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“We can’t move fast enough on this,” Harsh Ghai told Business Insider in an interview in early April.
“Currently, probably about 25% of restaurants have kiosks,” he said. “But the remaining 75 percent will probably have kiosks installed within the next 30 to 60 days.”
Guy said he owns 180 fast-food restaurants in California, including about 140 Burger King locations and numerous Taco Bell and Popeyes restaurants. Mr. Guy said he was the largest Burger King franchisee on the West Coast, but BI could not independently verify this.
“We have kiosks in all of our restaurants,” he said.
Guy says he can’t raise prices any further.
The new minimum wage applies to limited-service restaurant chains with at least 60 locations nationwide and went into effect on April 1. That’s 25% higher than the state’s general minimum wage of $16 an hour, although many California cities and counties have a minimum wage. Set their settings higher.
Fast food workers and the unions that represent them have been campaigning for higher wages for years, especially in California, where the cost of living is high.
Some fast food franchisees say increased salaries could make it difficult to maintain profits. Many people are desperately looking for ways to bring in more revenue and reduce costs.
Guy said that in a typical year, his restaurants would raise prices by 2% to 3%, but in the past 12 months they have increased prices by 8% to 10%.
“Most of that will be absorbed by food cost inflation,” he said. “So it doesn’t even cover most of the payroll costs that this bill would incur.”
And he doesn’t want prices to go up any further.
“You can’t get a better price,” Guy said. “Anything more than that is the result. [a] Significantly impacts our traffic. ”
Instead, he said, the company is taking a variety of steps to offset the wage increases, including reducing work hours, eliminating overtime, pausing the development of new restaurants and adding kiosks.
Fast food chains are rapidly adding ordering kiosks in the United States to cut labor costs. California’s new $20 wage adds even more urgency.
Kiosks are also highly accurate and encourage customers to spend more. Shake Shack says kiosks are its most profitable channel. Burger King is rapidly rolling out kiosks, and Taco Bell says it has kiosks in all of its U.S. restaurants.
Guy said the previous strategy of adding kiosks to new or renovated restaurants would have taken five to 10 years to introduce kiosks to all restaurants.
“But now we are in the process of complying with the law and installing kiosks in all our restaurants to help balance out some of the labor costs that are hitting us,” Guy said. Ta.
“When we did the financial analysis, it made more sense to spend the capital investment on technology, and if you were to buy a lot of hardware, obviously you would be able to buy it at a lower price,” he said. . continued.
“So it makes more sense to roll it out across the business.”
Are you a fast food restaurant employee and excited about the new minimum wage? Or are you a franchisee or restaurant manager worried about how it will affect your business? ? Email this reporter at gdean@insider.com.