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Wendy's Plans To Automate 6,000 Restaurants With Self-Service Ordering Kiosks (investors.com) 921

An anonymous reader writes: In response to the rising minimum wage, the fast-food chain Wendy's plans to start automating all of its restaurants. The company said it will have self-service ordering kiosks available to its 6,000-plus restaurants in the second half of the year. Wendy's President Todd Penegor said it will be up to franchisees to decide whether or not to adopt the kiosks in their stores, noting that many franchise locations have had to raise prices to offset wage increases. California's decision to gradually raise the minimum wage to $15 by 2022 will impact Wendy's 258 restaurants, all of which are franchise-operated. About 75% of 200-plus Wendy's restaurants are run by franchisees in New York, a state that is also on its way to $15. Penegor said, wage pressures have been manageable both because of falling commodity prices and better operating leverage due to an increase in customer counts. The company is still "working so hard to find efficiencies" so it can deliver "a new QSR experience but at traditional QSR prices." The CEO of Carl's Jr., Andy Puzder, is also looking into replacing many of its workers with machines to save money.
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Wendy's Plans To Automate 6,000 Restaurants With Self-Service Ordering Kiosks

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  • by Anonymous Coward on Friday May 13, 2016 @05:06AM (#52103281)

    That would get the biggest savings of them all.

    • by skam240 ( 789197 ) on Friday May 13, 2016 @05:08AM (#52103285)

      Just make it a chatbot that responds to key terms "bacon" or "cheese" with "yes, more please" and you've got a winner!

    • by Imrik ( 148191 )

      Would help the corporation's bottom line but wouldn't do anything for the franchises, unless you think they'd actually pass the savings on by reducing franchise fees.

      • by gfxguy ( 98788 ) on Friday May 13, 2016 @10:22AM (#52105091)
        How to you figure? The local franchise owner opts to get a few of these, replacing a good part of the staff, and has fewer employees to pay - especially important in high minimum wage states. They can keep costs down, keep prices down to stay competitive. Sure, the corporate side benefits, ultimately, too, but it seems good (in a business sense) for both sides of the equation.
    • by trout007 ( 975317 ) on Friday May 13, 2016 @07:32AM (#52103839)

      Total CEO compensation was $21 Million out of sales of $2.4 Billion.

      • by Ol Olsoc ( 1175323 ) on Friday May 13, 2016 @08:35AM (#52104161)

        Total CEO compensation was $21 Million out of sales of $2.4 Billion.

        The problem perhaps, is not so much the idea that basic percentages of total sales is the bottom line, but what value is added by that 21 million dollar expense.

        As well, would it look like such a small percentage if the 21 million dollars is compared against total profit instead of total sales? We all know the answer to that.

        There is an inherent problem when Billionaires and multi-millionaires tell people making 20K a year that they are making too much money.

        I dunno if my outlook is so screwed up or what, but it seems to me that trying to put as many Americans as possible out of work - or at least have them work for as little as possible, just isn't sound business strategy, especially for substandard eateries like Wendy's, who don't exactly cater to the wealthy.

        • by bondsbw ( 888959 ) on Friday May 13, 2016 @09:28AM (#52104579)

          I dunno if my outlook is so screwed up or what, but it seems to me that trying to put as many Americans as possible out of work - or at least have them work for as little as possible, just isn't sound business strategy, especially for substandard eateries like Wendy's, who don't exactly cater to the wealthy.

          The employees for a Wendy's location make up probably less than 1% of the local population. Probably less than 10% of the general population frequent that restaurant regularly, but employees get half-price meals all the time so they are even less likely than the average person to pay full price for a meal from Wendy's. The impact to revenue is therefore almost non-existent, so any payroll impact is likely to have a much larger effect on net profits.

          Granted, once most everybody fires low-wage employees, this will become the problem you describe. But employee wages drive pricing, and if your burgers cost a dollar or two more than the equivalent burgers next door, you lose customers... just as if your burgers cost less, you gain customers. The good guy loses.

          It is a problem, it is an inevitable problem, but doing the "right thing" isn't really a viable solution. The good guy will go out of business. The solution has to come elsewhere.

        • by MachineShedFred ( 621896 ) on Friday May 13, 2016 @09:31AM (#52104607) Journal

          You have the general premise wrong.

