Fast food chains have found a way to get around ever-rising minimum wages - and it is not good news for staff

Fast food chains in California are replacing staff with digital order kiosks - as a way to cut costs after the minimum wage in the state was hiked to $20-an-hour.

After two years of price rises caused by higher costs for food, restaurant bosses say they cannot raise them again.

So they are looking at other ways to cut their overheads - and, with labor the biggest costs, having fewer staff is the easiest way.

It is cruel irony for workers and their unions that battled for years for higher wages - a move critics warned would lead to job losses. 

Harsh Ghai, a major Burger King franchisee with 140 restaurants on the West Coast,  plans to have digital kiosks in all of them in two months. Until the wage hike, he planned to roll them out over the next five to ten years.

Burger King franchisee Harsh Ghai plans to have digital kioks in all his 140 restaurants on the West Coast

Digital ordering kiosks are a way for fast food restaurants to cut down on staff

A Burger King franchisee on the West Coast plans to have digital kiosks in all his 140 outlets within two months

The controversial wage hike - $4 more than the minimum wage in the state for any other job - was introduced by California Governer Gavin Newsom at chains with more than 60 locations in the US.

Since it came into effect on April 1, workers have already complained of getting fewer hours - and some workers have been laid off.

Staff at Pizza Hut and Round Table have already lost their jobs after bosses said they could not afford to pay it.

McDonald's, Chipotle and Starbucks warned they will pass on the extra costs but Burger King operator Ghai says putting up prices risks losing too many customers.

Ghai said over the past year, he had put prices up by between eight and ten percent - compared to between two and three percent in a normal year.

'The majority of that is going to get absorbed in the inflation of our food costs,' he told Business Insider

'So we're not even compensating for most of the labor costs that we're going to be experiencing with this legislation.'

He added that any more price rises are 'going to result in a significant impact to our traffic' - so he has found another way to cut wage costs.

'We have kiosks in probably about 25 percent of our restaurants today,' Harsh Ghai told Business Insider.

'However, the other 75 percent are going to have kiosks in the next probably 30 to 60 days.'

Under his previous strategy to roll out kiosks more slowly - only adding them to new restaurants or those being remodelled - it would have taken five to ten years.

'But now we are just going ahead and installing the kiosks in every single restaurant in response to the legislation to be able to balance some of these labor costs that are hitting us,' Ghai said.

Self-service kiosks are not a new sight in major fast-food chains. They were being slowly introduced before the pandemic and that rollout gained momentum during it.

McDonald's introduced self-service kioks in 2017

Panera Bread led the way in 2014 by introducing self-service kiosks in all locations, and in 2017 McDonald's followed suit.

Shake Shack equiped all its locations with self-serve ordering kiosks by the end of last year.  Bosses said customers tend to order larger meals when using kiosks compared to traditional cashier orders.

Katie Fogerty, Shake Shack's chief financial officer, said: 'When a guest goes to our kiosk and they see the visual merchandising of our menu, we see that they have a higher [value] order than a traditional cashier order. 

'We see that they add on more premium and higher margin items. And so that together really makes that our highest margin channel.' 

Last month, Chick-fil-A opened the first of its futuristic new 'grab and go' restaurant where there are NO cashiers. Diners must pre-order on the phone for pick-up and there is nowhere inside to eat.