Ok using your assumption a 2/3 increase the new cost basis would be :
.50/1.20 = X / 100 = 42%. A 12% increase over the current 30%. No where near 50% increase...
Technically, he wouldn’t have to double sales price to handle a 2/3 labor cost, no. That’s not correct.
To maintain the same margins, he would have to add the 2/3 increase in labor x the percentage of labor cost, as you were attempting to illustrate. This assumes all increased labor costs remain consistent.
Nonetheless, I expect screens (like now at Jack in the Box) will replace order-takers, and they’ll use speech recognition.
At the grocery store, you won’t even check yourself out anymore, nor will there be checkers in the future:
https://www.youtube.com/watch?v=eob532iEpqk
Most resteraunt chains are set up with the following equation:
30% labor cost
30% food cost
30% utility and building cost
= 10% profit
just raising the labor cost will make these businesses unprofitable
food cost is not going to come down, no matter how draconian the cuts to quality or portion size are.
cost of maintainence, utilities and taxes are only going up.
even well run resteraunts are “feeling the bite”( I crack myself up)
I have 28 years of resteraunt experience. Both as Labor and management.
If labor increases from $9/hr to $15/hr, that’s a 66% (rounded low) increase - closer to 67%. 2/3 increase.
Ok using your assumption a 2/3 increase the new cost basis would be :
.50/1.20 = X / 100 = 42%. A 12% increase over the current 30%. No where near 50% increase...
Actually ..
In order to keep the same ratio of 30/70 , a 66% increase on one side has to be offset by a proportional increase to the total. A 50% increase (original price times 1.5) to the total is indeed correct.
1 + 50% = 150 or 30/.66 (.45) + 70/.66 (1.06) = 1.51 times the original price. A 51% increase.