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Wednesday, May 14, 2014

Panera Bread Replaces Workers with Technology

 It looks like I nailed another global trend ... 

Technology is now replacing "would you like fries with that" accelerated by SOARING demands for higher minimum wages and SOARING costs to provide health insurance (maternity leave, etc.) for these low skill jobs.

Bruce Horovitz, USA TODAY 4:43 p.m. EDT May 13, 2014
Panera Bread may be on the brink of changing the way customers order fast food.

The trend-setting dining chain is combining several technologies -- from store kiosks to online and mobile ordering -- that will cut the number of cash registers at most stores when the changeover is complete in late 2016.

The fast-casual chain could play a serious role in fundamentally changing the way consumers order fast food . For decades, the $200 billion fast-food industry has relied on a system that often results in long lines at cash registers and at drive-thru windows. Others fast-food giants -- from Domino's to Pizza Hut to Chipotle -- are experimenting, too. But Panera appears to be one of the most ambitious combinations of technologies geared at speeding-up service.
"Our mission is to never have a customer wait," says Panera founder and CEO Ron Shaich, in a phone interview. He's acutely aware of -- and frustrated by -- the current series of lines that customers must often stand in to order; pay for and pick up food in most of Panera's 1,800 restaurants. "It's like a game," he says.
Bull crap... their mission is to make money and they are making the change as the cost to employ zero skilled workers with little incentive to improve is pushing them to technology faster than before.
That's about to change big-time. The most visible change: ordering kiosks are being phased in at Panera stores nationwide, even as the number of cash registers is being reduced. Most stores will get four to eight kiosks. At the same time, an unspecified number of cash registers will be removed.
In a new twist for Panera: food orders will be delivered directly to tables. Some employees who worked at registers will, instead, move to delivering or preparing food, says Shaich. There will be no jobs cut, he says.
Customers also will be able to order from their mobile phones or laptops while in Panera. And they'll be able to place "to go" orders via mobile or online up to five days in advance -- and pick up the orders at a pre-set time.

Kiosks are now in some Panera's in the Boston and Charlotte markets and will expand to another 150 locations this year, Shaich says.
It is NOT a coincidence that Boston has a high, living wage mandate... From http://www.cityofboston.gov/jcs/Liv_wage_ord.asp
The Living Wage Ordinance was passed by the Boston City Council and approved by the Mayor on September 4, 1998. The purpose of this Ordinance is to assure that employees of vendors who contract with the City to provide services earn an hourly wage that is sufficient for a family of four to live on or above the poverty line.  
The current Living Wage is $13.76 an hour and will stay in effect until June 30, 2014. The living wage is subject to an increase each July 1.
It makes sense they also test the new technology in a similar city with a low minimum wage like Charlotte so they can accurately gauge savings.

The minimum wage is $7.25 per hour for most employees in North Carolina, with exceptions for tipped employees, some student workers, and other exempt occupations.
Continuing:
.... The tech upgrades will cost about $125,000 per store, he estimates.
The technology can run 24x7 so for places open 7 days a week, you could easily eliminate 10 jobs with a couple of lines to take orders.  These places have high attrition so they can reduce hours of workers and have them deliver to tables until normal attrition solves the no layoffs goal as they phase in these changes.
Panera is on the cutting edge with the system. One restaurant industry consultant says that faster service -- particularly via mobile ordering -- is the single most talked-about issue at industry conferences. "The smart phone is now your wallet," says Dennis Lombardi, executive VP at WD Partners.
They can spin it all they want but higher costs are accelerating the move to replace low skilled workers with technology.  Just look at how they tested it first in Boston where it saves them the most money on labor.

Kirk Lindstrom's Investment Letter Performance

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