          He's not telling them they are making too much money. He's telling them that due to outside regulation, keeping them around is more expensive than automating the job. You even nailed the 'why' when you said that Wendy's doesn't exactly cater to the wealthy - they need to keep the average selling price down, so they can continue to exist.

          What we are seeing is the inevitable consequence of increases in levels of technology, and outside regulation forcing wages up on jobs that have traditionally not been viewed as a career position, but rather a stepping stone for someone starting out in the labor market. The company is going to do what is necessary to keep sales up and expenses down, and some governmental entity just made automation cheaper than people. The consequence of that shift is that those people are free to look for higher paying opportunities elsewhere.

          The upside: we've had self check-out in supermarkets for some time now, and there's still plenty of standard check lanes open any time I go to the store, because that shitty scan robot isn't fast enough for anything but a few items, and doesn't give a level of customer service that you can get from another person. The market will decide which model it likes better - a computer that you place your own order on and then use SamdroidplePay, or talking to a person who can be friendly and courteous at the going regulated market wage, and not enraging if you have the gall to pay with cash, because we still haven't figured out a machine that accepts cash properly.

          TL;DR: All of this has happened before, and it will all happen again. Are you similarly pissed off that your car wasn't hand-welded together by some guy named Burt that is still staggering around from pounding cans of Pabst the night before?

          • What we are seeing is the inevitable consequence of increases in levels of technology, and outside regulation forcing wages up on jobs that have traditionally not been viewed as a career position, but rather a stepping stone for someone starting out in the labor market.

            %30 of the entire Labor Market is low-wage service jobs. Considering the large % of the job market, the belief that service-jobs are just stepping-stones to careers elsewhere is unrealistic. At the end of the day having companies at a race to the bottom on their quarterly report payroll line ends up hurting the economy and eventually them as lower salaries eventually end up eroding consumer spending power. This is why you need Government regulation to make sure that the economy is solidly grounded in fundam

  • Half arsed (Score:2, Informative)

    by Anonymous Coward

    From what I have understood they are only removing the person that will mishear what I say and pushes the wrong button in the register and instead lets me do the pushing. That almost as much automation as the pizzeria that allows me to select topping online and have it delivered to door.
    The thing with junk-food burgers is that every burger and every bread already have industrial-grade quality.
    Making the entire "cooking" process automated shouldn't be harder than any other automated manufacturing process.
    The

    • Re: (Score:3, Interesting)

      by Zuriel ( 1760072 )

      Once food making machines become a mature technology, they'll be much *better* than human employees. A machine doesn't have enough imagination to get tired, distracted or forget things. If it's programmed to cook something for 178 seconds, that's exactly how long it gets cooked for, every single time.

      Putting millions of people out of work is either horrible or great, depending on whether or not we've done basic income [wikipedia.org] yet.

      • by Entrope ( 68843 ) on Friday May 13, 2016 @06:16AM (#52103513) Homepage

        Machines will not forget things in your order, flirt with the machine next to them, or spit in your food. It will make your order absolutely the way it is told to, and it absolutely will not stop, ever, until you are fed. At least, that's what Sarah Connor told me.

        • by Pollux ( 102520 ) <[ge.ten.atadet] [ta] [reteps]> on Friday May 13, 2016 @06:46AM (#52103627) Journal

          When I saw your comment about flirting, it immediately reminded me of my experience patronizing a particular pretzel chain last weekend. My wife and I placed our order, and we were told, "We make those fresh, so it's going to take about 7-8 minutes." We said alright, sat down, and waited. With four workers behind the counter, all female, I didn't expect it to take too long. But as soon as we sit down, Mr. "I dropped out of high school because I look this good" walked up and leaned against the counter. And all that estrogen ran to him like rats to limburger. Except for the one girl in the back... She did all the pretzel rolling...all the baking...all the packaging...and 15 minutes later, we had our order.

          But don't misunderstand me. I'm not at all a fan of Mr. Moneybags replacing all his workers with computers & robots, keeping all the profits, and putting them in offshore accounts until he can repatriate the money at a meager 7.5% tax. I'm also not a fan of Mr. Moneybags not paying American workers anymore who are unemployed and unable to buy pretzels at Mr. Moneybags's pretzel shop, drying up the American economy. What that establishment, and every establishment, needs is good management.

