The recent wage hike at McDonald's may come with some unintended consequences, warned former CEO Ed Rensi in a recent interview with FOX Business. Increasing costs of labor are hastening McDonald's plans for automated drive-thrus, a technology that will put some employees out of work.
Rensi's comments come just a week after current McDonald's CEO Chris Kempczinski spoke at an investors conference, confirming that the company was testing voice-recognition technology at the drive-thrus of ten Chicago locations. Kempczinski confirmed strong initial performance from the new system, which is about 85% accurate in processing orders. Allowing for regional calibrations, he predicted that the technology would be implemented chain-wide within five years.
McDonald's was unable to offer an estimate of how many of its employees would be affected by the technology, but Rensi has no doubts about what the immediate impact will look like: "Quick-service restaurant workers…[are] going to lose jobs," he said. "Technology is always cheaper than people."
For Rensi, the chain's investment in automation is linked to recent developments in its wage scale. Pressure from labor organizations saw McDonald's commit to 10% wage increases for crew members and shift managers. Hikes may benefit employees in the short term, but will only hasten the McDonald's plans for automation, Rensi speculated.
As he sees it, the wage increase will leave most McDonald's franchisees in a bind, scrambling to offset the increased cost of labor. Conventional fixes such as increased menu prices will not be feasible for most franchisees, he believes. Unwilling to sacrifice business for higher prices, franchisees will favor cost-reduction approaches and are likely to opt into automated drive-thrus.
In his critique of the McDonald's wage hike, Rensi made an intriguing appeal to small business owners. In his view, wide-scale implementation of automated drive-thrus will only further tilt the playing field in favor of "institutional big guys," over the interests of small businesses.
McDonald's has had automation in the works since at least 2019 when it first acquired Apprente, the voice-recognition technology company behind its recent drive-thru upgrades. Rensi may be overstating the impact wage-hikes are having on McDonald's current push towards automation, but the underlying claim, that AI is ultimately cheaper than labor, seems right on the money.
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