In an innovative move, a chain of New York City restaurants introduced virtual cashiers, who are taking customers' orders over Zoom from their homes in the Philippines. The approach has sparked heated debates, with some claiming it is a step toward a dystopian, impersonal future. But the technology might not be as bad as critics think. 

Customers at Sansan Ramen and Sansan Chicken in the Long Island City neighborhood in Queens are no longer greeted by a cashier face-to-face but instead interact with one displayed on a flat-screen monitor. Although physically half a world away, the virtual cashiers handle menu inquiries and take customers' orders just like in any other restaurant.

this is insane

cashier is literally zooming into nyc from the philippines pic.twitter.com/opAyS8AYUs

— brett goldstein (@thatguybg) April 6, 2024

The initiative, launched by New York–based Happy Cashier, has been under testing since October. It currently operates in several stores in Queens, Manhattan, and Jersey City, including the dumpling joint Yaso Kitchen. 

Yet since the virtual cashiers started trending on social media, the system has faced criticism. A New York Times reporter who visited a Sansan Chicken said the cashier had a spotty connection, making it hard to hear. Another reporter tried to order something off the menu at Yaso Kitchen, but the virtual cashier didn't seem to know what they were ordering. And a New York Post article seemed to care more about the system's tipping standards than the benefits of the technology.

Beyond technical glitches, the model has sparked broader economic and social concerns. Critics argue that virtual cashiers are taking away job opportunities from New Yorkers, especially amid the shrinking local fast-food work force. Meanwhile, others have come to the defense of foreign workers who are being "exploited" with a meager salary of $3 an hour—way under New York City's $16.

Despite these concerns, employing virtual cashiers could have several advantages. For struggling businesses, it offers a way to reduce operational costs and maintain lower consumer prices. 

Chi Zhang, the founder of Happy Cashier and a former restaurant owner himself, sees the model as a necessary adaptation. Facing high rents and operational costs, having "a virtual-assistant model, somewhat akin to that employed by overseas call centers, could help maximize small retail spaces and improve store efficiency," he told The New York Times.

"I simply cannot avoid discussing this topic," he told Fortune, referring to using outsourced labor to cut down costs. "The cost is admittedly cheaper than the U.S."

While the operational costs of virtual cashiers are lower for restaurant owners, the wages are also competitive by Philippine standards. According to Zhang, his virtual cashiers are earning over 150 percent more than the average cashier earns back home. It's a win-win situation.

The concept of virtual cashiers is not entirely new. Back in 2022, the Canadian food chain Freshii hired almost 100 workers from places like Nicaragua to take orders and payments through a video calling device after the company was left grappling with staffing shortages caused by the pandemic. 

With the technology still in its pilot stage, improvements are expected. Zhang hopes to quickly scale up the number of virtual assistants by the end of the year, positioning his venture as the leader of a transformative trend in the restaurant industry. 

The post Could Virtual Cashiers Be the Future of the Restaurant Industry? appeared first on Reason.com.

California Gov. Gavin Newsom is pushing back against claims that he sought to include a special exemption in a new minimum wage law to help a longtime friend and donor—but the governor's objections only underline how the entire law was a giveaway to his political allies.

Starting next month, fast-food chains operating in California will have to pay workers at least $20 per hour, even though the minimum wage for other jobs in the state will remain at $16 per hour. Newsom signed the bill to create that higher wage mandate, but the law includes a special carve-out seemingly tailored to exempt Panera Bread (and other chains that sell bread as a standalone menu item). Newsom had pushed for that exemption, Bloomberg reported earlier this week, as a favor to Greg Flynn, owner and CEO of the Flynn Restaurant Group, which operates 24 Panera locations in the Golden State.

After the story took off in the media, a spokesman for the governor's office claimed the allegation of favoritism was false. Newsom "never met with Flynn about this bill and this story is absurd," wrote Alex Stack in a statement to Reason and other media outlets that covered the story. "Our legal team has reviewed and it appears Panera is not exempt from the law."

The first claim might be true in only the narrowest sense. The Associated Press has confirmed that Flynn met with the governor's staff regarding the minimum wage bill and that he suggested exempting "restaurants like bakeries, bagel shops and delis" from the higher minimum wage law. Flynn denied speaking to Newsom directly, but it certainly appears that he attempted to exercise some influence over the lawmaking process.

Meanwhile, the governor's office's claim that the exemption doesn't apply to Panera only raises other questions—like, why is that exemption there at all?

That's a question that reporters in Sacramento have seemingly been trying to answer for months. Asked directly about the bakery exemption at a press conference last year, Newsom said it was "part of the sausage making" of the legislative process. In the wake of the Bloomberg story, Newsom's office has not offered a better explanation for the carve-out. Until that changes, the questions will persist.

"If [Newsom] is unable to provide a better justification for this carve-out, it raises serious questions about the integrity of his administration," a group of Republican lawmakers wrote in a letter requesting that state Attorney General Rob Bonta investigate the matter.

Newsom's explanations about the carve-out seem to be "falling apart in real time, particularly because Californians are accustomed to watching this administration hand out favors to its friends," Will Swaim, president of the California Policy Center, tells Reason. 

Swaim drew a parallel to the aftermath of the passage of California's Assembly Bill (AB) 5 in 2019, which effectively banned freelancing in many industries. After newspapers complained that the law would make it more difficult for them to use freelance labor, Newsom backed a short-term and then a longer-term exemption for the industry.

Of course, the debate over the narrow bakery exemption to the minimum wage law seems to miss the larger point: the entire law is a bizarre exemption from the state's existing minimum wage statute. Maybe a special interest and personal friend influenced that one section of the new law, but there is no doubt that other special interests—labor unions that give huge campaign contributions—are the reason why the rest of the law singles out fast food restaurants while effectively exempting other employers.

In short: Newsom's claims that special interests didn't influence one part of the bill would be more believable if special interests hadn't obviously influenced the entire bill.

"This was a bad bill to begin with—imposing an unsupportable minimum wage on businesses that operate on razor-thin margins has already raised menu prices and accelerated layoffs in the industry," says Swaim. "Its victims will be small franchisees who don't have Panera's pull and workers who are now facing mass layoffs."

The post Of Course Special Interests Shaped California's New Minimum Wage Law appeared first on Reason.com.