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15 Feb ’12
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Well who would have thought such a thing.
In a move meant to offset higher minimum wages taking effect in states across the country, fast-food giant Wendy's will be offering self-serve kiosks to many of its franchisees later this year.
Though some reports suggested the kiosks would be made available at all Wendy's by the end of 2016, spokesperson Bob Bertini says it will be up to individual franchisees whether or not they install the kiosks.
Below, the statement from Wendy's in full:
The majority of Wendy's restaurants are franchise-operated. We are in pilot now with self-service order kiosks, which we expect to make available for installation by our franchisees later in 2016. Whether they choose to do so will be up to them. Earlier news reports were not quite accurate. We did not say kiosks would be available at every restaurant by end of year. We do continue to invest in technology to help mitigate the inflation we are seeing on the wage front.
In an earnings call on Wednesday, company president Todd Penegor said that "managing labor pressure" will be critical "to make sure that we provide a new QSR [quick-service restaurant] experience but at traditional QSR prices."
more http://www.eater.com/2016/5/13/11670490/wendys-self-serve-kiosks-labor-cost
19 Feb ’12
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Well they're also outsourcing the order taking at the drive through as well.
21 Feb ’12
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Been saying this forever and getting called every name in the book because of it. Labor is a cost of doing business. The business operates to turn a profit for the owner. If labor becomes too expensive, the owner will either try and cut costs to offset it, or in the worst case, close up shop. This hurts the unskilled individuals trying to get some work history to be able to negotiate a higher salary, by pricing them out of the entry level market.
6 Feb ’14
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As technology continues to advance and shrink in cost to implement and use it will be utilized. The trend is only related to labor and profitability indirectly. Minimum wage labor has been a relatively fixed cost out of proportion with inflation and out of proportion with profitability.
Minimum wage labor, unskilled labor, and entry level workers are 3 distinct categories that intermingle but are still distinct. A large percentage of minimum wage workers are neither unskilled or entry level. Many are adults with bills to pay who may be working more than one job or are unable to find other work. Many entry level workers are skilled before entering workplace. Many so called unskilled workers are really displaced skilled labor.
Regardless of labor costs, some businesses succeed and others fail. Lots of variables can affect that. Sometimes it is the business owners themselves that are responsible.
The heart of this has nothing to do with wages and everything to do with net take home for owners/investors/executives. The Federal minimum wage could be halved and net profitability could be doubled, and if the overhead of technology was less than equivalent labor many workers would be replaced.
I'm calling bullshit.
15 Feb ’12
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easytapper said
Well they're also outsourcing the order taking at the drive through as well.
I'll have to ask my brother if they tested that at his wendy franchise
21 Feb ’12
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"As technology continues to advance and shrink in cost to implement and use it will be utilized. The trend is only related to labor and profitability indirectly. Minimum wage labor has been a relatively fixed cost out of proportion with inflation and out of proportion with profitability."
-This is only partially correct. Yes, as technology advances, some jobs will be lost and replaced with new ones. if that wasn't the case we would still have lamplighters and horse drawn coach drivers. It is not only indirectly related to labor indirectly however. This current situation should be proof positive of that. Additionally, whether or not the cost of minimum wage labor has been fixed, and has scaled with inflation is entirely irrelevant. Labor is a cost of business overhead, there's no way to explain around that.
"Minimum wage labor, unskilled labor, and entry level workers are 3 distinct categories that intermingle but are still distinct. A large percentage of minimum wage workers are neither unskilled or entry level. Many are adults with bills to pay who may be working more than one job or are unable to find other work. Many entry level workers are skilled before entering workplace. Many so called unskilled workers are really displaced skilled labor."
-While they may be distinct categories, I would say for the purposes of this discussion they fall squarely in the same bracket. If a worker isn't making minimum wage they're not relevant to this conversation. Here are some statistics taken directly from pew.
-About half of minimum wage earners are age 16-24. Minimum wage earners make up about 2.5% of all hourly and salary employees. About 64% of minimum wage workers are part time employees. The industry with the highest number of minimum wage workers is the restaurant food service industry (18%).
"Regardless of labor costs, some businesses succeed and others fail. Lots of variables can affect that. Sometimes it is the business owners themselves that are responsible."
-This is correct. However we aren't discussing the myriad of reasons a business could succeed or fail, we're discussing the effect of wages on the cost of running a business.
"The heart of this has nothing to do with wages and everything to do with net take home for owners/investors/executives. The Federal minimum wage could be halved and net profitability could be doubled, and if the overhead of technology was less than equivalent labor many workers would be replaced."
-You do realize the the vast majority of Wendy's locations are franchises don't you? The investors and executives have nothing to do with this issue, as they will make the same regardless. It's the private owners who this affects. For starters, a Wendy's franchise will cost the owner between 2 million and 3.5 million just to get up and running. That's a really big investment, and a pretty beefy loan payment to make every month. On top of that, the owner owes 8% of gross sales to Wendy's annually for franchise royalty rights and advertising. On average, a fast food franchise has a profit margin of about 6% or so dependent on the location and volume. Out of that profit has to come the entire operating budget, 70% of which (on average) is the cost of labor. On top of that, there are costs of materials (food), utility costs, building and equipment maintenance, insurance costs etc. Add the loan payment (at a 2.75% interest rate over a 7 year term, that comes out to just over $39,000 that must be paid before any actual profit is made) and you're looking at a lot of risk for a pretty small margin. If you increase the biggest recurring cost of operation by doubling up on cost of labor, you literally make it impossible to turn a profit in a business like this with already slim margins.
"I’m calling bullshit."
-If it's all about more profit for the greedy fatcat business owners as you are advocating, why then did the move to automation not occur long ago (since the technology has existed for quite some time now), instead of happening just before a massive hike in labor costs?
15 Feb ’12
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DD, 6% is the net profit not the gross profit for an average store. Labor is usually more in the 30-35 percent range including management and payroll related costs depending on location but everything else is pretty much spot on.
I can give some hard facts for wendy's at least when I worked for them, average sales were around 15,000 a week, our store was the busiest in the region and we were a million dollar store, we averaged around 20,000 a week, being a million dollar store was a big thing, they handed out awards for that.
I would say 6 to 8 percent would be about right for net profit. So let's say with the average store sales of 780,000 and 8 percent profit you are talking 62,400 going to the owner.
That is the money he is taking to the bank.
Depending on the location they might use 500 labor hours a week, heck we use 400 at our current business and have about half the staff I had at my last wendy's. So for every dollar their labor goes up, it costs them at least 26,000 dollars a year, this does not include the increase of workman's comp or UI which is based off your payroll dollars.
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