Self Checkout

Yup. The rising cost of unskilled labor (a.k.a. minimum wage) is eliminating jobs and replacing them with kiosks. A lot of us predicted exactly this when the "make minimum wage a living wage" movement started screaming for $15 an hour to be the new minimum wage a few years ago.

Employers can't pay employees more in wages than their work generates in profits and still stay in business. It's simple math.

For example: if an employee is being paid $15 and hour, and their medical insurance, employer paid taxes, workman's comp, etc. cost another $10 an hour then it costs the employer a total of $25 an hour for that employee to work there.

If a retail operation is making an average net profit of 5% on sales, then that employee has to generate $500 an hour in sales, every hour they work, just for the employer to afford to pay them. That's $4,000 in sales per day per employee.

In a fast food setting for example, with a couple of people working the cash registers, a couple cooking the food, and a couple more prepping, packing, and bagging the food, six employees working means the fast food has to make $3,000 an hour in sales ($24,000 per 8 hour shift) to be profitable.

Even if the profit margin doubles to 10% it still requires $1500 per hour minimum in sales - every hour - for the restaurant to pay for a crew of 6. That's $12,000 in sales every 8 hour day and that cost of doing business never ends or even goes down.

Suppose that a kiosk replaces just the two cash register employees. That is $50 an hour in savings. In the example above with a 5% profit margin that reduces the required sales from $3,000/hr ($24,00 per shift) to $2,000/hr ($16,000 per shift). It doesn't take very long at that rate for the savings to completely pay for the kiosk, and once it is paid for there isn't a whole lot of ongoing maintenance cost.

Even in a higher profit margin setting like the 10% profit margin example above the kiosk still reduces the required sales levels from $1,500/hr ($12,000 per 8 hour day) to $1,000/hr ($8,000 per 8 hour day). So the kiosk still pays for itself in a short period of time and continues to provide additional savings (profits) once it is paid for.

Plus kiosks don't make mistakes like entering the order wrong, or giving incorrect change. They don't steal from the till, call in sick, take breaks, take vacations or present any of the other thousand other problems that come with having employees. So I don't see a very rosy future for low skilled minimum wage jobs in retail settings. Especially as minimum wage rates and benefit costs keep climbing.

Great perspective, yet I doubt the local fast food joint does, $3K a day let alone $3k and hour.
 
At 26th and California, the Cook County Jail in Chicago
has had self checkout since at least the 1960s.

However, if Ben Hecht's play The Front Page is any
indication, the practice goes back to at least the
1930s.
 
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norbert-val-humorous-strip-down-greeting-card-31882-p.jpg
 
At the grocery store couple weeks back. Went to the checkout with a full cart. Guessing $150.00, my wife would know exactly. Only two lines open and quite backed up. An employee, young and foolish, wanted to help me with the robot. I asked to open another lane and was refused with the robot offer still valid. I left the cart and walked out. Restocking job security for someone.
Until recently they had 4 or 5 lanes open, and would start another if the lines increased.
I just went to the same chain in a more affluent area. They had the robots, but also four lanes open on a weekday. Now my new store.
I know it's the future, but I won't make it easy.
 
Again, another example of economics. If gas stations still operated with attendants like they did in the 1950s, gas would probably cost twice what it does now. I don't remember the last time I saw a free-standing old-style attended gas station that wasn't associated with a convenience store or supermarket. At one time, some states banned self-service gas pumps as being a fire hazard. I know Ohio did. Remember when gas stations all had one or two service bays and someone they called a "mechanic"?

New Jersey has only full-service fuel pumps. I was at a wedding there last week and got my windows squeegeed while the fuel was pumped. NJ fuel was less expensive than the self-service fuel across the Hudson in NY.
 
I don’t know how it is in other states, but in Kaliforniastan you can not use the self checkout process for the beer I often buy at the-grocery store, that means I often need to stand in along line to check out at a manned check out line which is frustrating , because I could have been through the self checkout several times by the time I get through the manned position. Thank the Retail Clerks Union for this state law. End result is I usually buy my beer only at a store that does not have any self checkout kiosks.