          • Re:Flirting (Score:5, Interesting)

            by Grishnakh ( 216268 ) on Friday May 13, 2016 @10:46AM (#52105291)

            I'm not at all a fan of Mr. Moneybags replacing all his workers with computers & robots, keeping all the profits, and putting them in offshore accounts until he can repatriate the money at a meager 7.5% tax. I'm also not a fan of Mr. Moneybags not paying American workers anymore who are unemployed and unable to buy pretzels at Mr. Moneybags's pretzel shop, drying up the American economy.

            I am. I think he's doing exactly the right thing. His machines will do a much better job than humans and will do it more efficiently. And if more and more places like that results in the economy completely collapsing and turning into a civil war that makes Syria look like small potatoes, then that's what we deserve for doing such a poor job in electing our government. We need more automation, and to keep our economy strong we need a universal basic income and universal healthcare so that everyone shares in the fruits of the labor of automation. But if we're not going to demand that because we're too stupid, then we deserve destruction due to civil war.

    • The thing with junk-food burgers is that every burger and every bread already have industrial-grade quality.

      And not only junk food.

      each time I'min the US I'm wondering how places that obviously don't do more than heat up pre-made food are allowed to call themselves "restaurant"

      To add insult to injury, that ready-to-microwave stuff then shows up under the restaurants brand in the convinience food aisle at the supermarket!

  • Disgustng (Score:5, Insightful)

    by Anonymous Coward on Friday May 13, 2016 @05:22AM (#52103313)

    America is shedding jobs at an epic rate so that the rich can get slightly richer. The only reason these corps "can't afford" a higher minimum wage is because they need to protect their obscene profits. We're all in this together and we're all headed to the same grave. Let's try helping each other out instead of seeing who can amass the biggest pile of cash at the expense of other people. A revolution is brewing.

    • Re:Disgustng (Score:5, Interesting)

      by Alain Williams ( 2972 ) <addw@phcomp.co.uk> on Friday May 13, 2016 @05:29AM (#52103329) Homepage

      A revolution is brewing.

      This was tried 200 years ago [wikipedia.org], it did not stop the rise of the machines, the mill owners became very wealthy. However: I do agree that increasing automation will cause large social problems, I don't know how to deal with them, but we need to go into this with our eyes open not shut.

      • " I don't know how to deal with them,"

        You do, you just don't like the "how", because human beings at the core are miserable, selfish, misanthropic horror creatures.

        * Did I use "horror" in the bizarre yet correct for the UK way? Why do you guys say "horror" instead of "horrible"?

      • Re:Disgustng (Score:5, Insightful)

        by bickerdyke ( 670000 ) on Friday May 13, 2016 @05:50AM (#52103401)

        However: I do agree that increasing automation will cause large social problems,

        It's not the automation per se that causes the problems.

        it's more the fact that we insist that people somehow "work" in exchange for goods, services and housing, but less and less of that work is needed to provide goods, services and housing, thanks to automation.

    • Re:Disgustng (Score:5, Insightful)

      by ( 4475953 ) on Friday May 13, 2016 @05:44AM (#52103377)

      Stephen Hawking has warned about that trend recently on reddit.

      Have you thought of “technological unemployment,” where machines take all our jobs?

      The outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.

      I agree with him. The second option seems more likely.

      • Re:Disgustng (Score:5, Insightful)

        by jbmartin6 ( 1232050 ) on Friday May 13, 2016 @07:10AM (#52103723)
        If everyone is miserably poor there isn't much value in owning a bunch of machines to make things for them.
    • by AmiMoJo ( 196126 )

      Looks like an opportunity to set up a "full service" fast food restaurant. For $0.10 more you get served by a human being and the food is better. Higher than minimum wages cause the staff to care enough to clean the place properly and not ejaculate in your milkshake.

      After that it could maybe get some Starbucks style decor so that it appeals to hipsters and people who would never set foot in Wendy's. Or just stay cheap but slightly better.

