California just raised the minimum wage for fast food workers

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California just raised the minimum wage for the state’s fast food sector workers by $4 to $20.
As if on cue, it raised a familiar refrain that those workers would be replaced by technology, such as self-service kiosks.
And, although many casual observers disagree, higher wages for fast food workers could actually help fast food owners, Dongoski said.
The employment level in fast food restaurants still hasn’t reached pre-pandemic levels.
Automation is catching on Self-service kiosks are fairly commonplace in large fast food chains.
So yes, self-service kiosks is about reducing costs, but it is also about providing a positive customer experience, and convenience.
And he’s now adding self-service kiosks directly on the front counter of restaurants with the aim to remove registers completely.
The changes are necessary, said Ghai, who employs 3,700 fast food workers in California.

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The minimum wage for workers in the fast food industry in California was recently increased from $4 to $20. The constant fear that those employees would be supplanted by self-service kiosks and other forms of technology surfaced as if on cue.

According to industry experts, that is likely to occur in certain cases where businesses that haven’t done so will turn to technology to help offset increased labor costs.

The restaurant industry has been embracing automation for some time now, even in states where the minimum wage hasn’t increased, but the truth is that the services sector is already experiencing a boom in automation.

A pair of factors are involved. One that has been underway for some time is robotics and automation at the retail level, according to Rob Dongoski, global lead for food and agribusiness at the strategy and management consulting firm Kearney. Examples of what’s referred to in the business community as the “quick service restaurant” space are automated frying machines and auto-refill technology.

Furthermore, Dongoski noted that higher pay for fast food employees might benefit fast food owners, despite the opinions of many casual observers to the contrary.

Fast food restaurants still employ less people than they did before the pandemic. Pay raises are therefore a means of luring employees into that setting, according to Dongoski. In order to compensate for the initial labor shortage, businesses will already need to automate and use robotics. In addition, wage increases will be necessary to draw in the necessary labor. “.

Applying to restaurant chains with more than 60 locations nationwide, the new wage went into effect in California on April 1.

The law also establishes the first-ever fast food council in the United States, comprising representatives from the restaurant sector and labor unions. The council will have the authority to raise wages yearly for the remainder of the decade, either in line with inflation or up to 3.5%, whichever is higher. In addition, this council has the authority to collaborate with current state agencies to look into matters like wage theft and suggest safety guidelines for fast food employees.

People are becoming more and more automated.

Large fast food chains frequently have self-service kiosks. The trend began before the pandemic and gained momentum during it.

In 2014, Panera Bread introduced its Panera 2.0 strategy, which included self-service kiosks in every location and completely redesigned the customer experience.

Self-service kiosks were introduced by fast food giant McDonald’s in 2017, recognizing at the time that the food industry was evolving due to consumers’ growing preference for convenience and customized dining experiences.

By the end of 2023, self-serve ordering kiosks will be available at every Shake Shack location, as the burger chain hinted last year. When customers can place their food orders without having to speak to a human, they order much more, which is much more profitable, according to company executives during a May earnings call with analysts.

Chief financial officer Katie Fogerty of Shake Shack told analysts during the call, “We see that they have higher [value] order than a traditional cashier order when a guest goes to our kiosk and they see the visual merchandising of our menu.”.

We observe that they include more high-end, higher-margin items. Together, that really makes that our channel with the highest margin, the speaker stated. “There are still some customers who prefer to interact with the cashier in person for their transactions. However, many of our visitors want to head straight to the kiosk when they arrive. “.

Burger King’s CEO said in another place last year that the burger company planned to install a large number of digital self-service screens in its US restaurants. The CEO stated that the company discovered that when customers had autonomy over their orders, they typically placed larger orders and gave the kitchen staff more time to prepare those orders.

A “mobile pick-up restaurant” was introduced by Chick-fil-A in New York City just last month. The prototype idea only prepares food for takeout or delivery; it lacks seating.

It’s true that some customers prefer self-ordering, particularly younger or those in the “born digital” generation, according to Marbue Brown, founder of The Customer Obsession Advantage, an independent tech and customer experience consultancy serving tech and retail companies.

Everybody has been to a restaurant where they have sat down and had to wait a while for someone to come over and ask for their order, according to Brown. It’s a plus for you if you could place that order without having to wait for someone to accept it. Self-service kiosks therefore aim to save expenses while simultaneously offering convenience and a satisfying user experience. The minimum wage is unrelated to this. “.

According to Brown, there is an accelerant effect from the increase in the minimum wage.. The adoption of tech may occur much more quickly in some regions than in others, but these changes were always likely to occur. “.

Regarding minimum wage laws, Brown anticipates that restaurants in California will look into every avenue to control prices for patrons.

According to him, “they will definitely use automation if it’s one of those things and they can do it effectively.”. “I doubt they will fire all of their employees, but they will probably try to create a hybrid ordering system where customers can place their orders both in person and through a kiosk. Discovering the ideal formula is crucial. “.

“Somebody will leave us. There’s no avoiding it.

Automation is a given for the fast-food industry, according to Harsh Ghai, a franchisee who owns 180 Burger King, Taco Bell, and Popeyes restaurants.

Notwithstanding the industry’s labor issues, Ghai stated that the pay increase would only motivate him to add more self-service kiosks. Ghai stated that self-service kiosks were already installed in 25% of his locations prior to the increase in the minimum wage. “During the next five to ten years, the original plan was to install them in all of our locations,” he stated.

He has cut that timeframe significantly since April 1.

With the intention of installing self-service kiosks in all of his restaurants in California within the next thirty to sixty days, Ghai is rushing to acquire as many of these machines from suppliers as possible. “Everyone is attempting to acquire them,” he remarked.

He also wants drive-through ordering powered by AI enabled everywhere. In a CNN interview, he stated, “The objective is to be 100% AI order taking capability this time next year.”. In an effort to do away with registers entirely, he is also now installing self-service kiosks right on front counters of eateries.

According to Ghai, who employs 3,700 people in California’s fast food industry, the changes are imperative. According to Ghai, “the wage increase has significantly raised our labor costs.”. “On April 15, we will implement our first payroll post-hike, which will result in a 25% increase over what it was last month. “.

Although he doesn’t intend to fire employees, he claimed that employing technology will reduce expenses and hours worked.

There’s no doubt that some will leave. It cannot be avoided. All of our restaurants won’t be profitable if we keep the same menu prices and pay increased labor expenses, according to Ghai. The media has already reported on the backlash from customers who are forced to pay more for burgers due to food price inflation, so we are unable to raise menu prices as that will negatively impact traffic. “.

The president and CEO of the California Restaurant Association, a trade association that advocates for the state’s restaurant industry, Jot Condie, stated that he is aware of announcements made by certain restaurant operators stating that they will either close locations or not expand due to the increase in the minimum wage.

According to Condie, “necessity rather than just consumer desire will drive the accelerated rate of technology use going forward.”.

Six restaurants have already closed this year, and Ghai closed eight last year. “And this was all done prior to the pay increase even taking place,” he stated.

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