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Pandemic Wave of Automation May Be Bad News for Workers

“You can pull a less-skilled worker in and have them adapt to our system much easier,” said Ryan Hillis, a Meltwich vice president. “It certainly widens the scope of who you can have behind that grill.”

With more advanced kitchen equipment, software that allows online orders to flow directly to the restaurant and other technological advances, Meltwich needs only two to three workers on a shift, rather than three or four, Mr. Hillis said.

Such changes, multiplied across thousands of businesses in dozens of industries, could significantly change workers’ prospects. Professor Warman, the Canadian economist, said technologies developed for one purpose tend to spread to similar tasks, which could make it hard for workers harmed by automation to shift to another occupation or industry.

“If a whole sector of labor is hit, then where do those workers go?” Professor Warman said. Women, and to a lesser degree people of color, are likely to be disproportionately affected, he added.

The grocery business has long been a source of steady, often unionized jobs for people without a college degree. But technology is changing the sector. Self-checkout lanes have reduced the number of cashiers; many stores have simple robots to patrol aisles for spills and check inventory; and warehouses have become increasingly automated. Kroger in April opened a 375,000-square-foot warehouse with more than 1,000 robots that bag groceries for delivery customers. The company is even experimenting with delivering groceries by drone.

Other companies in the industry are doing the same. Jennifer Brogan, a spokeswoman for Stop & Shop, a grocery chain based in New England, said that technology allowed the company to better serve customers — and that it was a competitive necessity.

“Competitors and other players in the retail space are developing technologies and partnerships to reduce their costs and offer improved service and value for customers,” she said. “Stop & Shop needs to do the same.”

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McDonald’s Will Raise Wages at Company-Owned Restaurants

Battling to hire employees in a tight job market, McDonald’s on Thursday joined a growing list of fast-food and restaurant companies that are lifting hourly wages in the hopes of attracting job seekers.

Earlier this week, Chipotle said it was raising hourly pay at its restaurants in the hopes of hiring 20,000 new employees and, in late March, Olive Garden said it was raising workers’ pay.

Fast-food and casual dining restaurants have struggled to find workers in parts of the country. As coronavirus vaccinations have increased and government restrictions have eased, the restaurant industry, which laid off or furloughed millions of employees during the pandemic, has begun a hiring spree, as have several other service-related industries.

But even as McDonald’s and other restaurant chains raise wages, union activists say it is not enough for the employees who went to work daily during the pandemic and helped the restaurants survive or even thrive.

report released last week showed a significant jump in the number of workers hired in the restaurant and bar sector, employment levels at full-service restaurants in February remained 20 percent lower than they were a year ago, according to the National Restaurant Association. That’s the equivalent of 1.1 million jobs. Employment at fast-food and fast-casual restaurants was down 6 percent over the same period.

Some restaurants say the challenge of hiring workers could slow their own recoveries from the pandemic. But some potential employees — whether concerned about the safety of serving customers dining indoors, buoyed by government stimulus checks or simply unhappy with the pay being offered — are wary of returning to work.

“We’re not only competing with our peer companies out there, and I know everybody is challenged with that,” Greg Levin, the president and chief financial officer of B.J.’s Restaurants, an American grill chain, told Wall Street analysts in April. “We’re also right now kind of competing with the federal government and somewhat of the unemployment subsidies.”

The company estimates that it needs to hire an additional 5,000 employees to return to prepandemic sales levels.

But some analysts say other factors may be playing a role in making it difficult for the restaurant industry to hire, namely employees who left permanently after the volatility of the past year and others who may have found jobs in other, faster-growing sectors.

added more than 400,000 employees last year, and on Thursday said it was planning to hire an additional 75,000 workers. It will offer a $1,000 signing bonus in some locations, and pay an average of $17 an hour.

McDonald’s, hoping to add 10,000 new employees in the next three months, said it would increase hourly wages for current employees by an average of 10 percent and that the entry-level wage for new employees would rise to $11 to $17 an hour, based on the location of the restaurant.

At its company-owned restaurants, McDonald’s said the average employee wage would increase to $13 an hour, with some restaurants getting to an average wage of $15 an hour later this year. All company-owned restaurants are expected to be at an average hourly wage of $15 by 2024, the company said.

But while the coffee chain Starbucks said last year it would raise the pay for all employees to $15 an hour over a three-year span, McDonald’s has been reluctant to commit to a similar minimum-wage move.

