Fast-Food Restaurants May Replace Workers With Kiosks Due to Minimum Wage Rise

The fast-food industry faced a major shift in California at the start of this month as the minimum wage rise took effect. As a result of the $4 increase, some restaurants are adding more self-service kiosks to save on costs, potentially replacing employees with the technology.

According to industry experts, this change is likely to be implemented in cases where the business doesn’t already have the technology in place to offset the rise in labor costs.

However, automation services have long been integrated into the sector, predating the pandemic by several years. Restaurants like Panera Bread, McDonald’s, Shake Shack, and others have employed these systems for quite some time. Even in states without the recent wage increase, the industry continues to embrace automation technologies.

Rob Dongoski, global lead for food and agribusiness at Kearney, a strategy and management consulting firm, said, “There are two things in play. One, already in motion for a while is robotics and automation at the store level.” Examples that you can find in quick-service restaurants include auto-refill technology and automated frying machines.

Dongoski stated that while many casual observers don’t think increased wages for fast-food workers could help fast-food owners, he believes they actually could. The employment rate in fast-food restaurants is yet to reach pre-pandemic levels, so “wage increases are a way to attract workers into that environment,” he explained. “Businesses will already have to automate and use robotics to offset lack of labor to begin with, and then, the wage increase to attract the labor that they do need.”

Marbue Brown, founder of The Customer Obsession Advantage, an independent tech and customer experience consultancy, said, “We’ve all been to restaurants where we’ve sat down and waited for quite a long time for someone to come over to ask for your order. If you could place that order without having to wait for someone to take it, that’s a plus for you. So yes, self-service kiosks is about reducing costs, but it is also about providing a positive customer experience, and convenience. This has nothing to do with minimum wage.”

Brown went on to say that the minimum wage increase is expediting the adoption process, however. “It’s not that these changes were not going to happen already, it’s that tech adoption might happen a lot faster in certain geographies.”

He also believes restaurants will “explore all options” to maintain prices for customers. “I don’t think they will eliminate their workers en masse, but they will try to have a mix where it’s a hybrid environment of ordering with a kiosk and with a person,” he explained. “It’s about finding the right formula.”

According to Harsh Ghai, a fast-food franchisee who owns 180 quick-service restaurants in California, everyone is currently scrambling to get self-service kiosks from vendors, himself included. He’s aiming not to lay off workers, but he did say that using the technology “will help to shave hours and costs.”

“Undoubtedly we will lose some people. There’s no way around it,” Ghai stated. “If we continue to maintain our current menu pricing and absorb higher labor costs, 100% of our restaurants won’t be profitable. We can’t raise menu prices because that will hurt traffic and we’ve already seen in the media the backlash from customers having to pay more for burgers because of food price inflation.”