm being forced to up the pay to $20.. With a heavy heart I would have to let go of 5 employees to keep things running smoothly. Let's suppose I didn't want to let go of anyone. Then I'd have to make adjustments somewhere else like food prices or sacrifice another part of my business. Either way, some part of my business will be taking a hit.

The goal as a business owner is to cash flow positively

Jetfire said:

Each Wendy's is individually run as a franchise. As a business owner, I agree with this tactic. Believe me, I would love to pay my workers more for a better quality of life but I wouldn't be able to just "magically" change the numbers to offset the cost.

Let's say on a monthly basis, after paying off inventory and other business expenses, you're left with $100 (Using small numbers). I am paying each worker $10. So I have enough to employ 10 workers. But then suddenly, I'm being forced to up the pay to $20.. With a heavy heart I would have to let go of 5 employees to keep things running smoothly. Let's suppose I didn't want to let go of anyone. Then I'd have to make adjustments somewhere else like food prices or sacrifice another part of my business. Either way, some part of my business will be taking a hit.

The goal as a business owner is to cash flow positively

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This would all be well and good, but the company that owns the name "Wendy's" is making shitloads of money off of each of those franchises. If franchising didn't make them money, franchises would never have come into being.

You can preach "positive cash flow" all you like, but this sort of lunacy is why capitalism is ridiculous.

Explanation of Franchising --> https://en.wikipedia.org/wiki/Franchising

gimmepie said:

This would all be well and good, but the company that owns the name "Wendy's" is making ****loads of money off of each of those franchises. If franchising didn't make them money, franchises would never have come into being.

You can preach "positive cash flow" all you like, but this sort of lunacy is why capitalism is ridiculous.

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Yes, they make a crap load of money but these corporations aren't made of money. It's accounting 101. Gotta look at their income statements, their balance sheets and everything else. If you're willing to look into it then here you go:

https://finance.yahoo.com/q/is?s=WEN+Income+Statement&annual

They're not even big numbers.

Jetfire said:

Yes, they make a crap load of money but these corporations aren't made of money. It's accounting 101. Gotta look at their income statements, their balance sheets and everything else. If you're willing to look into it then here you go:

https://finance.yahoo.com/q/is?s=WEN+Income+Statement&annual

They're not even big numbers.

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I'll have a proper look later. Thanks for the link!

Jetfire said:

The goal as a business owner is to cash flow positively

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That's the goal of each individual business, but as a whole business also needs to ensure that people have money to spend on them. If businesses collectively fire too many people, pay people too little, then that hurts them. But of course no individual business wants to be the one paying their workers more. They want someone else to do that.

gimmepie said:

I highly doubt an international franchise like Wendy's was hit that hard by a mandatory minimum wage increase. A small cut to the veritable fucktonne of profit the company makes does not justify doing to people what the minimum wage increase was meant to prevent (people who can't afford to live).

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Yeah but (American) companies just love their fucktons of profit.

"you mean I actually have to pay my employees a decent wage? even though I can afford it? fuck that shit, I'ma lay off people instead"

How would a fast food kiosk even work anyway, I'm having trouble visualizing how that works

Fast food kiosks are already in place around California.

They function similar to a current line in which you step up and order. You have a touch-screen menu that displays the items and costs, you select, then you order.

You pay by card and your order is processed to the back, where a cook makes the order. Then they call the order and they give it to you.

The entire process would arguably not cut that many jobs when you consider most fast food places have 1-2 cashiers + a drive-thru cashier, who would likely remain until even that can be automated. Front-line cashiers are expendable though. The companies will be willing to pay the cooks and other essential personnel though because they are the core of the operation. Having a face take your order though is not necessary and the automation could improve a lot of the services at a counter.

Unfortunately it's the way of the world and it's something that a lot of small businesses will have to cut back on if they can't afford the pay increase so drastically. Big chains can manage to do these humanless-orders, but the small places are where quality and service will get hit worst.

