Robots can't spit on your hamburger and if your order is wrong it's because of what YOU punched into the kiosk.
Posted on 04/29/2016 11:10:55 AM PDT by Lorianne
While this should be no surprise to any rational non-establishment-teet-suckling economist, former McDonalds' CEO Ed Rensi exclaims, in a recent Forbes Op-Ed, that "a $15 minimum wage won’t spell the end of [fast-food brands]. However it will mean wiping out thousands of entry-level opportunities for people without many other options." The $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business (and we add simple supply and demand fundamentals) - just "do the math" Rensi rants...
“They’re making millions while millions can’t pay their bills,” argue the union groups, suggesting there’s plenty of profit left over in corporate coffers to fund a massive pay increase at the bottom.
In truth, nearly 90% of McDonald’s locations are independently-owned by franchisees who aren’t making “millions” in profit. Rather, they keep roughly six cents of each sales dollar after paying for food, staff costs, rent and other expenses. I>Let’s do the math: A typical franchisee sells about $2.6 million worth of burgers, fries, shakes and Happy Meals each year, leaving them with $156,000 in profit. If that franchisee has 15 part-time employees on staff earning minimum wage, a $15 hourly pay requirement eats up three-quarters of their profitability. (In reality, the costs will be much higher, as the company will have to fund raises further up the pay scale.) For some locations, a $15 minimum wage wipes out their entire profit.
I> Recouping those costs isn’t as simple as raising prices. If it were easy to add big price increases to a meal, it would have already been done without a wage hike to trigger it. In the real world, our industry customers are notoriously sensitive to price increases.
(Excerpt) Read more at zerohedge.com ...
Robots can't spit on your hamburger and if your order is wrong it's because of what YOU punched into the kiosk.
I agree with the story’s general statements, but typical franchisee is pocketing more than 156k per restaurant. A McD franchise costs is roughly 1 million to 2 million dollars of total investment. Not to many folks are going to tie up that much capital for a 10% return.
Typical Chick Fil A franchisee is making about 300-350k a year. I am not for one second buying the typical McD franchise is only pocketing 150k in profit.
Only MORONS report profits that are high. There are legal ways to eliminate profit during reporting to keep the taxes low. Only IDIOTIC businesses pay the full tax. If you own a business and pay taxes anywhere close to 15%, you are a sucker and need to have a competent tax accountant ASAP.
Fast food jobs were never meant to be a career.
If your job skills are only enough to get a job a McD’s then you have the wrong set of skills.................
You discount the numbers, but without providing a basis regarding McDonalds, as opposed to Chik-fil-A.
I cannot say whether the numbers are right or wrong, but to proclaim them wrong, one needs to have evidence.
Have you ever noticed in some McDs they need almost as many managers as workers, to tell them what to do?
Minimum wage is $0 per hour and no law can ever change that.
“Fast food jobs were never meant to be a career.”
Agreed, but with the lack of jobs like manufacturing where the dimmer bulbs of society could support a family, that leaves them with what is left. Or we get ready for a bigger welfare state. Fast food and other jobs of that time are now careers for folks.
Creative accounting only gets you so far... Putting up 1-2MM for a 150k annual return is stupid no competent business man would settle for that return.
Remember the Automats of yesteryear? They will make a comeback.................
Sigh...
Simple math tells you that no businessman worth a damn will tie up 1-2MM of capital for. 10% annual return. There are so many easier ways to make 150k rather than tie up that much cash and manage a few dozen high school kids it wouldn’t be worth it.
The fact you seem oblivious to this obvious math concerns me. A manager at a relatively competent bar or restaurant can earn 100 to 150k a year, to think someone would tie up 1MM to 2MM of capital do such a little return as 150k a year. You can make those kinds of returns on that kind of money going far less risky and more passive things than owning a franchise.
But you want evidence, typical McD franchise makes betwee 500k and 1Mm per year.
http://www.ask.com/business-finance/mcdonald-s-franchise-s-profit-8f7327118fa3c180
I was in a factory the other day and by the looks of it, they don’t pay $15 an hour either.
I believe the minimum wage should be closer to $0.00. While it’s true that very few people work for a career at minimum wage, there are millions and millions earning between $12 and $15 an hour.
In 2014, the lowest fifth of the population earned an average of $21K a Year, the second fifth average was $41K. Assuming 120 million employees in US and the half the second fifth earns between $22 and 30K, that means that upwards of 36,000,000 employees will receive a raise to $15 an hour ($30K a year)
This whole mess isn’t just burger flipping jobs as the libs like to say. There are about 3,500,000 fast food employees in the US. That’s less than 10% of the number of people affected by a staggeringly high minimum wage. The US economy can’t withstand such high wages for low profit value jobs.
Folks who work in this realm are supremely necessary, but they don’t bring enough profit to an organization to be worth $15 an hour.
This point is forgotten. If the guy you are currently paying 8 dollars must now recieve, at gunpoint, $10, then the guy you are currently paying $12 will want $13 or $14 or $15. And so on.
Furthermore, you will now have $2 less to pay for new or improved roofs, sidewalks, furniture, signage, advertising, beef, buns, stoves, windows, cleaning supplies, toilet paper, electric bills, plumbing bills, water bills, packaging, lights, or a new hat for your wife.
There are jobs and people at play in every one of these items, including the hat for your wife.
The store owner is in the best position by far to determine if $2 is best directed to entry level wages, mid-level wages, upper level wages, or executive wages. Or to new or improved toilet paper, beef, lettuce, or sytrofoam cups.
The only way an increase in minimum wage is healthy, is if it would have in any event the best place to invest that $2.
Liberals are either stupid, or they are outright heartless vermin. In either event, they hurt people and do not care.
“Creative accounting only gets you so far... Putting up 1-2MM for a 150k annual return is stupid no competent business man would settle for that return.”
I am fine with a low taxable return as long as an actual return is higher. Perhaps McD has some “creative accountants” that are keeping their taxable returns much lower. Good for them. Who wants to report higher and pay the moochers... unless you’re a sucker.
“Folks who work in this realm are supremely necessary, but they don’t bring enough profit to an organization to be worth $15 an hour.”
That is key right there.
This has been common knowledge since Lenin - no one wants to know.
You can be fine with it but it’s not reality. The Typical MCD franchise profit is 500k to 1MM a year... It would have to be to get anyone competent to even think of opening up a McD’s.
The idea that a MCD franchise typically only makes 150k a year is absurd on its face, no matter how good of an accountant you have.
Simply put 2Million put in a 20 year annuity at 6% return will put more than 150k cash in your pocket for year, with a lot less headache and risk. No one, I repeat No One with a functional brain would agree to tie up 2MM into operating a business with only a 150k a year return.
Yes higher wages will result in fewer jobs, but the author of this article doesn’t have a flipping clue about business to present the notion that a typical McD franchise only profits 150k a year. If that were true MCD would not be able to sell a franchise.
But you want evidence, typical McD franchise makes betwee 500k and 1Mm per year.”””
GROSS or NET??? Have done bookkeeping for a restaurant in the past & never saw this kind of net figures.
You get minimum wage because you have minimum skills. Get more skills and watch your pay increase. Ordering kiosks and self serve pay machines will take the place of a fair number of these whiners.
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