What the Fast Food Industry Will Do to Reduce Labor Costs in Response to Higher Minimum Wages in California

As the minimum wage in California continues to rise, fast food chains are facing significant challenges in managing labor costs. The industry must adapt to these changes by exploring various strategies, including automation, which could revolutionize the way food is prepared and served.

Automating the Kitchen: A Logical But Delayed Move

Like other manufacturing businesses, fast food industries can respond to rising labor costs by developing new automation solutions to reduce reliance on human labor. It may seem surprising, but it is noteworthy that despite serving billions of burger meals, most fast food kitchens still rely on manual labor. This situation is similar to what we see in other industries that have made significant advancements in automation over the past century, such as automobile manufacturing and textile production.

Consequences of Automation in Fast Food Industry

The implementation of automation in the fast food sector could have profound implications. Two primary outcomes are foreseeable:

The closure of many fast food restaurants due to the inability to compete with the high cost of labor. A shift towards full automation in surviving establishments, leading to the displacement of many employees.

These scenarios mirror what happened in New York City after a law mandated that car wash workers must earn a minimum of $15 per hour. Many car washes either closed down or transitioned to automated systems, resulting in widespread job losses.

Impact on Gig Economy and Gig Employees

The fast food industry, as with other gig economy sectors like rideshare, is further pressuring workers to find alternative employment. In California, gig workers often face harsh conditions, with no job security, no benefits, and unpredictable scheduling. This has led many to question whether working such jobs is sustainable or worth the long-term consequences.

Final Thoughts on Future of Fast Food

The shift towards automation and away from human labor is inevitable. While this move could potentially lead to more efficient operations and lower costs in the long term, it is essential to consider the broader social and economic impacts. The fast food industry must weigh the benefits of automation against the consequences of job displacement and economic disruption.

Conclusion

As the minimum wage continues to increase, fast food entrepreneurs and workers alike must prepare for significant changes in the industry. By embracing automation and exploring new business models, companies can navigate these challenges and continue to thrive. However, it is crucial to approach this transition thoughtfully to minimize the negative impacts on the workforce and ensure a more equitable and sustainable future for all involved.