MCB Analysis: What $15 an Hour Would Look Like for McDonald’s and Other Fast Food Companies

Not a crime but I’ve got some free time so might as well…

As people take to the streets to protest for higher wages, one has to wonder: are they essentially going to cause a reaction that might land them out of a job? No, I’m not talking about retaliation for protesting but a restructuring of the way the industry works in order to accommodate the workers’ demands, should they successfully rally for the cause. I’m talking about automation. As the Heritage foundation points out, fast food locations would need to up their prices about 38% and wage spending would now total 66% of all costs. Considering they only spend 31% on their ingredients, that means sales would take a steep dive as fast food sales are highly sensitive to price fluctuations. Would you really want to spend almost the same amount of money for a fast food burger as you would for one in a restaurant offering higher quality and full service? The wheels for this automation of the fast food industry are already in motion. Could the future fast food worker start to resemble a machine operator in a factory as machines make most of the jobs they would do otherwise redundant, thereby deeply reducing the amount of workers needed? Only time will tell. Until then, check out how it is all gearing up.

Sidenote: Did you know the average fast food location profit margin is only about 3%?

From Time magazine:

“McDonald’s is moving deeper into the app game in an effort to attract younger customers with strong digital options.

The fast food giant is currently testing an app that allows customers to order food ahead of time at 22 locations in Georgia and Alabama. Called McD Ordering, the app is listed in Apple’s iPhone store and on Android devices but hasn’t been officially announced yet.

Customers choose the food and drinks they want from a menu on the app, go to the selected location and scan their code. They then receive their orders after submitting a payment via the app.

Testing on the app began quietly several months ago, but McDonald’s hasn’t commented publicly on it until this week.”

Burger making robot makes about 360 an hour. Read more about it:
http://www.businessinsider.com/momentum-machines-burger-robot-2014-8

McDonald’s opens kiosks for orders:
http://ktar.com/103/1732866/Report-McDonalds-installs-7000-touchscreen-kiosks

McDonald’s to allow ordering via app:
http://time.com/2933767/you-can-now-order-a-mcdonalds-big-mac-on-your-iphone/

The dollars and cents: http://www.heritage.org/research/reports/2014/09/higher-fast-food-wages-higher-fast-food-prices

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