Lea Mira, RTN Staff Writer – April 11, 2024
California’s recent decision to raise the minimum wage for fast food workers to $20 has reignited the debate about the role of technology in the restaurant industry. While some argue that rising labor costs will lead companies to replace employees with technologies such as self-service kiosks, self-replenishment technology, self-frying machines and other cooking robots, industry experts say restaurants’ Automation suggests that restaurants are already quite automated. Wages will rise.
Recent legislation was defined by Assembly Bill 610. The bill established certain exemptions that exclude workers in nontraditional restaurant locations, such as airports, hotels, event centers, theme parks, and corporate campus cafeterias, from the wage increases. Initially, the bill exempted restaurants that baked their own bread, such as Panera. However, following opposition, Governor Newsom clarified that Panera would indeed be subject to the requirements of the new minimum wage law. This clarification ensures that wage increases are applied more uniformly across the restaurant industry, regardless of the specific services or products provided by individual establishments.
Higher wages could benefit fast-food restaurant owners by attracting workers in an industry that has not yet recovered to pre-pandemic employment levels. The new wage law, which went into effect on April 1, applies to restaurant chains with 60 or more stores nationwide. It would also create the nation’s first Fast Food Council, which would allow wages to increase annually based on the rate of inflation or up to 3.5%, whichever is higher. The council could also recommend worker safety standards and work with state agencies to investigate issues such as wage theft.
Self-service kiosks are becoming increasingly common in large fast food chains. Panera Bread, McDonald’s, and Shake Shack have introduced self-service kiosks in recent years. Shake Shack executives note that customers tend to order more food when using a kiosk than when interacting with a human cashier. Similarly, Burger King plans to roll out more digital self-service screens, citing larger order volumes and increased preparation time for kitchen staff as benefits.
Customer preferences for automated ordering, especially among younger consumers, are driving the adoption of self-service kiosks, while minimum wage increases are likely to accelerate technology adoption in certain sectors. Fast-food franchisee Harsh Ghai, who owns 180 Burger King, Taco Bell and Popeyes locations, is among the owners who plan to install more self-service kiosks as wages rise. In an interview with CNN, Guy said the company is also considering introducing AI-powered drive-thru ordering and aims to remove cash registers from restaurants entirely. He argues that these changes are necessary to offset rising labor costs and maintain profitability.
The California Restaurant Association said some restaurateurs are choosing not to expand or closing because of higher wages. Guy himself has closed 14 restaurants in the past year. According to a recent report from the National Restaurant Association, which holds its annual (and largely technology-focused) Restaurant Industry Trade Show in Chicago from May 18-21, 16% of restaurants will deploy artificial intelligence in-house this year. It has become clear that the company plans to introduce it to its businesses. Meanwhile, 25% plan to use self-ordering and payment kiosks. Almost half of the restaurants surveyed said they plan to use technology and automation to address labor shortages.
The report also shows a generational gap in attitudes towards technology in restaurants. While 64% of Gen Z and 66% of Millennial adults believe that the use of technology creates a more positive dining experience, only 19% of Baby Boomers share this belief. Some national chains, such as Wendy’s, are already incorporating AI into their business models, such as drive-thrus and automated speaker boxes with dynamic pricing.
Technology adoption in the restaurant industry is not limited to self-service kiosks and AI-powered ordering systems. Mobile pickup restaurants are also gaining traction, such as the one his Chick-Fil-A in New York City recently debuted. These establishments have no seating and only prepare food for delivery or take-out, further streamlining the dining experience and reducing labor costs.
The integration of technology in the restaurant industry is also extending to the back of the home. Self-frying machines and self-refill technology are just a few examples of how restaurants are leveraging technology to increase efficiency and reduce the need for labor. These innovations not only offset rising labor costs, but also address ongoing labor shortages in the industry.
However, the transition to a more technology-driven industry is not without its challenges. While younger generations are more open to the use of technology in restaurants, older consumers may be less familiar with these changes. As the industry continues to evolve, it will be important to find a balance that caters to all customer preferences. This could lead to hybrid models where traditional service coexists with self-service and automated options, providing a diverse dining experience that caters to a wide range of customer preferences.
California’s wage hikes may accelerate the adoption of automation and other technologies in many restaurants, but it’s clear that this trend is already well underway. The move toward more technology-driven industries is not just a response to rising labor costs, but also a reflection of changing consumer preferences, continued labor shortages, and continued technological innovation.