      • you just described Atlantic City and Las Vegas. Everyone is unionized and that $15-$20 breakfast i can have at the corner diner for two people is like $40 or more at the casino diners and just as bland
      • Someone who hates their job isn't going to suddenly start loving it just because they are getting a few dollars per hour more.
    • Re:Disgustng (Score:5, Insightful)

      by swb ( 14022 ) on Friday May 13, 2016 @09:23AM (#52104537)

      I would think we would be at the point where the HENRYs -- high earners, not rich yet, people like the highly educated professional class and SMB owners, people with a high income and wealth accumulation potential, but still needing to work due to lack of sufficient wealth accumulation -- would be starting to feel some kind of collective fear for their own status.

      The working classes have largely been strip-mined for their wealth, the middle classes nearly so, and the next class on the radar screen has to be the HENRYs. There's an awful lot of income still flowing into that class that must look pretty tempting once the middle class has been finished off.

      While they remain politically influential by virtue of their income and education, they probably suffer from some identity confusion, believing that their high income gives them a social status equal to the very rich, leading them to believe their interests are aligned. Really, an economic version of the false affiliation working class whites believed they had with Republicans who used social issues as a diversion while stripping them of wealth and income.

      When in fact, it would seem that once the wealth accumulators no longer find sufficient wealth to strip from the middle class, they will target the "inefficiencies" of high income earners as their next source of wealth addition.

      I would expect that if the HENRYs ever get sufficiently stripped of income and wealth, that the truly wealthy would just start to feed on each other.

  • This sounds like nothing but another CEO running his mouth on his new favorite matter - and showing in the process how uninformed he actually is. We saw the same thing with Subway and Papa John's CEOs telling us how the Affordable Care Act was going to bring the sky crashing down on their empires, yet both are doing just fine.

    To tell us how much a raise in minimum wage will impact the actual cost of doing business - and the cost of the product - they need to open up about two things in particular that they skilfully danced around in this article:
    • How much are they actually paying their employees currently? They mentioned that they already had to raise their wages to get better workers. How much of a raise is $15 over the current rate?
    • How much of the cost of the product is actually labor? This one is a big - and difficult - one to answer. A lot of corporate types like to live in the fantasy where doubling a worker's salary means everything they make or do is now twice as expensive, but we know that is not the case. For a fast food place, you need to consider the cost of the materials going in to the product, the cost of paying for and maintaining the building (with its utilities, parking lot, and everything else), etc. The human cost of their product is likely 10-20% at most.

    Sure, the wage increase has a cost. What we don't know - and I would argue the people interviewed in this story don't know either - is how large is that cost. Will it actually be offset by replacing more workers with kiosks and robots, or is this just a ploy from the top?

    • by FlyHelicopters ( 1540845 ) on Friday May 13, 2016 @05:43AM (#52103375)

      We saw the same thing with Subway and Papa John's CEOs telling us how the Affordable Care Act was going to bring the sky crashing down on their empires, yet both are doing just fine.

      Subway is not, actually...

      How much of the cost of the product is actually labor? This one is a big - and difficult - one to answer.

      No it isn't... labor is generally just as expensive, if not more expensive than the cost of the food... These are well known costs within the food business...

      A lot of corporate types like to live in the fantasy where doubling a worker's salary means everything they make or do is now twice as expensive, but we know that is not the case.

      No one believes that who runs a food business... but it will cause overhead to rise about 16%, give or take, for most such places.

      That is their existing profit margin, they don't have 16% to give.

      The human cost of their product is likely 10-20% at most.

      Then you are misinformed, it is at least double that...

      • by skam240 ( 789197 ) on Friday May 13, 2016 @05:58AM (#52103429)

        It's exactly double that by most measurements I've seen. So companies will have to raise prices? There will be more people able to afford them which will only help their bottom line. Henry Ford acted with a great bit of social responsibility by paying his employees enough to where they could afford one of his cars. The least a fast food place could do is pay its employees enough to afford one of its shitty meals.

      • We saw the same thing with Subway and Papa John's CEOs telling us how the Affordable Care Act was going to bring the sky crashing down on their empires, yet both are doing just fine.

        Subway is not, actually...

