McDonald’s Stock Sores Thanks To Automation

For those bored by finance, bear with me here.

McDonald’s stock has been on a tear since the beginning of the year, surging 26% compared to the S&P 500’s 10%. Despite the massive size of the company (currently valued at $127 billion), they haven’t seen diminishing returns in the size of their growth (as small companies tend to grow at faster rates than larger companies). The stock has been upgraded this year by a number of investment banks, including Goldman Sachs and Wells Fargo.

And what’s leading the growth?

New product offerings, like all-day breakfast? Rapid construction of stores? A general rise in sales? Not in an increasingly health conscious world.

The main driver has been a bit paradoxical – and it’s thanks to liberals, but not for the reason they’ve wanted. Liberals have succeeded in passing higher minimum wages in the municipalities they have influence over, and rising labor costs have reduced McDonald’s labor costs (which are about a third of their expenses) by driving them towards automation. As CNBC reported, “McDonald’s shares hit an all-time high on Tuesday as Wall Street expects sales to increase from new digital ordering kiosks that will replace cashiers in 2,500 restaurants.”

This was to be expected, by the way.

Fast-food industry veterans are coming out against raising the minimum wage.

“It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging french fries,” former McDonald’s USA CEO Ed Rensi said in an interview on Tuesday on the Fox Business Network’s “Mornings with Maria.” “It’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe.”

According to Rensi, rising labor costs are forcing chains to cut entry-level jobs and replace workers with machines. Currently, Wendy’s, McDonald’s, and Panera are rolling out kiosks across the US, in part because of the rising cost of labor.

H/T Business Insider, May 2016

Who knew liberals could be so beneficial to big business? It’s only come at the expense of hundreds of thousands of workers losing their jobs nationwide thanks to their policies.

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By Matt

Matt is the co-founder of Unbiased America and a freelance writer specializing in economics and politics. He’s been published... More about Matt

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