McDonald's to replace cashiers with touch screens

To save on its European labor costs, the fast-food icon will borrow the self-checkout model from retail. Will its US locations be next?

By InvestorPlace May 16, 2011 8:57AM

Image: Hamburger (© BananaStock/Jupiterimages)McDonald's (MCD) is trying to make fast food even faster.


The Financial Times reports that the world's largest fast-food chain plans to replace many of the cashiers at its 7,000 European restaurants with touch-screen terminals that allow customers to order and pay electronically.


The system is similar to what many consumers experience in supermarkets, retailers and gasoline stations that have opted for self-checkout to save on labor costs. McDonald's says the move is about making its European restaurants more convenient and efficient. It's also clearly about keeping down costs. If it succeeds, you can bet the trend will come soon to the U.S.


The decision is being driven by margin concerns. McDonald's is still growing its sales, reporting a 5.7% increase during its first quarter in Europe compared with a year ago. But margins are being eaten up by higher commodity costs -- beef and dairy in particular. (Mickey D's recently debuted new chicken menu items to fight beef inflation.)


Outside the restaurant, consumers everywhere are struggling to pay bills under the weight of rising gasoline and food prices, and a Big Mac or McCafe coffee is quickly becoming an expense many folks cannot afford as often as they might once have. That may be even more the case now that McDonald's has said it will raise menu prices to cover rising food costs.

Eliminating cashiers may help McDonald's stabilize menu prices, or even cut some, to help lure customers to its restaurants. It's not like most of McDonald's customers don't know what they want when they go in to order. By adopting a swipe-and-go payment system, McDonald's also can gather more information about its customers, such as their ordering habits and which menu items sell best to a particular demographic.


However, some customers may not like it or not have credit or debit cards. Likewise, some may sympathize with the cashiers who lose their jobs. Many customers at stores like Wal-Mart (WMT) have gotten used to checking themselves out, and considering the relatively small menu at McDonald's compared with the produce section at a supercenter, they may not find the self-checkout kiosks hard to use at all.


But while the ordering experience may not change, the labor market could feel an impact. During the Great Recession, many consumers turned to McDonald's -- one of the few employers still hiring -- for employment. McDonald's recently held a national hiring day to fill 50,000 jobs. There may be some risk in rolling out a cashier-free system after touting the restaurant's footprint as an employer. And if there are not enough accessible employees around to complain about when folks use the self-checkout for the first time, that could really give customers the impression that McDonald's is just looking to cut corners to squeeze out a few more euros.


McDonald's didn't mention any immediate plans to make touch-screen ordering and payment more widespread in the United States.  But if it's successful in Europe, it won't be long before U.S. consumers find themselves reading or talking to a screen.


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7Comments
May 16, 2011 9:41AM
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In a nation where we have vast unemployment problems these "things" are the worst to come along.  Yes, it might keep the junk food costs down but it also puts people out of work when work is needed. 

Look at CostCo and Home Depot.  How many people did those machines put out of work.  The grocery stores have done the same thing in many instances. 

Yes they may be low paying jobs but they are jobs and they are being replaced by machines.  And it wouldn't be quite so bad, because someone has to build those machines but the slap in America's face is that they are not built here but in some other third world nation where the labor is cheap, benefits are non existent and health and safety laws are a joke.

So, now, how can you show your displeasure?  Don't use them and use a human cashier instead.  If they have no human cashiers then shop somewhere else.

Also, these screens are prone to damage from things like acetone which, like in finger nail polish remover, the acetone breaks down the plastic membrane covering the touch screen that makes it work.

So much for McDonald's hiring 50,000 job positions.

May 16, 2011 10:49AM
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I am surprised that the Socialist governments of the Euro Zone are not screaming at this news.  After all, it was France that pioneered the 35 hour work week.  And with confiscatory taxation and other heavy-handed Nanny state regulations, who would have thought they'd allow this?  Here's the flip side to the job losses:  McDonald's is a shareholder owned company and like it or not, they are in business to make money, which in turn is spread around in dividends and other improvements to the company and its products.  For those of you who believe a job is an entitlement, regardless of whether or not it is productive or contributes to a company's mission or profitability, and for those of who you who disapprove of McDonald's strategic decision making, I have this advice:  SPEND your Euros or dollars elsewhere!   No one makes you eat at the Golden Arches.

 

McDonald's is FREE to make decisions (at least for the time being) like this in its own self-interest.  Likewise, if you don't like these same decisions, you are free to do business elsewhere.  Grow Up and STOP WHINING!  Life isn't fair, no said it was.  GROW UP and face reality.  Life's hard.  Think for yourself, take care of yourself and take some individual responsibility instead of letting the government and other nanny state tyrants do everything, to include wiping your nose when you have a cold for you!  As a shareholder, I agree with Mickey Dee's decision to cut costs.

May 17, 2011 8:52AM
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Instead of worrying about losing minimum wage jobs, think about all the automation jobs that will come out of this... The problem isn't the fact that minimum wage jobs will go away, the problem is the fact that people won't educate themselves to better their career.

If someone was really concerned about losing their cashier job at McDonald's, then they should spend a year studying automation, and get a career fixing these damn things...

If you want to compete with the Chinese market, you either have to live like them (64 cents/hr) or automate the damn thing...

Eventually manual labor will be mostly wiped out, its just a matter of time. If you want to survive, get a better education!

Jul 27, 2011 12:15PM
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I bet that there would not be as many errors in orders if people were allowed to input the orders themselves.  McDonald seems to employ the dumbest people they can find.  The counter people always screw up my order.
Oct 31, 2011 6:07AM
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I've seen this before in Fine Burger restaurant in London! Open-mouthed

it's not a new idea... they have touch screens with the entire menu and all kinds of games.


it's very nice, and i heard it's now popular to use iPad menus, which is really cool. never tried it though. all made by a company named Conceptic. i wonder if McDonalds also working with them. see here:
http://www.emenu-international.com/iPadMenu

May 16, 2011 1:16PM
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But what about all of those new McJobs?  I guess they haven't figured out how to automate burger flipping yet.
May 16, 2011 11:57AM
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I have never used the auto checkout lines and I never will! I would rather wait 10 to 15 minutes to check out with a human being than to zip thru a auto checkout aisle even with only 1 item.  If McDonalds chooses this route in the US I will just go to another fast food joint who has people.
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