After McDonald’s announced yet another round of disappointing earnings yesterday—its quarterly profits fell 30 percent—the Wall Street Journal editorial page took a moment to gloat. “So even one of the world’s most ubiquitous consumer brands cannot print money at its pleasure,” it wrote. “This may be news to liberal pressure groups that have lately been demanding that government order the chain known for cheap food to somehow pay higher wages.”
In other words, if you think McDonald’s is doing poorly now, just imagine how it would fare with a $10 or $15 minimum wage. Meanwhile, the Journal already sees signs that McDonald’s is planning to reduce labor costs by automating away its cashiers. Next year, the company says it will introduce touch screens to make it easier for patrons to order and customize their meals. (Recently, it's been playing with a "build-your-own burger" concept that it hopes will lure back diners who grew tired of its stale menu.) "Customers want to personalize their meals with locally relevant ingredients," CEO Don Thompson told reporters yesterday. "They also want to enjoy eating in a contemporary, inviting atmosphere. And they want choices in how they order, choices in what they order and how they’re served.”
"That is no doubt true," the Journal edit board responded, "but it’s also a convenient way for Mr. Thompson to justify a reduction in the chain’s global workforce. It’s also a way to send a message to franchisees about the best way to reduce their costs amid slow sales growth. In any event, consumers better get used to the idea of ordering their Big Macs on a touchscreen."
I wouldn't be so sure. Replacing cashiers with computer screens is indeed the most obvious way that most fast-food chains could cut down on human labor. (I've warned about that prospect before, in the context of Seattle's $15 minimum wage.) But when McDonald's began deploying touch-screen kiosks in Europe several years ago, management told the Financial Times that it didn't expect the new technology would lead franchises to cut their workforce. And if you walk into a McDonald's in, say, France, one thing you'll notice is that there are plenty of employees standing behind the counter despite the fancy kiosks, which many customers simply ignore. The same way plenty of shoppers hate the idea of checking out their own groceries, some people seem to just prefer having a human take their order.
At fast-food chains other than McDonald's, experiments with touch screens haven't necessarily led to smaller staff. Take White Castle, which installed an ordering kiosk in a Columbus, Ohio, location. The company says that it doesn't plan to use the interface to replace workers and that the number of employees at the restaurant has stayed flat.
“We are 100 percent reliable on our people to create a memorable experience," White Castle Vice President Jamie Richardson told QSR, a fast-food industry trade magazine. "The kiosks free them up even more to provide that hospitality." I'm not sure McDonald's would say quite the same about the workers who staff their franchises, which tend to operate with the bare minimum amount of labor already. But I'm not sure the company is really interested in abandoning the idea of customer service altogether.
It's entirely possible that, as kiosks become more ubiquitous and customers get used to them, they'll eventually lead to fewer workers in the front of the house at McDonald's and other fast-food chains. Who knows—maybe that automatic burger-making machine will also take off and decimate kitchen staff. But for now, it might be safe to take McDonald's at their word that this is about making it simpler for customers to order a custom burger with a little guacamole on it.
Update, Oct. 22, 2014
Earlier today, I asked McDonald's whether it had any plans to reduce labor costs using touchscreens. Spokeswoman Terri Hickey writes back:
To clarify, there are currently touchscreens being used as part of a Create Your Taste burger customization test that is ongoing right now in four restaurants in California. Customers customize their burgers, choosing from various toppings on touchscreens. The dining experience is interactive at McDonald’s and our restaurant staff who are participating in the four-restaurant test have shared that interacting with customers is still an engaging and important part of their jobs at McDonald’s.
Hickey also called the Journal's editorial "highly speculative and hypothetical." So, as of now, the company's official line is that it's not swapping out cashiers for computer screens.