Fast-food companies will have little choice but to automate their operations as minimum wages rise, the chief executive of Jack in the Box Inc. said Tuesday.
“As we see the rising costs of labor, it just makes sense.”
Speaking at the ICR Conference in Orlando, Fla., CEO Leonard Comma said automation might be the solution to rising labor costs, according to a report by Business Insider.
While Jack in the Box JACK, -2.14% has tested automated kiosks since 2009, Comma has previously said they’re too expensive to install on a widespread basis. But Comma reportedly said Jack in the Box is now reconsidering kiosks and other technology in the face of higher minimum wages for workers.
California plans to raise its minimum wage to $11 this year, as part of a process to raise it to $15 by 2023. It is one of 18 states planning to raise minimum wages this year.
A worker making $15 an hour working 40 hours a week would make about $31,200 a year.
As chief executive, Comma made $9.4 million in compensation in 2016, according to Morningstar.
Jack in the Box isn’t the only fast-food chain looking to automation. Wendy’s Co. WEN, -0.06% is experimenting with self-order kiosks in about 1,000 stores, and last year, McDonald’s Corp. MCD, -0.02% announced a plan called “Experience of the Future” that would bring self-order kiosks and other tech upgrades to 2,500 stores. McDonald’s has denied that automation is seen as a replacement for human workers.
Jack in the Box shares are down more than 12% over the past year, compared to the S&P 500’s SPX, -0.11% 21% gain in that time. Last week, BTIG analysts downgraded its stock from buy to neutral, based on increased competition from McDonald’s.