How Many McDonald's Workers Will Be Pushed Out by Technology?

Douglas A. McIntyre

McDonald’s Corp. (NYSE: MCD) just bought a tech company that can change store menus based on the weather, what customers might add to menu items they already have selected and what people are more likely to order in the morning or in the night. It spent $300 million to buy this firm, called Dynamic Yield. This technology gets added to order-taking machines in many McDonald’s locations, and it means very large layoffs are inevitably coming.

McDonald’s is no different from any other fast-food chain, drug store retailer or mall-based store. Most of these operate on small margins. Employee costs are high, even though most retail workers are poorly paid. Despite the low pay, the more layoffs the better, as long as stores can deal with current foot traffic. And, in many cases, the death of brick-and-mortar retailers means that they need even fewer people, who can be replaced by technology.

Retailers CVS Health Corp. (NYSE: CVS) and Walmart Inc. (NYSE: WMT) already have self-checkout at a number of their stores, which allows them to replace cashiers. Altogether, the total figure of retail employees who can be replaced by these systems will rise into the tens of thousands.

Store owners, in some cases, can state that without automation they cannot remain in business. This would be fair for J.C. Penney Co. Inc. (NYSE: JCP) to argue. Sears, or what is left of it, can make a case that is hard to debate. But McDonald’s is financially healthy. Eventually, that will not matter. The rise of the machine means the sunset of ever more retail jobs.