McDonald's Ex-CEO Shows Concern Over $15 Minimum Wage

According to media reports, during an interview on the FOX Business, former McDonald's Corp. (NYSE:MCD) CEO and President Ed Rensi expressed his views on the effect of the implementation of the minimum wage of $15 on the current job market and economy.

During an interview on the FOX Business Network’s Mornings with Maria, Rensi declared that at the National Restaurant Show held for four days at McCormick (NYSE:MKC) Place, which ended on May 24, he saw many robotic devices being introduced in the restaurant industry. The ex-CEO feels it would be cost effective to buy a robotic arm for $35K than hiring an employee who is inefficient and is being paid $15 an hour.

Rensi feels that if the minimum wage is increased to $15 per hour across the U.S., companies hiring for entry-level positions will opt to use robots instead of human staff. Rensi, who has held the post of CEO from 1991 to 1997 spoke against a wage hike at a time when employees were staging protests outside the McDonald’s headquarters.

He further said that the concept of minimum wages of $15 an hour is going to be extremely detrimental to the job market, as many workers would lose their jobs, because of technological. Further, Rensi added that the government should remove the concept of the federal minimum wage and leave it to the states to decide on wages.

In our view in the restaurants industry the implementation of the minimum wages throughout U.S. would lead to an increase in menu prices and higher technology usage. As wages continue to rise, larger quick service chains like McDonald’s will have to restructure their workforce in order to clamp down on costs.

McDonald’s currently carries a Zacks Rank #3 (Hold). Better ranked stocks in the same sector include Carrols Restaurant Group, Inc. (NASDAQ:TAST) , Famous Dave's of America Inc. (NASDAQ:DAVE) and Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) . All these stocks carry a Zacks Rank #1 (Strong Buy).