In 2019, the company said it would no longer use its powerful lobbying arm to fight attempts to raise the minimum wage to $15 an hour at the federal, state and local level. In a call with Wall Street analysts in January, Mr. Kempczinski, the McDonald’s C.E.O., said the company was doing “just fine” in the more than two dozen states that had increased minimum wages in a phased-in way.

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McDonald’s says sales are back to prepandemic levels.

McDonald’s said Thursday that sales of Big Macs, chicken nuggets and french fries got back to prepandemic levels in the first part of the year.

Global same-store sales grew 7.5 percent in the first quarter from the year-earlier period. That was driven by a big jump of 13.6 percent in the United States, McDonald’s reported. Revenues for the quarter rose to $5.12 billion, topping the $4.7 billion brought in a year ago as well as the $4.9 billion in the first quarter of 2019, before the pandemic struck.

Chris Kempczinski, the president and chief executive officer of McDonald’s, touted the company’s rebound, noting that it had occurred “even as resurgences and operating restrictions persist in many parts of the world.”

Profit in the quarter climbed to $1.5 billion, from $1.1 billion a year earlier.

Chicken was one of the big drivers for growth in the U.S. The company brought back its spicy chicken nuggets for a limited time and entered the competitive chicken-sandwich market with its own version in February.

ingredients.

What remains unclear is which consumer behaviors that changed during the pandemic will stick. In the call with analysts, executives said they expected delivery and drive-through to remain important. But breakfast has been slower to rebound.

“We believe that certainly as some consumer habits return to prepandemic ways of life, that the breakfast day part will continue to come back,” Mr. Erlinger said. “And similarly to how it was a real market-share battle prepandemic, we think that market-share battle will absolutely continue and we’re ready and prepared for that.”

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Chipotle Sued by N.Y.C. Over Workers’ Scheduling

New York City on Wednesday sued the fast-food giant Chipotle Mexican Grill over what it says are hundreds of thousands of violations of a fair scheduling law at several dozen stores.

Workers are owed over $150 million in relief for the violations, according to the complaint, and financial penalties could far exceed that amount, making it the largest action the city has brought under the law.

The suit cites violations of the so-called Fair Workweek Law that include changing employees’ schedules without sufficient notice or extra pay; requiring employees to work consecutive shifts without sufficient time off or extra pay; and failure to offer workers additional shifts before hiring new employees to fill them.

The allegations cover the period from November 2017, when the law took effect, to September 2019, when the city filed an initial suit involving a handful of Chipotle stores. The new complaint, filed by the Department of Consumer and Worker Protection at the Office of Administrative Trials and Hearings, said that Chipotle had made some attempt to comply with the law since 2019, but that violations were continuing.

can exact a large physical and emotional toll on workers and their children.

Under the law, fast-food employers must provide workers with their schedules at least 14 days in advance — or, if not, obtain written consent for them and pay them a premium for the shifts.

Employers must also provide workers with at least 11 hours between shifts on consecutive days or obtain written consent and pay them $100. The hope is to discourage the practice of forcing workers to work late into the evening and then help open a store in the morning, known as “clopening.”

The provision requiring employers to offer workers additional shifts before hiring new workers was intended to make it easier for workers to earn enough income to sustain themselves.

Employers in fast-food and retail operations often hire more workers at fewer hours to add scheduling flexibility, said Saravanan Kesavan, an expert in retail operations at the University of North Carolina. Dr. Kesavan has conducted research showing that financial performance can actually improve when employers provide more stable and predictable schedules.

The complaint also accuses the company of violating the city’s paid sick leave law, which was enacted in 2014 and mandated up to 40 hours of paid leave per year. (The ceiling grew to 56 hours beginning this January for larger employers.) The city contends that Chipotle illegally denied requests for time off, required workers to find their own replacements or did not pay workers for time they took.

According to the complaint, all of the estimated 6,500 Chipotle employees in New York City from November 2017 to September 2019 were affected by violations involving scheduling and sick leave, and on average they experienced more than three scheduling violations a week.

became sick after eating at Chipotle restaurants in 2015 and 2016, some from E. coli bacteria, leading to a sharp decline in the company’s stock price and threatening the image it had cultivated as a purveyor of “food with integrity.”

Last year, Chipotle was fined nearly $1.4 million over accusations that it regularly violated Massachusetts child labor laws from 2015 to 2019. The company settled the case without admitting violations.

