McDonald’s to Replace Thousands of Restaurant Cashiers With Automated Ones

Some are saying that the euphoric rise of Bernie Sanders and his Socialist platform had initially spurred on rush to get on board the automation train, especially when the former Democratic candidate who nearly smashed Hillary’s dream of being crowned Queen of the Primary Homecoming began speaking about looking at a broad spectrum of pay rate engagement, even in the realm of the fast food restaurant.  His vision was that of a kid out of high school working in a Burger King or McDonald’s and earning a cool $15/hour.

Once the genie was out of the lamp, as the saying goes, it was hard to put it back in again.  And this genie proved that you can’t mess with the profit of restaurant retail when they’re already operating at a very close, tight budget.

According to ZeroHedge, McDonald’s has recently skyrocketed in the Stock Exchange due in large part to a new launch of a concept called  Experience of the Future (EOTF) where they have moved ahead with a plan to gut the competition by installing robots in place of their cashiers and order-takers.

The stock market is luvin’ McDonalds stock, which has continued its recent relentless rise to all time highs, up 26% YTD, oblivious to the carnage among the broader restaurant and fast-food sector. There is a reason for Wall Street’s euphoria: the same one we discussed in January in “Dear Bernie, Meet the “Big Mac ATM” That Will Replace All Of Your $15 Per Hour Fast Food Workers.”

In a report released this week by Cowen’s Andrew Charles, the analyst calculates the jump in sales as a result of the company’s new Experience of the Future strategy which anticipates that digital ordering kiosks (shown above) will replace cashiers in at least 2,500 restaurants by the end of 2017 and another 3,000 over 2018. Cowen also cited plans for the restaurant chain to roll out mobile ordering across 14,000 U.S. locations by the end of 2017 (we did not show that particular math, but the logic was similarly compelling).

Here is a snapshot of the math that Cowen, likely in conjunction with management, used to come up with the cost-savings as McDonalds increasingly lays off more and more minimum wage workers and replaces them with “Big Mac ATMs”

MCD is cultivating a digital platform through mobile ordering and Experience of the Future (EOTF), an in-store technological overhaul most conspicuous through kiosk ordering and table delivery. Our analysis suggests efforts should bear fruit in 2018 with a combined 130 bps contribution to U.S. comps. We believe mobile ordering better supplements the drive-thru business where 70%+ of U.S. sales are transacted. In our view, MCD’s differentiation lies in the operational enhancements of mobile ordering that includes curbside pick-up of orders in order to not disrupt the drive-thru.

We are constructive on the use of guest facing technology for the restaurant industry. MCD’s longer-term U.S. story revolves around Experience of the Future (EOTF), a holistic operational and technological overhaul to the store base. MCD’s March 2017 investor meeting centered around the initiative with interactive displays. Perhaps the most conspicuous piece of Experience of the Future lies in digital kiosk ordering, which have seen success in International Lead Markets. Additionally, food ordered via the kiosk is delivered to the customer’s table. We believe EOTF better enhances the instore experience, which represents roughly 30% of domestic sales compared to mobile ordering, which allows customers to avoid leaving their cars.

In essence, what it comes down to is that approximately 2.5K restaurants are going to have their cashiers replaced by these kiosks that will be taking your orders by the end of 2017 and another 3K restaurants by the end of next year.  This is just the initial launch.  If successful, there will most likely be more…much, much more.  What’s going to be happening that the food will be ordered at the kiosk and then you’ll find your seat and the food will be delivered to your table.  I’m not exactly sure how that’s accomplished, perhaps through a number system at the table or an interactive map on the screen where you’ll point to your table.

The point is that this will be a time-saver for both the store and for you.  That is, provided that the kiosk is efficient, and if McDonald’s is investing this much money in the program, I can’t see it not being efficient.  There is also a sense of empowerment on the part of the customer who really does feel that they are “getting it their way.”

So, what happens if Bernie decides to run again in 2020?  Well, for one, he’ll be three years older and, two, I’m not sure if McDonald’s will be experiencing such a draw for those $15/hour jobs anymore.

Oh, well…there’s always 2024.

Source:  ZeroHedge