Recently, the fast food industry was targeted by unions to increase fast food worker pay to $15 per hour.
Several states and New York City passed laws increasing minimum wages.
Investors Business Daily reports that Wendy’s President Todd Penegor says the increased minimum wages around the country and competition for good workers are raising their costs:
“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.”
While the minimum wage issue has been framed as one of fairness to people working in low skilled jobs, as Carl’s Jr. CEO Andy Puzder told talk host Hugh Hewitt recently, there comes a point where they price themselves out of a job:
“For example, Apple did $39.5 billion in business last year, and only has 97,000 employees. So they made about $407,000 dollars per employee, which gives you a lot of latitude to increase wages, if you want to do so.
In the retail segment, if you take all 22 retailers on the Fortune 500 and add them together, they did about $34 billion in business last year, and … made about $6,300 dollars per employee.
Now if you give a minimum wage employee an increase to $12 dollars an hour, rather than making $6,300 dollars an hour on employees, you lose about $1,100. If you give them a raise to $15 dollars, you lose about $6,000 dollars per employee.”
Which is why Wendy’s just announced it’s adding a computerized kiosk ordering system at all 6,000 restaurants later this year:
IBD reports that Wendy’s is also making another move. It’s improving its mobile-based app to make it easier for people to order and pay for their food without the aid of a human:
“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.”
Trade publication “Kiosk Marketplace” reports that the Wendy’s CIO says people like to do fast food orders themselves, a fact that McDonald’s, Hardee’s and Carl’s Jr have all discovered.
Wendy’s also plans to reduce the number of company-owned stores from 10% of its total to 5%.
Via IJ Review