But the company has posted solid sales growth during the pandemic, with revenue of $6 billion last year, and its stock price has soared.

According to the New York City complaint, Chipotle frequently violated the law by either destroying or failing to maintain or produce records attesting to its scheduling policies.

“Chipotle failed to produce certain categories of scheduling information the department requested, in part because it had destroyed paper schedule records,” the complaint states. “However, the evidence Chipotle did produce, as well as evidence that employees provided, shows that Chipotle did not begin to implement key elements of the Fair Workweek Law in any of its New York City locations until approximately September 2019.”

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Drive-Throughs That Predict Your Order? Restaurants Are Thinking Fast

Starbucks has employees at hundreds of busy locations strolling through car lines, taking orders with hand-held devices so customers can get their caffeine fix a few seconds faster. Shake Shack, which has long emphasized that quality ingredients are worth waiting a few extra minutes for, will soon feature its first drive-through window. And the vast majority of new Chipotles this year will have “Chipotlanes,” where customers can drive up to a window and pull away with preordered meals in less than a minute.

With dining room restrictions in place for much of the country during the pandemic, drive-through and pickup windows became critical ways for a variety of restaurants to remain afloat.

Now, as the dining industry looks toward a post-pandemic world, many companies are betting big that digital ordering and drive-throughs will remain integral to their success. And the basic experience of sitting in a single line of cars, speaking into a sometimes garbled intercom and pulling up to window to pay for your food before driving away is poised to be demonstrably altered for the first time in decades.

has been sued by neighboring businesses that say its long drive-through lines block their customers’ access.

For most restaurants, the solution has many parts. First, more are trying to encourage customers to use ordering apps, which improve the accuracy of orders and are often connected to loyalty programs that give them points for free food. They are also trying to figure out how to best speed consumers through the drive-through or pickup process without disrupting traffic patterns or other businesses.

Drive-through times average 4 minutes and 15 seconds, according to Bluedot, a geolocation company. Like a Daytona 500 pit crew, restaurants are always looking for ways to shave off minutes, or even seconds.

To be competitive in this race, Chipotle, whose digital orders soared from 20 percent of its sales to as high as 70 percent at the height of the pandemic, installed in many of its kitchens a second assembly line where employees put together tacos or burrito bowls for mobile and online orders exclusively.

The chain also expects that 70 percent of its restaurants that open this year will have the dedicated Chipotlanes for online orders.

“In the traditional drive-through experience, you wait in line to order, you wait in line to pay and pick up, you wait in line for your food to be prepared,” said Jack Hartung, the chief financial officer of Chipotle. “We’re trying to get our service time from when you pull up to the restaurant, pick up your food and drive off to 40 or 50 seconds.”

Others, like McDonald’s and Burger King, are adding multiple drive-through lanes, which have been a feature at some busy fast-food spots like Chick-fil-A but are becoming more commonplace. Burger King is running three-lane tests in the United States, Brazil and Spain. In the U.S. and Spain, the third lane is “express” for advance orders made through the app. In Brazil, the lane takes delivery drivers to a pickup area with food lockers or shelves.

Burger King is also looking to propel its drive-throughs into the future with a Big-Brother-like artificial intelligence system, Deep Flame.

Right now, roughly half of Burger King’s drive-throughs with digital menu boards are using Deep Flame’s technology to suggest foods that are particularly popular in the area that day. It also uses outside factors, like the weather, to highlight items like an iced coffee on a hot day.

But this year, Burger King is testing a Bluetooth technology that will be able to identify customers in Burger King’s loyalty program and show their previous orders. If a customer ordered a small Sprite and a Whopper with cheese, hold the pickles, the last three visits, Deep Flame will calculate that chances are high that the customer will want the same order again.

It’s unclear whether the technology pays off. McDonald’s is moving in a similar direction. The fast-food giant acquired the Israeli artificial intelligence firm Dynamic Yield in 2019 with an eye toward boosting sales by providing personalized digital promotions to customers.

Restaurant Brands International — the parent company of Burger King, Tim Hortons and Popeyes — hopes to have the predictive personalized systems at more than 10,000 of its restaurants’ locations across North America by mid-2022.

“We’re taking what was an outdated, old, static sales channel and bringing it to the forefront of the industry,” said Duncan Fulton, the chief corporate officer for Restaurant Brands International. Now, customers can have the “the ability to automatically reorder things and pay for the items at the board, which, ultimately, speeds up the window time, allowing you to collect your food and go on your way.”

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