Fast food giant Wendy’s has announced plans to implement over 6,000 self-serve kiosks at locations nationwide, citing a tight labor market and rising minimum wage costs.
The move will effectively drop the minimum wage of thousands of entry-level workers from $15 per hour to $0 per hour.
The company is also testing other labor-free options such as mobile ordering and mobile payment apps.
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.
“As we’ve seen in California and now with an iconic American restaurant group, a major consequence of dramatic minimum wage hikes is the increased use of automation and fewer jobs for hard working Americans, said Jeremy Adler, Communications Director at AR Squared.
“As cities and states consider drastic minimum wage increases, it’s important to remember that these policies will reduce economic opportunities for Americans who need them most.”
On his nationally syndicated talk show earlier this week, Mark Levin explained that the minimum wage hikes are a “job killer.”
“The minimum wage is a job killer,” Levin explained. “The minimum wage kills jobs, particularly for younger people.”
That certainly appears to be the case for thousands of Wendy’s employees.