In response to the new $20 per hour minimum wage law, a major fast-food franchisee in California, US is expediting the implementation of digital order kiosks to manage rising payroll costs.
Harshraj Ghai, owner of 180 fast food outlets across California including Burger King, Taco Bell and Popeyes, expressed urgency in adopting the technology.
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In an interview with Business Insider he said: “We can’t move fast enough on this [rollout]. We have kiosks in probably about 25% of our restaurants today. However, the other 75% are going to have kiosks in the next probably 30 to 60 days.”
“We are installing kiosks in every single restaurant.”
Ghai, the largest Burger King franchisee on the West Coast, faces the challenge of adapting to the wage increase, which is 25% higher than the state’s general minimum wage of $16 an hour.
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The law, effective from 1 April 2024, affects chains with at least 60 locations nationwide. Fast-food workers and their unions have been advocating for higher wages, especially in a state such as California where living costs are substantial.
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By GlobalDataFranchisees are seeking ways to maintain profitability amid higher payroll expenses.
From 2023 to 2024, Ghai raised prices by 8% to 10%, significantly more than the typical annual increase of 2% to 3%.
He stated: “The majority of that [price rise] is going to get absorbed in the inflation of our food costs. So we’re not even compensating for most of the labour costs that we’re going to be experiencing with this legislation.”
He is reducing workers’ hours, eliminating overtime, halting new restaurant development and integrating kiosks to counteract the wage rise.
The trend of incorporating order kiosks is growing within the US fast-food industry to diminish labour costs, and the new wage law in California has intensified this shift.
Kiosks not only offer cost savings but also improve order accuracy and encourage higher customer spending, as noted by Shake Shack, which regards them as its most profitable sales channel.
Burger King is rapidly introducing kiosks and Taco Bell has already installed them across its US locations.
Ghai’s previous strategy to incorporate them in new and remodelled restaurants was planned to take place over five to ten years, but the urgency imposed by the wage law has accelerated this timeline.
In March 2024 The Wall Street Journal reported that California restaurants are reducing staff and working hours to cope with the cost implications of the wage increase.
