There’s a myth that just won’t die about fast-food chains going out of their way to underpay their employees. In reality, and as is the case with all industry sectors, low pay is incredibly expensive. For the employer.
Simply consider the costs (time and monetary) associated with training individuals who, due to the low pay, are likely to jump to better opportunities once they present themselves. More important, consider the lack of individual productivity that low pay is associated with.
Which is why, contra popular perception that businesses aim to pay workers as little as possible, the reality is quite different. Consider Yum Brands which, according to the Wall Street Journal, is investing tens of millions annually in artificial intelligence (AI) technology meant to powerfully increase the capacity of its restaurant brands (Taco Bell, Pizza Hut, KFC, and Habit Burger Grill) to serve exponentially more customers faster, and in a higher-quality way.
What’s important about all of this investment is that it’s not the actions of a restaurant company intent on staking its present and future on “cheap labor.” Again, no business of any kind eager to seriously grow would do such a thing. Repeat it over and over again, cheap labor is very expensive for businesses, and by extension, their shareholders.
In which case Yum is investing copious amounts meant to arm its labor force with technology that can increasingly do and think for its human workforce so that those humans can work quite a bit more productively. Translated for those who need it, Yum is spending a great deal of money on technology that will make it possible for the Louisville, KY-based corporation to pay its workers quite a bit more.
The simple, too-easily-forgotten truth is that machines that do and think for us don’t put us out of work as much as they greatly amplify our work. If the opposite were at all true, then we would see human capital the world over relentlessly migrating to the locales defined by the most primitive working conditions, free of the machines that allegedly put us in breadlines.
The reality is that work divided (whether with individuals or machines) is the path to wondrous specialization, and higher pay borne of that specialization. Applied to restaurants, Yum is finding (and aiming to discover through investment) that machines are increasingly capable of handling not just order taking and digital transfer of orders via drive-throughs, but also technology capable of directing employees on oven temperatures, schedules, and operations more broadly.
With technology it’s always useful to think of the pin factory visited by Adam Smith in the 18th century, or the factories designed by Henry Ford in the early 20th. They were monuments to work divided that powered massive productivity leaps in concert with pay increases that proved a magnet for talent. Yum is overseeing something similar today.
As the aforementioned Wall Street Journal story about it indicates, roughly 45% of Yum sales are digital. Importantly, the previous number isn’t the frontier as much as it signals where things are going. The Journal reports that while outside e-commerce technology formerly used by Yum could process 700 Taco Bell orders per minute, its in-house developers have created technology that will process 4,600.
Where it perhaps grows most interesting for those who increasingly outsource all of their food needs to restaurants, is what will happen when AI finds its way into kitchens. Indeed, imagine the speed and soaring quality of the food produced in kitchens once much of the work required to produce the final product is handed off to machines that don’t show up late, require breaks, vacations, and who are always looking ahead to the next, better opportunity.
The answer is that as AI grows in relevance at the front and back of restaurants, the pay of those in the front and back will soar to reflect the importance and productivity of the work done by humans in the front and back. In short, the perception of fast and fast casual work is about to change for the much better, and with that, the demand for fast and fast casual jobs.
Republished from RealClear Markets