Wendy’s Embraces Automation with More Self-Service Kiosks

Wendy’s Embraces Automation with More Self-Service Kiosks

Wendy’s, which began installing self-service ordering kiosks at its restaurants last year, plans to add them to over 1,000 stores this year, the Los Angeles Times’ Shan Li reported this week:

At Wendy’s, Chief Information Officer David Trimm said that customers and franchisees have taken a liking to the kiosks. “You will see customers deliberately going to those kiosks directly, bypassing lines,” Trimm said during the company’s investor day Feb. 16. “Some customers clearly prefer to use the kiosks.”

There’s “a huge amount” of demand among franchisees, who will shell out about $15,000 for three kiosks, Trimm said. Wendy’s has estimated that the cost will be recouped in less than two years, he said.

Automated ordering is also a way to help cut labor costs in the face of rising minimum wages throughout the US, ostensibly supporting the argument often made by critics of the minimum wage that these hikes merely encourage employers to automate low-wage roles:

In the long term, many chains are looking toward kiosks as a way to reduce their employee headcount, especially as wages rise. … For Wendy’s, kiosks are part of an overall move into automation that could cut labor costs, said Robert Wright, chief operations officer. He called 2016 a “tough” year, with wages rising 5% compared with 2015.

Yet Greg Miller at Wall Street Daily argues that focusing on minimum wage increases as the cause of this trend is misguided—these jobs are getting automated regardless:

The cost curve is moving in favor of more automation. At its core, technology is about finding newer, innovative ways of accomplishing tasks – in ways that are better, faster, stronger, more convenient and cheaper than before. Contrast this declining cost curve with wages, which generally head higher over time – even if they’re not goosed by legislation and don’t keep up with inflation. Automation was previously targeted at higher-wage manufacturing jobs because it made greater economic sense to replace a high-wage worker, whereas it wasn’t worth it to replace an already-cheap low-wage worker. That’s no longer true.

It’s also not immediately clear what the long-term impact on headcount at Wendy’s stores will be. McDonald’s CEO Gregg Easterbrook, for example, said last year that while the fast food chain was affected by new technologies and rising wage floors, it was shifting workers toward more service-oriented roles in response to these trends, rather than laying them off. Recent research has suggested that fast food workers aren’t being displaced by robots as quickly as some expected because robots are not yet capable of performing many essential restaurant tasks. Likewise, Li points out, Panera Bread “has increased hours for employees at some locations to service the higher number of orders that come in through self-serve kiosks”:

“They just had too many people in line and they felt they were losing transactions because they just didn’t have enough room to process orders in a reasonable amount of time,” [Nick Setyan, senior vice president of restaurants equity research at Wedbush Securities,] said. With the uptick in orders after the kiosks were installed, Panera Bread “upped man hours in the kitchen to deal with the backlog.”