        I don't know what planet you live on, but here on planet earth Subway overtook McDonald's some time ago as the fast food chain with the largest number of locations world wide. They are continuing to open new locations - in the US and around the world - at a much faster clip than McDonald's as well. Even with most of their locations franchises, how would they be able to keep opening so many new restaurants if they were not doing well? They would have a hard time convincing franchisees to put down the capital to open a new location if they were doing poorly.

        How much of the cost of the product is actually labor? This one is a big - and difficult - one to answer.

        No it isn't... labor is generally just as expensive, if not more expensive than the cost of the food...

        You're only looking at part of the equation. Sure, you can say you pay an employee $X per hour and that they can make Y sandwiches per hour. You can say that the raw materials in each sandwich is $B. What you can't as easily predict though is how much you will pay to keep the lights on, or how much it will cost to maintain the equipment in the restaurant. You can't predict how much your parking lot will cost you or when your landlord (if you are in a shopping mall and don't own your property) will raise your rent. They also cannot always predict what the franchise fee will be any given year. These restaurants have only one source of income - the food they sell. They have to cover all their costs through that.

        A lot of corporate types like to live in the fantasy where doubling a worker's salary means everything they make or do is now twice as expensive, but we know that is not the case.

        No one believes that who runs a food business

        And how often do CEOs actually come from within the industry? There is always pressure from the board to bring in outside executives, which leads to blowhards like this guy.

        but it will cause overhead to rise about 16%, give or take, for most such places.

        16% isn't that much for fast food, really. A $2 sandwich goes up by about $.30, that really isn't that much. People don't flinch at that kind of price fluctuation on gasoline any more, why would they change their habits on food over it?

        • by chispito ( 1870390 ) on Friday May 13, 2016 @08:23AM (#52104095)

          I don't know what planet you live on, but here on planet earth Subway overtook McDonald's some time ago as the fast food chain with the largest number of locations world wide. They are continuing to open new locations - in the US and around the world - at a much faster clip than McDonald's as well. Even with most of their locations franchises, how would they be able to keep opening so many new restaurants if they were not doing well? They would have a hard time convincing franchisees to put down the capital to open a new location if they were doing poorly.

          Are you sure about that? http://www.wsj.com/articles/su... [wsj.com]

        • Re: (Score:3, Interesting)

          by Maltheus ( 248271 )

          16% isn't that much for fast food, really. A $2 sandwich goes up by about $.30, that really isn't that much. People don't flinch at that kind of price fluctuation on gasoline any more, why would they change their habits on food over it?

          I already have. I used to get the Asiago Ranch Chicken sandwich from Wendy's every week. They raised it by almost a buck, earlier this year, and now I go to Chick-fil-a instead (despite the lines).

          • by sjames ( 1099 )

            So they can't go up three times as much as GP suggested without losing business. Would an incremental increase of $0.30 have driven you away if Chick-fil-a had also gone up by $0.30?

    • by Anonymous Coward on Friday May 13, 2016 @05:56AM (#52103423)

      When I worked in fast food, our store seemed to hover at 20-25% of revenue for labor cost. I've been told that that is fairly low, and that 30% is the industry average. California has a current minimum wage of $10 per hour. This would mean that $15 would be a 50% increase. If a fast food location there were to give everyone a 50% raise, that would result in needing to increase revenue by 15% to make up the difference. I don't feel that 15% over six years is a very large increase.

    • Business doesn't work that way. You don't justify the cost with just the increase amount. You justify the cost based on the total savings for replacing an employee. If that employee's costs are higher, the payback time is shortened. There is some point, and each business or business owner can decide based on their business needs, that it makes sense. If that point is at, say, $13/hr, where the payback time is short enough, then min wage increase could push them over that.
    • Re: (Score:3, Insightful)

      by Anonymous Coward

      You obviously don't know how these companies run. Most of this affects franchise owners not big parent companies. People who buy into a brand and have a few stores. Maybe even just one or two. They have to pay the parent company a percent of gross earnings and the rest they get to apply to costs such as labor, maintenance, inventory. All the variables the parent company doesn't absorb. Not to mention the small independent business owner without brand support who is on their own. In the restaurant business l

    • Re: (Score:3, Insightful)

      And you missed that minimum wage increase drive wage increase for almost any other job. To afford the increase in price of the products made with labor paid at the minimum wage everyone else will eventually get a salary increase over a period of a few years. After that, the current situation you tried addressing by increasing the minimum wage will still prevail. At the end, it will not solve anything. All the prices of goods and services will be driven up in order to pay for increased salaries.
    • by MeNeXT ( 200840 ) on Friday May 13, 2016 @06:31AM (#52103573)

      Restaurant operating cost typically are 1/3 Labor, 1/3 Food Cost. You can lower one by increasing the other. You can lower your food cost by purchasing more raw ingredients but you need the staff to prepare it. You can lower your labor cost by buying prepared and just heating it.

