California Fast Food Law Forcing Franchisees to Automate Everything, Eliminate Employees

In a swift response to California’s new $20 minimum wage for fast-food workers, Harsh Ghai, a prominent fast-food franchisee in the state, is accelerating the installation of digital order kiosks across his 180 restaurants.

Ghai, who owns approximately 140 Burger King locations and several Taco Bell and Popeyes restaurants, told Business Insider, “We can’t move fast enough on this.”

The implementation of kiosks, which are currently present in about 25% of Ghai’s restaurants, is set to expand to the remaining 75% within the next 30 to 60 days. “We are installing kiosks in every single restaurant,” Ghai emphasized, highlighting the urgency of the situation.

The new minimum wage, effective April 1, applies to limited-service restaurant chains with at least 60 locations nationwide and is significantly higher than the state’s general minimum wage of $16 an hour.

While fast-food workers and their unions have long advocated for better wages, especially in high-cost California, franchisees like Ghai express concerns about the impact on profitability.

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To offset the increased labor costs, Ghai has already raised prices by 8% to 10% in the past year, a substantial increase compared to the typical 2% to 3% annual hike. However, he cautioned, “I can’t take more price than that. Anything more than that is going to result in \[a\] significant impact to our traffic.”

In addition to deploying kiosks, Ghai is implementing other cost-cutting measures, such as reducing workers’ hours, eliminating overtime, and pausing the development of new restaurants.

The financial analysis, he explained, favors investing in technology over absorbing the higher labor costs.

The rapid adoption of kiosks in California’s fast-food industry is part of a broader trend across the United States, as chains seek to minimize labor expenses while maximizing efficiency and profitability.

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Shake Shack, for instance, reports that kiosks are its most profitable channel, while Taco Bell has already installed them in all its US restaurants.