Memo to $15 /hour burger flippers: Meet Alpha, your competition.

Fast food workers around the country have been protesting for a $15 minimum wage.

A couple of days ago we warned about the possibility of McDonald’s replacing $1 menu with a buck-and –a-half menu … ouch!. The core story line: economists modeled the impact of raising the minimum wage for fast food workers to $15 and concluded that, all else equal, fast food prices would have to go up by about 40% to cover the increased labor costs.

Ooch.  Continues a historic trend … As time rolls on, a buck buys you less and less at Mickey D’s

McD for a buck - 1955 today
Source

Since that post, a couple things happened.

First, McDonalds reported a 3.7% decline in global same-store sales.

That ranks as the company’s worst global same-store sales results in more than a decade.

Profit margins are shrinking and the company is trying to upmix customers to higher margin menu items.

Not exactly the time to be asking for a 66% raise, right?

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Adding to the discourse, a couple of loyal readers fed me some red meat: the realistic possibility that, very soon, low skilled burger flippers will be eased out by burger-making robots.

Here’s the scoop …

 

According to Singularity Hub

San Francisco based Momentum Machines has developed “Alpha”, a computerized assembly line that is capable of cranking out 360 burgers an hour … not just the beef paddies … fully “dressed”, customized burgers on a bun.

 

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Average fast food joint spends $135,000 a year on burger line cooks … up that to about $225,000 if wages get bumped up to $15 / hour.

Alpha isn’t intended to increase worker productivity “at the margin”.

Rather, Momentum says that “Our device isn’t meant to make employees more efficient it’s meant to completely obviate them.”

Ouch.

The company claims that using Alpha will save a restaurant enough money that it pays for itself in a year.

Double ouch.

My advice to the $15 / hour clamorers: be careful what you wish for … you might get it.

For a while that is, until Alpha takes your job.

The saving grace: the dollar-menu – my food array of choice – may not be doomed to extinction.

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#HomaFiles

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One Response to “Memo to $15 /hour burger flippers: Meet Alpha, your competition.”

  1. Rob Marshall Says:

    I would welcome the automation. Earlier this year, at a McDonalds in Paris, I could essentially bypass the cashier. I entered my order using a touchscreen monitor. I paid with a credit card. My order was relayed to the kitchen.

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