Bob
Actually wouldn't the age to purchase restrictions be the reason for having to be checked out by a human when buying alcohol? I don't think they've invented a kiosk that can check the age on your ID and compare the ID picture to your face for a match.
 
New Jersey has only full-service fuel pumps. I was at a wedding there last week and got my windows squeegeed while the fuel was pumped. NJ fuel was less expensive than the self-service fuel across the Hudson in NY.

Until recently Oregon did too. It was illegal for the consumer to pump their own gas. Yet it was still cheaper than just across the border in Washington. The reason? State taxes. The state tax on gasoline was so much lower in Oregon that they could pay someone to pump it for you and STILL sell it for less than what they sell it for in Washington.

I suspect the same is true for NY/NJ
 
Great perspective, yet I doubt the local fast food joint does, $3K a day let alone $3k and hour.
Exactly. The numbers were just theoretical, but probably not too far out of the ballpark.

OTOH you might be surprised. At an average of just $15 per sale, for a 12 hour day, $3k is less than 17 sales per hour. Most of them will see two or three times that many sales per hour for at least two or three hours during both their lunch and dinner rushes. And at least in my area, $15 doesn't go very far at a fast food place.

Unless you go with only the items on the "value menu", burgers fries and cokes for two will run $15-$20 easy.
 
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Great perspective, yet I doubt the local fast food joint does, $3K a day let alone $3k and hour.

I looked it up. McDonalds average annual sales per unit is $2,550,000, or $6,986.30 per day based on 365 days. But there's a couple of days they are closed so it's probably just a tad higher.

Wendy's does close to $4,000 per day per unit. Chick-fil-a smokes them all at $12,000 a day per unit.


The Top 50 Fast Food Restaurants in America Ranked by Sales - QSR magazine
 
What BC38 said.

I have been watching this situation for several years now. I'm not sure that I saw it coming, or not, but it sure makes sense to me.

Fast food restaurants are low profit margin operations, just like grocery stores. They make their profits on the volume of sales (customers) coming through and buying. I believe that McDonald's and others have standards for service, i.e. three minutes from the time that you walk in until the time that you have your food order. You staff throughout the day to meet this standard.

However, at $15.00/hour (plus payroll taxes and benefits) for your staff, it's not going to happen. The best and easiest option is to have the customer perform some or all of these tasks.

As our forum members know, our unemployment rate is at the lowest level that it's been in decades. Add to this fact that we have a growing, expanding economy that has created more jobs. Then there are the "Baby Boomers" who are rapidly leaving the workplace and their employment. I see "Help Wanted" and "Now Hiring" signs everywhere.

Another factor is the work ethic of employees. I had lunch with a new tax client last week. She said that their managers have special classes related to the motivation (??), work ethics, supervision and management of Millennials.

We had lunch at Red Lobster last Sunday. Just like Chili's, Longhorns, etc. they have their terminals on the table. Our waiter told us that in the future someone will seat you at a table, and then you place your order, request beverage refills, and then pay your bill using that terminal. No waiters or waitresses. All that they will have will be food-beverage transporter people, and very few of those.

As Pogo always said, "We have met the enemy, and he is us!"

Bill
 
I use them if I've only got a few items but a lot of the times, especially at Walmart, the lines there are longer than in the checkout lines.
 
17 yrs ago I was in my 34th year working for NCR, a company that's been around since 1885. One of my last responsibilities was installing the newly conceived self check outs. They were pretty much pieced together Rube Goldberg affairs compared to today's self check outs. Retailers know that people are happy to spend an hour or more shopping but when it comes to settling up and paying they want to pay and get the heck out. It's hard for retailers to satisfy everybody. Self check outs give retailers the option of having what amounts to a crew of 8-12 cashiers standing at the ready 7x24x365 without payroll demands. They show up every day and show when the weather's bad or too nice to work. Acceptance of self check outs was bad at first. Now we have generations that love poking their noses into cell phones all day so the self checks are a breeze for them. People 51+ are the biggest detractors of self checks. I admit I don't like them but they'll be more in the future. They're just a more interactive ATM. When I left NCR they were working on an RFID scanner that scanned the whole order without removing anything from the cart.
 
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