| Nuvendil said: OK, we are just retreading ground I covered a couple pages ago but I'll go on :P When you go and do all the math, the increase would reduce their net income - their bottom line -to less than $600 million dollars by the best. Yeah they make 25 billion, but that all but a bit over 7 billion gets eaten up in costs of operations and payroll right now. McDonalds is a massive company, running that is exorbitantly expensive: utilities, maintenance, cost of supplies, construction, shipping, and of course payroll. Taxes and interests take that to around 4.5 billion. That's the companies bottom line. The hike in payroll costs would bring that to less than 600 million. And that's before raising pay even further for shift managers and such. Or factoring in the impact from closing franchises which would be imminent. The company could easily go into the red with the current setup. And again, employees DO eat up the majority of payroll by a country mile. The total disclosed executive compensation for McDonalds is currently 24.36 million. This total factors in the CEO, CFO, and the three other most compensated officers. Like I said, the executive level IS highly paid, but it is ultimately insignificant compared to the total payroll costs and the proposed payroll hike. And as I also said in that previous post, McDonalds could survive but it would require enormous changes to the company, many unpleasant. Jobs would be cut, franchises shut down, prices would be raised, etc. It would be exorbitantly costly and could indeed destroy the company depending on how fast the payroll hike hit. Cause it's not just the changes, it's maintaining their consumer base through the transition. But yes, if the change came closely it would be entirely possible for them to survive. But it wouldn't be fun, thousands of franchises currently doing middling business would become unsustainable quickly. This isn't to say I think minimum wage is fine, it is too low. This is to say that a FEDERAL minimum of $15 is too high and that people really don't do the research and thinking to realize how huge this is for these companies. In some areas (California, for example) $15 makes absolute sense. Cost of living is high enough and the economy strong enough to support it. South Carolina? North Carolina? Texas? Probably something around $10 to $12 is better. The US is enormous with hundreds of millions of people, different taxes in different states, etc. Regions vary in economic strength and cost of living. The federal minimum wage has to take that into account. And all this is to say nothing of the absolute havok a $15 federal minimum wage would bring on the small business sector. |
Ok, I do understand your concern. At least we're agreeing the minimum wage should be higher than what it is now. It would seem to me though, that McDonalds model of cheap chain-operated fastfood is in itself unsustainable.
In Belgium, we have had a rise of "quality burger restaurants", which are more expensive, but prepares much better food. We even have some "local fast food" concepts that are catching on. In my home town, we have a Burger King-like fast food place called the Ketchup. You can get a burger with fries for 5€ (about 6€ if you take a medium soda). That's more expensive that the McDonalds here, but the burgers and fries in the Ketchup are bigger, better and all in al more filling. I can get a hamburger at McDonalds for 1€, but to actually have a satisfying meal, you'd come at about the same cost as the Ketchup, while the latter provides better food and higher wages.
It seems the competition is really starting to cut into McDo's, but it might just as wel be that their business model is starting to rot in this day and age.
