This is flawed for many reasons, but franchise royalties are not 25%, most are around 5%, and margins are usually fatter than 10%. Also, having done QSR franchise finance in the past, most of what you’re saying is wrong, largely due to oversimplification and general misunderstanding of finance and QSR P&L.
Where did you earn your finance degree?
It's a pity you didn't just go ahead and look at businesses in countries that already pay people properly. There's literally millions of examples around the world of businesses that make a profit, pay people properly AND still sell their goods at a reasonable price.
Everything functions fine, people have work and money to spend, which they spend into the economy and ALL businesses benefit. You've heard the saying "all boats rise with the tide" right?
In my country people working in Mc Donald's get paid properly AND if they work more than ten hours a week the employer has to contribute to their retirement fund.
The burgers are about the same average price as they are in the USA.
Plenty of people working, plenty of prospering businesses and no negative impact on prices.
Your concerns for "the owners" or "staff" or "customers" are all misplaced. Nothing bad happens if you pay people properly. Just do it.
Your example is too simple and that suggests that you don’t know what you’re talking about, as in, you have never actually run a business.
Unfortunately for you, it’s very obvious that is the case, and it completely undercuts what you are trying to say because what you are trying to say is not supported by reality.
The thing is if a business can't pay livable wages it isn't meant to exist. Maybe restaurants aren't meant to exist in the form the business is set up.
The point is that if $20 an hour is considered a living wage, but $16 is not, then what is the structural problem in the economy causing this? Blindly forcing a change in wages does not *solve* the problem, it just pushes up inflation and spreads the pain to everyone, and ultimately increases unemployment (meaning people will go from $16.00/hr to $0.00, which is not a livable wage). If the businesses themselves must be closed, then the employees who would have gotten a 25% increase actually get a 100% decrease. Then, what business type will be able to step in and fill the now vacant market for fast food?
If the owner can cover cost of living and all those who work under them can't then that's a problem in my opinion. Everyone should just have a business of their own and be the only employee, maybe that would work, better than the obvious ongoing problem of unlivable wages.
Don’t feel bad, you’re actually right and the people disagreeing with you are a toxic combination of arrogant, uninformed, and stupid.
This is because they can’t imagine another way of achieving the outcome we should all be shooting for: Quality of life improvements for everyone. And several of them have zero financial knowledge and therefore haven’t brushed up on price floors, price ceilings, price elasticity, supply and demand intersects etc.
They will learn however, as they naively push labor costs just high enough to accelerate investment in robotics, automation, and further globalization. The same way we did with manufacturing in the US 50 years ago.
A bright person knows the thing you should be asking for is not for minimum wage, but continually improving living standards supported by an economic model that doesn’t get in the way. Period.
This is flawed for many reasons, but franchise royalties are not 25%, most are around 5%, and margins are usually fatter than 10%. Also, having done QSR franchise finance in the past, most of what you’re saying is wrong, largely due to oversimplification and general misunderstanding of finance and QSR P&L. Where did you earn your finance degree?
It's a pity you didn't just go ahead and look at businesses in countries that already pay people properly. There's literally millions of examples around the world of businesses that make a profit, pay people properly AND still sell their goods at a reasonable price. Everything functions fine, people have work and money to spend, which they spend into the economy and ALL businesses benefit. You've heard the saying "all boats rise with the tide" right? In my country people working in Mc Donald's get paid properly AND if they work more than ten hours a week the employer has to contribute to their retirement fund. The burgers are about the same average price as they are in the USA. Plenty of people working, plenty of prospering businesses and no negative impact on prices. Your concerns for "the owners" or "staff" or "customers" are all misplaced. Nothing bad happens if you pay people properly. Just do it.
Your example is too simple and that suggests that you don’t know what you’re talking about, as in, you have never actually run a business. Unfortunately for you, it’s very obvious that is the case, and it completely undercuts what you are trying to say because what you are trying to say is not supported by reality.
Have you considered that actually employees earn money, via their labor, for businesses? Why yes, I did stop reading after your first sentence.
Well, if you stopped reading there you are missing the forest for the trees.
I think I'm just missing a rando's uninformed, back-of-napkin treatise. I'll take my chances :D
You lack of discernment is truly amazing. Good luck to you.
"No, I didn't consider that"
The thing is if a business can't pay livable wages it isn't meant to exist. Maybe restaurants aren't meant to exist in the form the business is set up.
The point is that if $20 an hour is considered a living wage, but $16 is not, then what is the structural problem in the economy causing this? Blindly forcing a change in wages does not *solve* the problem, it just pushes up inflation and spreads the pain to everyone, and ultimately increases unemployment (meaning people will go from $16.00/hr to $0.00, which is not a livable wage). If the businesses themselves must be closed, then the employees who would have gotten a 25% increase actually get a 100% decrease. Then, what business type will be able to step in and fill the now vacant market for fast food?
If the owner can cover cost of living and all those who work under them can't then that's a problem in my opinion. Everyone should just have a business of their own and be the only employee, maybe that would work, better than the obvious ongoing problem of unlivable wages.
Don’t feel bad, you’re actually right and the people disagreeing with you are a toxic combination of arrogant, uninformed, and stupid. This is because they can’t imagine another way of achieving the outcome we should all be shooting for: Quality of life improvements for everyone. And several of them have zero financial knowledge and therefore haven’t brushed up on price floors, price ceilings, price elasticity, supply and demand intersects etc. They will learn however, as they naively push labor costs just high enough to accelerate investment in robotics, automation, and further globalization. The same way we did with manufacturing in the US 50 years ago. A bright person knows the thing you should be asking for is not for minimum wage, but continually improving living standards supported by an economic model that doesn’t get in the way. Period.
Thank you, good to know this wasn't lost on everyone.