Kiosks are highly efficient and convenient. On the east coast, there's a store/gas station named Wawa that primarily works with kiosks. In matter of seconds you can whip up a highly customized order.

I can see this business model working out perfectly fine in fast food joints

I think this is bad in general because it just makes it so there are less jobs for people to have. If it was really spurred on due to the increase in wages for employees then that just makes it even more fucked up. But it was something to be expected since if a machine can do the job then why wouldn't a company use it to save money.

OuterTsuchinoko said:

I think this is bad in general because it just makes it so there are less jobs for people to have. If it was really spurred on due to the increase in wages for employees then that just makes it even more ****ed up. But it was something to be expected since if a machine can do the job then why wouldn't a company use it to save money.

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Not only does it save the company money, but it will allow them to expand by having lower prices (assuming this is happening everywhere- it wont make a difference with a single franchise), and thus increase profits.

BadSheep said:

Not only does it save the company money, but it will allow them to expand by having lower prices (assuming this is happening everywhere- it wont make a difference with a single franchise), and thus increase profits.

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Will they lower prices or just keep them where they are at now? I always assume that they just won't be increasing them but whatever price it already is it will stay. Like "hey they're already used to paying this much anyway so let's just leave it"

No one believed me when I said this would happen. Bumping up pay destroys more than it helps.

But I mean I bet the guy who decided this would love to meet every person he/she replaced with a computer face-to-face and talk about how he/she just made their life even harder.

OuterTsuchinoko said:

Will they lower prices or just keep them where they are at now? I always assume that they just won't be increasing them but whatever price it already is it will stay. Like "hey they're already used to paying this much anyway so let's just leave it"

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Thats what Im thinking. Generally, prices should fall, but because its only one franchise, I dont know. And I do not know the policy about similar prices between franchises. I guess this is just what happens when automation happens when it is not supposed to.

We're moving into a more automated world in general, and whether the minimum wages is raised or not isn't really going to change that. Would Wendy's have never instituted kiosks if the minimum wage hadn't been changed? Somehow, I doubt it.

Also, my belief is that if Costco can pay their workers more than minimum wage without issue, I'm pretty sure other billion-dollar corporations can do it, too. It might mean the CEO brings home a slightly less engorges paycheck, but it results in employees being happier and there being a lower turnover rate. That's a significantly smarter way to run a business, imo.

~Psychic

I don't think this is a good idea.. Jetfire's explanation on how business works is a prime example. Yes, the Wendy's franchises makes a crap ton of money, but they don't make enough to raise all their employees to $15, to keep their cash flow profitable. Not only would they be raising their employees to $15, line leaders, supervisors, managers, etc would have to take a significant raise as well not even they are making $15. A manager makes about $13-14 at a fast food joint.. You'd have to bump their pay up to around $20 to equal out the amount they make compared to line employees.

You guy's also don't seem to realize that not even $15 an hour is a livable wage, unless you're working 40 hours a week. A lot of line workers are part time. Part time making $15 is the equivalent to making about $10 full time. Full time making $10 isn't enough to be dependent.

That's good to know! I'm planning on working in a fast food chain part time.

In the end a Kiosk or two won't eliminate more than 1 or 2 jobs from a store with them installed.

Customers will be customers and there will be adoption problems with such technologies; especially when you run into customers that are dumb as a box of rocks. Somebody will have to man the front-end somehow so that they can assist customers having problems with machinery.

Worse is the service cost of these machines. You need to hire someone skilled to maintain these systems; and while you can do that often from the corporate backend...you still have to have someone capable of installing the hardware in the stores. Someone who can be dispatched at need to fix a problematic machine. At least one human manned POS terminal will also be required; even if you have to stick a shift leader up there or a manager up there to handle people who can't/won't interact with the kiosk or handle problems with the kiosk.

TL;DR: If a company can afford this maneuver; they can most definitely afford a minimum wage increase.