      The remaining 1/3 goes to Sales and Marketing, Admin, Heat Light and Power, and other overhead. Hopefully after that it's profit.

      He should ask himself the question that if everyone replaces their employees who will have the funds to eat his food?

    • Replacing people with machine does allow to run the "restaurants" 24 hours a day, 7 days a week, with no "closed for holiday XYZ" downtime. Even if you only get a few dozen customers overnight, it's still only the cost of having the lights on. And with LED lighting it's now a negligible cost.

  • I hate these fucking machines that put the labor costs on me. Besides what do I know about the hygene of some stranger who accidentally touched a food stuff I'm going to consume, blech. hmmmm, I like the smell of my ass crack sweat..oh look a bit of lint...I wonder why it is always blue...hey lets get ice cream gross wrong yuk, no fucking way.

    If I have to make an *ice cream*, then I want to be paid for making it.

  • and you can still afford it if your company has no human employees.

  • by GeekWithAKnife ( 2717871 ) on Friday May 13, 2016 @05:52AM (#52103411)

    If you were in a mega corporation at C level wouldn't you complain about how anything negative to your business would ruin it?

    Wouldn't you try your best to stall any change that ends up causing you to have less profits (even a minuscule reduction) until you implement a process that circumvents the more expensive method?

    Minimum wage will drive your business to the ground...like when uhm minimum wage was first introduced?

    Otherwise wasn't the future of burger flippers always to be replaced by automation? -we'll only need minimal supervision of a human that can also greet customers should they care for a smiley service person.

    Those C-level folk are disconnected from the reality of everyday people. It's all about profit margins, quarterly statements, shareholder meetings, bonuses and so on. It's not about how their business will crash and burn supposedly affecting their poor employees, it's about earning a single cent than they did before and fuck everyone else.
  • McDonalds Australia has had this for a year or more. It creates more orders on the back end, but for people who want anything customised, they still go to the counter. In my experience as a client, people only check out the kiosk as a novelty, or if there are long lines.
  • Sheets gas stations have always had kiosks for ordering food for as long as I can remember. However I find the interface really frustrating to navigate. I only keep coming back because this one Sheetz place is in a convenient location.

    I also saw a kiosk in a McDonalds last year. Not sure if it was just a trial or a part of a store revamp.

  • by l3v1 ( 787564 ) on Friday May 13, 2016 @06:29AM (#52103561)
    I mean come on, we love (well, some love) nostalgia, but not the Automats [1] please :) Might have the old-is-new-again feeling that is in fashion again these days, but I don't think this is the way to go. Although, I don't eat at Wendy's more than once or maybe twice a year, so yeah, who cares :))))

    [1] http://www.wired.com/2008/07/g... [wired.com]
  • by wiredog ( 43288 ) on Friday May 13, 2016 @07:32AM (#52103837) Journal

    has been doing this for years.

  • by toonces33 ( 841696 ) on Friday May 13, 2016 @07:59AM (#52103979)

    In the movie it was Carl's Junior, but Wendys seems to want to get there first.

  • by WindBourne ( 631190 ) on Friday May 13, 2016 @09:23AM (#52104539) Journal
    Right now, large number of ppl on Food stamps and other forms of gov subsistence are actually working 40 or more hours / week. Problem is, that America's minimum wage has not kept pace with inflation. So now, we already pay out to ppl who work at Target, McDonald's, burger King, Walmart Sam's club, and yes Wendy's. With this, many ppl will be laid off, but if they buy American made equipment, they can point to providing better jobs. And if America will deal with the illegal alien issue, and send home those that have no families here, or whose families are nothing but drains on society, then we open many lower end jobs.

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